Tag Archives: redevelopment

Suburban redevelopment where on the same property 4 and 3 bedroom apartments are turned down, 1 to 2 bedroom apartments are approved

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In consecutive years, developers brought two different proposals for redeveloping an almost empty set of suburban office buildings into apartments. The first was turned down, the second was accepted. One factor was the size of the proposed apartments. From the first proposal:

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At an initial public hearing in August, the developer indicated he would target grad students with young families. According to the original plan, each apartment would have four bedrooms.

“If the target market demographics is going to be students, that’s more like a dormitory, not a residence. It’s a residential hall, but it’s not what we would envision in a neighborhood such as ours,” nearby resident Roberta Stewart told the zoning board.

The developer modified the proposal after the zoning board expressed concerns over a lack of details and too much parking. The property now has 80 parking spaces, most of which fall within a flood plain.

The revised plan shows three-bedroom units with offices in both buildings. There’s an “unmet need” for that size apartment in the area, Che said last month.

From the second proposal:

The previous zoning request was ultimately denied by the council last November in part due to the use of nontraditional floor plans — originally calling for four-bedroom units — and a surplus of on-site parking spaces, according to city documents.

Under the current plan, the buildings would contain a dozen one-bedroom units and 10 two-bedroom apartments, totaling 22 units. The proposed rents are approximately $1,674 a month for a one-bedroom unit and approximately $2,000 for a two-bedroom, said Mike Mallon, founder of Mallon and Associates, who represents the developer.

“We believe that our proposed plan will meet the residential demand in the market,” Mallon told city council members earlier this month.

It does not sound like the idea of apartments is the problem. The suburb was working with a plan that “recommends low-density multifamily residential development and repurposing existing structures.” The issue was the size of the apartments or the kinds of residents. If this was student housing – pitched by the developer as “grad students with young families” – then neighbors expressed concerned about dorms. Big apartments will lead to too many people near single-family homes.

Where are suburban residents to find larger apartments? Which suburban communities are approving construction of apartments with more bedrooms? Are the only concerns about students? Both developers said there is a market for their units but I would guess relatively few suburban apartments under construction have four bedrooms.

The prime suburban real estate available when restaurants close

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Want a prime location in the suburbs? Red Lobster and TGI Fridays might have an answer:

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Vacant restaurant chains are creating prime real estate for a wide range of companies looking for spots to grow, especially fast-food chains that want to install drive-thru lanes on spots where diners once sat down for dinner.

Chains like Red Lobster and TGI Fridays filed for bankruptcy this year and closed more than 175 restaurants combined. Red Lobster was driven into bankruptcy by mismanagement under a previous owner, global shrimp supplier Thai Union, while TGI Fridays fell under private equity owner TriArtisan Capital Advisors. Denny’s is also closing 150 restaurants…

In the past, these restaurants would often be replaced by a different restaurant chain, with tables to sit at and servers to bring out the food. But now, fast-food and fast-casual chains are taking these spaces and building more drive-thru lanes. Chipotle is building 4,000 new locations, the majority with drive-thru lanes, while Chick-fil-A is building new spots with four-lane drive thrus…

Many of these restaurant locations are also attractive to prospective tenants, as they are freestanding buildings, not located in the back of decaying indoor malls. Indoor malls have struggled in recent years, and mall vacancies reached 6.5% last quarter, according to CBRE. Macy’s, JCPenney, Nordstrom and others have closed hundreds of their stores in malls as online shopping has grown to around 16% of retail sales. Real estate research firm Green Street estimates about 150 enclosed malls have closed since 2008, leaving about 900 today.

Most of the closed restaurants are also located on high-traffic streets with large parking lots or adjacent to a shopping center, making them attractive sites.

I have heard before that certain restaurants and retailers are less into the business of selling things and more into the business of real estate. Think just of the largest fast food chains in the world: how many prime locations do they occupy? If all that land went up for sale at once, how many other businesses would be interested in jumping in?

I have been thinking about locations like these in terms of religious congregations recently. They often occupy important locations within communities, sometimes at busy intersections or in important historic locations. If that location is no longer occupied by a congregation and/or a religious building, it could be a loss in the community (and a possibility for something else).

In the case of these restaurants, it appears there is plenty of demand for the land and plenty of interested parties want to make more money with these properties. Additionally, I would guess most municipalities love that another restaurant will take over. Those new restaurants and businesses can generate even more revenue. The worst possible outcome is that the land remains vacant with limited demand and the property becomes an empty eyesore.

How long before these new restaurants that take over are selling off their own properties? Ten years? Twenty years? At least in this moment, new restaurants want to snatch up these properties but that might not always be the case.

