Fall 2014 Retail Review Newsletter - Mid

RETAILREVIEW
Mid-America
Assists Ross Stores, Inc.
with Chicagoland Expansion
A PUBLICATION OF MID-AMERICA ® RE AL ESTATE GROUP
FAL L 2 0 1 4
Ross on Randolph Street to Open October 7
Mike Phillips, Dan Tausk,
and Andy Bulson
Since their market entry in October 2011, the Chicago offices of
Mid-America Real Estate Corporation have assisted Ross Stores, Inc.
in successfully securing forty (40)
Chicago-area Ross Dress for Less
locations.
Ross Stores, Inc. is an S&P 500,
Fortune 500 and Nasdaq 100
(ROST) company headquartered in
Dublin, California, with fiscal 2013
revenues of $10.2 billion. The company operates Ross Dress for Less®
(“Ross”), the largest off-price apparel
and home fashion chain in the United States with 1,146 locations in 33
states, the District of Columbia and
Guam at fiscal 2013 year end. Ross
offers first-quality, in-season, name
brand and designer apparel, accessories, footwear and home fashions
for the entire family at everyday savings of 20% to 60% off department
and specialty store regular prices.
The company also operates 130
dd’s DISCOUNTS® in ten states.
After three years of aggressively
attacking the market, Mid-America and the Ross Property Devel-
opment Group have partnered to
secure locations and open stores
from downtown Chicago (Randolph
Street – opening October 2014) to
Crystal Lake, IL and from Gurnee, IL
to Merrillville, IN. Mid-America’s brokerage team consists of Senior Vice
President Mike Phillips, Principal/Director Suburban Tenant Brokerage
Andy Bulson and Principal/Director
Urban Tenant Brokerage Dan Tausk.
The foundation for Ross Stores Inc.’s
expansion program is their Market
Research Group, one of the most
sophisticated in the retail industry.
The Mid-America team has worked
closely with the Market Research
Group to establish and implement
the expansion program.
“Ross Stores, Inc. has been a pleasure to represent. Their entire team is
focused, well-organized and appreciative of our efforts,” said Phillips.
“Ross has changed the Chicago retail landscape dramatically by quickly
absorbing a good chunk of post-recession vacant junior anchor space.”
As Ross Stores, Inc. entered the
Chicago market, many well-known
retailers such as Borders, Circuit City
and Linens ‘n Things had vacated or
were in the process of vacating extremely desirable locations in some
of the best retail corridors in the area.
Ross Stores, Inc. was able to recycle
that space resulting in new high profile Ross Dress for Less stores. Chicago-area deals have been finalized
with local owners, regional REITS
and the largest national landlords.
“The level of collaboration beginning
with the Market Research Group to
our dealmaker to legal and then design and construction is as strong as
any tenant we have had the opportunity to represent,” said Bulson.
As we enter the 4th Quarter 2014,
Ross Dress for Less is scheduled
to open three (3) additional Chicago-area stores in early October and
continue their expansion for the foreseeable future.
“Despite the level of penetration and
success achieved to date, there’s
still a long way to go to achieve our
goals,” said Tausk. “Many city markets remain underserved, and Ross
will open a potential flagship store
on Randolph (downtown off State
Street) on October 7. This will be
their sixth urban store, which is just
a start.”
ICSC Chicago
Deal Making
October 7 - 8, 2014
Navy Pier
600 East Grand Avenue
Chicago, IL 60611
Stop by and visit us at the
ChainLinks and Mid-America
Real Estate Group Booth #711
Illinois Office:
One Parkview Plaza, 9th Floor
Oakbrook Terrace, Illinois 60181
630.954.7300
Chicago Office:
435 N. Michigan Avenue, Ste 2009
Chicago, Illinois 60611
630.954.7327
Wisconsin Office:
648 N. Plankinton Avenue, Ste 264
Milwaukee, Wisconsin 53203
414.273.4600
Minnesota Office:
5353 Wayzata Boulevard, Ste 650
Minneapolis, Minnesota 55416
952.563.6600
Michigan Office:
38500 Woodward Avenue, Ste 100
Bloomfield Hills, Michigan 48304
248.855.6800
www.midamericagrp.com
Mid-America Real Estate Corp. | Tenant Rep.
Expanding Tenants
Typical size:
21,360 SF
Kevin McLoughlin
Typical size:
25,000 SF
Mike Phillips, Dan
Tausk, Andy Bulson
Typical size:
40,000 SF
Jeff Kuchman,
Willie Hoag
Typical size:
3,500 SF
Steve Frishman,
Brian Adams
Typical size:
7,500 - 8,500 SF
Kevin McLoughlin
Typical size:
25,000 - 40,000 SF
Jeff Kuchman,
Stanley Nitzberg
Typical size:
49,500 SF
Brian Adams,
Steve Frishman
Tenant Representation
New Faces
Typical size:
1,200 - 5,000 SF
Brian Adams
Kevin Reinke,
Associate
Katie Killeen,
Associate
Typical size:
3,500 SF
Peter Scannell
The Tenant is King - A Chain Store Age Profile with Jeff Kuchman
Katherine Boccaccio, Chain Store Age Senior Editor
In a time of evolution and change, when buzz terms like right-sizing and
asset management dominate retail real estate conversations, an unwavering
focus on the tenant is more important than ever before. Chain Store Age
talked with Jeff Kuchman, Principal/Director Tenant Brokerage, Mid-America
Real Estate Corp., based in Oakbrook Terrace, Illinois, about the company’s
tenant representation business and how it has continued to take center
stage.
How much of a focus is tenant representation for Mid-America
Group, and how has that part of the business changed over the last
few years?
With the exception of lending/financing, Mid-America is involved in virtually
every aspect of the retail real estate business. However, tenant representation is as much a part of our core mission as it was 30 years ago. Our
five offices operating in the upper Midwest represent some 250 national,
regional, and local chain stores in nearly every retail category. Evolution
and change are critical to our retailer clients, and it’s critical that we evolve
alongside them, being ever mindful that we remain, at the most basic level,
information providers. Providing our clients with timely and accurate information that allows them to evaluate and respond to real estate opportunities
remains the most important aspect of what we do … and we do that through
media and ways that we’d never have dreamed possible before. Whereas
30 years ago that information was almost expressly used for purposes of
securing new store locations, today we’re involved in all phases of our retailer
clients’ real estate needs.
What kinds of services/advantages do you provide to tenants that
fosters their loyalty to your firm?
As I mentioned, strategy creation, new store deployment, acquisition evaluation, lease renewals, dispositions, down/rightsizing, asset and facilities
management, vendor agreements -- we become so deeply woven into our
clients’ real estate departments that we’re viewed as an integral part of the
team from day one. That depth of coverage only happens when we take
the time to truly understand what makes each client successful, and how
real estate serves the greater purpose of allowing each to better service their
customers. We view relationships over a long period, and always attempt to
counsel with that in mind.
What are the biggest challenges facing retailers today with regard to
their real estate activities?
Securing the best possible locations at affordable costs of occupancy
remains our clients’ biggest challenge, especially in light of the lack of new
development activity over the past seven plus years. In Chicago alone, we
averaged 5.5 million sq. ft. of new shopping center development over a
25-year period ending in 2007. We’ve averaged less than one million sq.
ft. per year in the period since. The absorption of vacant space and the
dearth of new developments have driven rents and acquisition costs steadily
higher, so identifying and securing the right piece of real estate that fulfills our
clients’ mission is even more critical than ever before. Construction costs are
another factor adversely affecting our clients’ occupancy costs. Acquiring
greater market share is expensive, and doing so while balancing investor and
shareholder interests is an art.
What about their greatest opportunities?
The greatest successes are derived from overcoming the greatest challenges. By establishing a clear vision for growth/market share, and working with
the right team of seasoned real estate professionals, our clients are apprised
of opportunities in advance of their competitors and secure the most profitable locations from which to service their customers. Our goal is to make
every invested real estate dollar count for our clients.
Overall, how would you describe the state of the industry right now,
and what are Mid-America’s strategies for tenant success?
Retailing is a tough, competitive business – one that constantly evolves. The
internal real estate departments today are accomplishing more with less in
terms of internal personnel and support than ever before. So much of what
we do consists of activities that one or several internal real estate professionals did years ago. When our clients are spread thin, it’s our job to make their
time with us as efficient as possible.