Suburb without a traditional downtown to replace shopping mall with mixed-use development

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A Chicago area suburb with a dying shopping mall and no traditional downtown hopes to convert the mall into a thriving mixed-use space:

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Golf Mill Shopping Center opened in 1960 as an open-air mall. Later, it was enclosed, and the iconic Mill Run Playhouse was built on the grounds. The theater, before it closed in 1984, hosted acts such as Chicago native Shecky Greene and Frank Sinatra.

Today, the mall has more than 1 million square feet of leasable space in addition to a nine-story office tower. Target and JCPenney are two of its biggest anchors, alongside AMC Theatres, Ulta, Burlington and Ross…

Alpogianis and other city officials see the future of the 80-acre site as “live, work, play” — an increasingly popular phrase for mixed-use developments that have virtually everything a resident could need on site. The Golf Mill Shopping Center redevelopment — to be called Golf Mill Town Center — will aim to be one of Niles’ premier destinations in the absence of a traditional downtown.

The first phase of redevelopment will include an overhaul of the mall’s retail, along with new luxury apartments and restaurants, Alpogianis said.

He said the project will be 70% retail and entertainment and 30% residential and other uses — the latter of which includes the “very good” possibility of a hotel and office, depending on market conditions.

The shopping mall redevelopment described here is common these days: add housing, restaurants, and different retail options to what was a mall with declining activity and revenue. The goal is more of a 24 hour a day place where a combination of residential, commercial, and recreational activity makes it more like a lively neighborhood.

What struck me here was the idea that such a redevelopment could help address a different issue in the suburb: no traditional downtown. In the Chicago area, such a downtown would typically be located along a railroad line connecting suburbs to downtown. Niles is more of in-between two railroad lines and the community had a small population until a population explosion in the 1950s (over 400% growth).

While the shopping mall is often viewed as a postwar substitute for public space, could all of these mall redevelopments lead to new suburban downtowns? The mixed-use developments are often intended to be more walkable, at least to the new residents who live there, and provide social spaces. Whether this actually happens is another matter; will the redeveloped malls be connected to a larger walkable grid in suburbia? Will people still need to drive to the redevelopment? Once people are living on site, how many will regularly make use of the nearby amenities as opposed to driving elsewhere?

The shopping mall may come and go in many suburbs but the quest for something like a downtown may continue.

Adding hundreds of luxury apartments to a shopping mall – and not affordable housing

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Why add affordable housing to the suburban shopping mall when a developer and community can add hundreds of luxury apartments to the mall? Such a plan is under discussion in Skokie, Illinois:

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The Skokie Village Board gave tentative  approval at its Oct. 8 meeting for developers to build hundreds of luxury apartments across three buildings at the upscale Westfield Old Orchard Shopping Center.

The first phase of construction would create 425 apartments between two mixed-use buildings, one five stories tall and one seven stories tall. The second construction phase would be for an additional seven-story building that could be used for more apartments or a hotel, said Stephen Fluhr, Unibail-Rodamco-Westfield’s senior vice president of development…

The additions to the mall were met with criticism by an affordable housing group, which blasted the Village Board for approving plans they saw as having too few affordable apartments.

The first phase would put two buildings in the area of the former Bloomingdale’s retail space in the northwest part of the mall, south of Old Orchard Road and east of Lavergne Avenue.  The developers’ intention is to create a new neighborhood complete with parks, restaurants and spaces for concerts and farmers markets, according to Fluhr. The development is a partnership with the mall’s owner URW and Focus, a development group that is also in the process of building apartments near malls in Vernon Hills and Aurora.

Many malls would like to add housing to their property (examples from the Chicago suburbs to southern California): it makes use of vacant shopping space and provides local residents who might visit stores, restaurants, and entertainment options at the mall.

I would also guess many mall and community would like to add luxury apartments. These apartments will attract certain kinds of residents, those with resources to spend more in the community and contribute to a certain status. Luxury apartments at malls would go along with the idea that only the wealthiest malls will survive.

But, as communities consider affordable housing, why not include affordable housing as part of redeveloped housing at the mall? Many suburbs have limited greenfield development options so redevelopment provides an opportunity for affordable housing. Or affordable housing could provide housing for people working at the mall or working near the mall as shopping malls tend to be close to all sorts of businesses and jobs.

The bigger issue at hand is likely this: how many suburbs are truly willing to add affordable housing? And if they say they want to add such housing or have local regulations that require it, where will they allow it be located?

Planning for cities with fewer offices

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If more employees work from home and AI reduces the number of workers in certain sectors, cities may need to plan for a world with fewer corporate offices:

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Ever since the pandemic, many landlords, mayors, and bosses have been going through what one might call “the five stages of office grief.” First, in 2020, there was denial that working from home would have any lasting impact. Then, in 2021, there was anger at employees who wouldn’t return, followed by bargaining on the exact number of days people would spend at the office. By 2022, depression had set in, and cities seemed ready to accept the need for radical change. Now, however, the country’s economic rebound provides new ammunition for those who wish to slide back into denial.