Mid-America Real Estate Corp. | Urban Team
Broker Profile
Michael Wexler,
Vice President
to a “big-house”, I knew it was going
to come with a lot of change. The
corporate culture was somewhat of a
shock at first and for a while I didn’t
know if I fit in. But after getting to
know the guys on the urban team and
finding my place within the group, I can
Market review/analysis:
honestly say I made the best decision
The Chicago market has come back in
of my career coming to Mid-America.
a big way since the downturn in 2008. What is your favorite Mid-America
Everyone has incredible strengths that
You see a good amount of developstory:
complement each other. A goal of mine
ment and retailers are back out looking My entrance into the brokerage world
moving forward is to get to know the
for space. There have certainly been
started with working for one guy and I suburban teams better, there’s a lot of
a handful of changes throughout the
was with him for almost 5 years. When great people I have yet to connect with.
market with retailers getting leaner and I decided to make the transition over
What are some of the current
projects you’re working on?
I’m working on a range of projects
representing both landlords and retailers throughout the neighborhoods of
Chicago.
moving towards smaller formats to
keep their occupancy costs down, but
there’s opportunity in that as well. Rising rental rates have proven the market
is healthy and Chicago’s retail future
continues to grow and get stronger
with increased interest from national
and international tenants.
New & Expanding
Tenants in City of Chicago
Yoga Six recently retained Mid-America Real Estate Corporation as its
representative in Chicago. Michael Wexler and Paul Bryant will represent the yoga studio in the city, which plans to open five stores by 2015.
LA Fitness continues its push into Urban Chicago with three new openings (Edgewater, Ravenswood, and Hyde Park) bringing its total open
to 18. Three additional urban clubs are under construction in highly underserved trade areas of Gage Park, Brighton Park, and Bronzeville
for later 2014 openings. LA Fitness will continue to plug existing gaps
in their urban networks into 2015 and 2016 with clubs ranging from 3237,000 SF. LA Fitness is represented by Dan Tausk and Greg Bayer.
BMO Harris Bank recently retained Mid-America Real Estate Corporation as its exclusive representative in Chicago. Dan Tausk and Stephen
Ansani will represent the bank in the city, while Peter Scannell will represent the bank in the suburbs of Chicago.
What’s Old Is New Again – The Wicker Park Commons Experience
Greg Bayer, Senior Vice President
In January of 2012, Mid-America Real Estate Corporation was engaged by
local developer Centrum Partners and their New York Partner, Angelo, Gordon & Co., to help reposition a unique 315,000 SF mixed-use neighborhood
center, The West Town Center, in order to increase NOI through new longterm leases and terminating existing ones where appropriate. The location at
the intersection of Milwaukee and Ashland Avenues, considered to be within
the booming Wicker Park neighborhood in Chicago, has tremendous exposure, an uncommon abundance of surface parking stalls and is at a heavily
trafficked public transportation rail and bus hub. Coupled with a gentrified
market with outstanding density, where’s the challenge?
Rewind as far back as the late 1800’s: Wicker Park developed as the need
for housing arose for a Northern European population following the Chicago
Fire. Increasingly throughout the next several decades Wicker Park and
the greater West Town became one of the outstanding Polish-American
neighborhoods of the United States. Like many areas of Chicago during the
mid-late 20th century though, West Town experienced a decline in population density and urban decay, in desperate need of renewal.
The West Town market began gentrifying in the late 90’s and momentum
increased in the early 2000’s. Today the neighborhood enjoys the title of having the highest concentration of residential rehab and tear-down construction
in Chicago. Former and long-time owner of West Town Center, Joseph Freed
& Assoc. recognized the emergence of a higher income and stable housing
population, the leading and necessary criteria for a reposition of a retail trade
area, and went to great lengths to push the next phase of the shopping
center’s evolution. Hitting a snag due to the Great Recession in 2008, the
shopping center underwent an ownership change, with Centrum successfully winning the bid and hitting the ground running with a major transformation
commencing in early 2012.
The first objective was changing the perception and branding of the center
as it had become an eyesore to national retailers. The new marketing material
featured a shedding of the old name in favor of The Wicker Park Commons
and included new proposed elevation drawings showing a restoration of the
façade to 1915 conditions with new storefronts. In close consultation with
the Ward’s Alderman and the Commission on Chicago Landmarks, Centrum
tasked Mid-America with promoting the features and benefits of an outstanding and underserved West Town neighborhood, presenting The Wicker Park
Commons as a hole in national retailers’ Chicago coverage and, most importantly, creating interest amongst the retail and brokerage communities.
Step two included a reconfiguration of floor plans to properly accommodate
the retail demand. This included a termination of existing tenant, Staples, in
preparation for a new merchandising plan reflective of the neighborhood.
Step three consisted of negotiating long-term leases with existing anchor,
Jewel Osco grocery, for 20 years; finalize new deals with Pet Supplies Plus,
Potbelly Sandwich Works, Vitamin Shoppe, and Sleepys The Mattress Professionals with more to be announced shortly.