Our cities will be better served by embracing the transition to a world that is less centered around offices. That will require diversifying their economic base, streamlining the construction and conversion of new housing and mixed-use neighborhoods, enhancing public services, and doubling down on what makes urban life attractive in its own right—not just as an employment destination. And the effort must start with the recognition that, in good times and bad, the relationship between economic activity and office demand has changed forever.

Even as there are good reasons to have districts of business offices, having fewer offices overall means offices might be better served being more spread out throughout a city and region or having more mixed-use neighborhoods. Americans have long separated land uses but fewer offices presents an opportunity to bring other land use into what once were separate business areas.

This might be a more radical idea but what could be possible if some of those office buildings were not there in the future? Could there be other land uses – not just renovated buildings – that future city residents and property owners would desire?

And could fewer offices mean fewer roads or less emphasis on vehicle traffic? If commuting is not happening at the same rate, what could be possible?

From railroad easement to tax deduction during railroad merger to Millennium Park

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Where did the land for Chicago’s Millennium Park come from?

In 1993, I went to work with Forrest Claypool in the Chicago Park District. I was responsible for the lakefront district. It always made no sense to me that there was this muddy, ugly hole right off Michigan Avenue. It also made no sense that if the Illinois Central Railroad owned that land, they would use it as a surface parking lot. You would think they would do something else with it. The other thing that stood out was that there was one track on the eastern edge with a single boxcar on it. It was just an eyesore. For a century, city and parks groups would try to buy the land, and the railroad would never sell it…

I did a title search. I just wanted to get to the bottom of it. I was sort of a zealot about the use of public land. I found out that the railroad didn’t own the land after all. It was always the city’s land. What the railroad had was an easement. So they could use the land for rail purposes, but they couldn’t build a building. They had no air rights. And to maintain the fiction of rail purposes, they kept the single track and the single boxcar. The railroad was happy to make some ancillary revenue as a parking operation. At this point, Forrest and I advised the mayor of what we had found. And [in 1996] the park district and the city Law Department together sued the railroad.

Without Randy Mehrberg’s discovery, none of this happens. Daley was in action mode almost immediately. As in: “Let’s go through the legal process here to get this thing done.” It was not until this sort of virgin land in the middle of the city became available that he saw that this was the chance.

The railroad was not terribly happy or receptive. But a funny thing happened: The Illinois Central was in the process of being sold to the Canadian National Railway. And I suggested to the railroad that instead of litigating with us, they make a donation to the city of all of their title and interest rights from Randolph Street to McCormick Place. They would get a nice tax deduction, and it would enhance their merger, because the purchase price was based on a multiple of earnings, and a large tax deduction would improve their earnings. We were able to negotiate that.

The area around the Chicago River and the lakefront was a shipping area with railroads converging and boats coming in and out. Yet, it sounds like it took a while to figure out what to do with all this space once transportation activity moved elsewhere. It is not as if Chicago stopped being a transportation center; the action shifted and this area eventually became a park.

Having been in Millennium Park many times, I do not recall seeing any documentation of the previous history of the land. If it is not marked, why not tell some of the story of railroads and other lakefront uses in the past to what the park is today? I am in favor of more resources for residents and visitors to learn and visualize what used to be where they are standing or looking. (Some of this could come from virtual reality or augmented reality devices but we are not there yet.)

Suburbs needing to revival older industrial parks

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What can a suburb do to breathe new life into a decades-old industrial park? Here are some ideas:

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Schaumburg officials hope a tax increment financing (TIF) district can provide the public resources needed to attract new investment in the village’s nearly 60-year-old, 573-acre Centex industrial park…

Neighboring Elk Grove Village’s 6-square-mile industrial park — the largest in the nation — wouldn’t be as successful without the kind of public-private partnership Schaumburg officials have in mind for Centex, Elk Grove Mayor Craig Johnson said.

Through a combination of location, modern infrastructure and a supportive local government, demand for some areas of the park has driven land prices there to $2 million an acre, Johnson added…

While Elk Grove’s industrial park includes the additional electricity capacity for such uses as data centers, Schaumburg is aiming to simply create a better environment for the type of manufacturing businesses that use the Centex industrial park today. But even those businesses have different needs than they did decades ago, Johnson said, such as higher ceilings and larger loading docks…

Johnson also noted that TIF funding allowed his village to acquire properties within its industrial park, package them into larger parcels and then sell them to businesses in need of more space.

Two thoughts come to mind:

  1. Many parts of the suburbs are no longer new. A sixty year old industrial park was created in the postwar era. The properties and the land use overall may not fit with what is in demand in 2024. At what point is it cheaper or easier to build new somewhere else? (I am thinking of what can happen with big box stores.)
  2. This exemplifies the kind of public-private partnership that is fairly common with development in the United States even as a lot of rhetoric suggests the U.S. takes a free market approach. There may be business competition but in the examples above, local governments are helping to create conditions or acting as middle men to get to the development they would prefer to see.

Another angle to this: what might suburbs do in the next few decades to set up industrial, commercial, and residential development for the next 50 years? At that point, even postwar suburbia will be roughly a century old.

How much sales tax revenue a mid-sized suburban shopping mall might generate

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After the purchase of a local shopping mall by a suburban community, a news article highlights how much sales tax money the mall once brought into the suburb:

Bloomingdale officials faced a similar scenario with Stratford Square, which once brought in $20 million a year in sales tax, but now is mostly empty. The village bought the mall this year for almost $9 million after filing for condemnation against the owner, Namdar Realty Group, as the property fell into disuse.

According to the FY 24 budget of the Village of Bloomingdale, they had $41 million in tax revenue. If the mall once brought in $20 million in sales tax revenue, that is a big change for a suburban community. Because the mall has declined over time, they have had time to adjust to the decreasing sales tax revenue. Still, that is a large amount.

What are the odds that the new land uses generate that amount of money? Given the state of retailers and brick and mortar establishments, this might be difficult. And there appears to be less demand for suburban office space. A mixed use setting, popular in suburban redevelopments (one example not too far away), could sustain some business and office activity. Residential development could provide more housing options but also require some different city services.

This reminds me of the long-term process redevelopment can often be. From the peak of the shopping mall to what the new development might look like, decades could pass. In the meantime, the community has changed and social and economic life has changed.

When you can build a suburban warehouse where an office building used to stand

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With less demand for suburban office buildings, the void is being filled with warehouses. One example from the northern suburbs of Chicago:

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The old Allstate campus was a traditional suburban office environment with lush landscaping, reflecting ponds and thousands of workers. That property now is called the Logistics Campus, a massive industrial development underway in Glenview…

“The ability to put modern industrial in the middle of an established community — it’s unique in the sense that there will be very few other sites of this size that can replicate what we’re doing,” said Neal Driscoll, Dermody’s Midwest region partner.

Development of big-box industrial space in the Chicago region set a record in 2023 with construction of 70 buildings totaling nearly 33 million square feet, according to a recent report by commercial real estate company Colliers International.

The shift to warehouses in the suburbs has been going on for a while. What I noticed in this story was this thought: the unique opportunity to put warehouses (“modern industrial”) in “an established community.” Translation: many upscale suburbs would not chose to put in warehouses. They might generate noise and traffic. They do not provide many white-collar jobs. They are not attractive buildings.

But, empty office parks are also not desirable. Suburban offices or headquarters for Fortune 500 companies are attractive: quality jobs, status, most likely a glass building. No one working in these buildings and companies leaving these spaces leads to issues.

Thus, warehouses might now be found in communities that would not necessarily select them if they had such options. A set of warehouses might be preferable to vacant office buildings or unwanted office buildings. Figuring out the best land use or zoning in a suburb can be less about the most ideal use of land but rather about the possible alternatives at that moment.

Seeing teardowns and infill homes throughout DuPage County

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While working on a project, I noticed something while driving through a number of DuPage County communities: there are teardown homes everywhere. They are not just limited to desirable downtowns; they are spread throughout numerous residential neighborhoods. They are often easy to spot: much larger than adjacent homes and with a particular architectural style with stone or fake stone bases, lots of roof peaks, and plentiful garage space. Some could be categorized as teardown McMansions. (Some of these homes might be infill homes where homes were constructed on empty land.)

These teardowns follow some of the patterns I found in over 300 teardowns in Naperville. The architecture and design is similar. The homes are often located next to older homes, often from the postwar era, from the twentieth century.

One difference is that these teardowns are spread throughout communities. In Naperville, teardowns tended to cluster near the desirable downtown area. In some of the communities I drove through, teardowns and/or infill homes are all over the place. Some of these communities do not have downtowns like Naperville and have housing stocks of different ages. It was not unusual to see a teardown suddenly in a neighborhood on the edge of a community when in Naperville the teardowns tend to cluster in particular neighborhoods.

In a county that is largely built out and with suburbs now 50-170+ years old, there will be more opportunities for property owners, builders, and developers to tear down old homes and construct new ones. My sense is that while communities may have regulations about what can be rebuilt, the general atmosphere is in favor of these new homes as long as there is interest and resources to make it happen.