Shopping Center Investment Sales Group
Liquidity Driven Market Continues Investment Properties
Buttermilk Towne Center
Crescent Springs, Kentucky
277,533 SF
Visconsi Cos. | $42 million
Over the first nine months of 2014, the retail investment sales market
has continued to be extremely strong. The demand drivers remain well
in balance with both a strong and diverse buyer pool, creating a tight
market for retail product supply. High levels of liquidity in the market are
driven by the incredible availability of equity capital with a desire for the
higher yields offered in real estate versus other investment types. Combined with a debt financing market actively lending at low interest rates,
the investment sales world is enjoying capitalization rates back at levels
last seen prior to the 2008-09 economic downturn.
Diverse Buyer Pool
The buyer pool for retail deals is driven by multiple parties. Pension
fund advisors with vehicles for Core, Core Plus, and Value Add deals
continue to focus on larger assets in only the top metro areas. Public
REITS are largely focused on deals in top 25 markets with opportunities
for yield growth. Private REITS are raising tremendous levels of equity
through their broker-dealer networks, again as private “mom and pop”
investors seek to diversify into real estate in the chase for better yields.
Private investment groups are actively showing up in the bidding for
deals of all sizes, types, and locations employing the debt market to
achieve higher returns, particularly on deals where Institutional and REIT
competition is thinner.
Pricing
There does remain a large spread in pricing and activity depending on
geography and credit quality. While those assets with core qualities in
primary and large secondary markets are experiencing pricing in the
5 – 7.5% cap rate range, retail centers in more secondary and tertiary
markets are being priced at cap rates 100 – 300 plus basis points
higher. Underwriting overall ar both the financial and property level is
more conservative than during the last cycle. One interesting circumstance that has become prevalent is the appearance in our deals of
environmental questions on many older centers, where consultants and
lenders are scrutinizing legacy situations and old reports. This has led to
many more requests for Phase II reporting, much of it lthrough modern
techniques such a vapor testing and electromagnetic scanning.
Overall, we expect the balance of 2014 leading into 2015 to remain
stable and strong. While we all await potential increased interest rates
as the economy accelerates, rates did not move up in 2014 as originally
prescribed at the start of the year. We are excited to bring to market
many new listings throughout the greater Midwest region for the fourth
quarter, and trust our clients will continue to benefit from the excellent
investment sale market fundamentals we currently enjoy.
The Glen Town Center
Glenview, Illinois
267,732 SF
Situs Holdings
Wanamaker Shopping Center
Topeka, Kansas
269,875 SF
Eighteen Capital Group | $18 million
Randhurst Village
Rand & Elmhurst Roads
Mount Prospect, Illinois
1,031,340 SF
Lafayette Pavilions
State Route 26 & Creasy Lane
Lafayette, Indiana
348,531 SF
Fox River Commons
Casaloma & Grande Market
Grand Chute, Wisconsin
78,977 SF
Investment Sales New Faces
Chris Martin,
Investment Analyst
Haley Pike,
Investment Analyst
New Listings
“
On many large deals, private
Over the first nine months
sponsors and operating
of 2014, the retail investment
partners are venturing with
sales market has continued to
some of the largest private
be extremely strong.
equity and hedge funds on
an individual asset basis
(Blackstone, Apollo, KKR, Fortress, as a few examples), whereas many
of those funds are traditionally focused on buying real estate portfolios
and companies. Much of the market has been cleaned up from the
“broken deals” generated at the end of the last cycle. We now seem to
have a shortage of good “Value Add / REO” stories available, so when
those opportunities do arise it’s leading to extremely active bidding
situations (10-20 offers).
Recently Sold
Ben Wineman, Principal
Net Lease Investment Sales Group
The Case for McDonald’s
Meet Our Net Lease Team
Wes Koontz & Kevin Conway,
Directors of Net Lease Investment Sales
Kevin Conway
Wes Koontz
Directors of Net Lease Investment Sales
What are some of the current properties you’re working on?
We are currently working on a number of projects for various
clients, including restaurants, drug stores, and banks. One
interesting property we have on the market is a Chase Bank in
Mokena, IL that has a rare 25 year lease term remaining, which is
longer than most similar properties on the market. The bank is in
an affluent sub-regional trade area and located at a primary hard
corner within the marketplace. This property will be an excellent
fit for investors with long lease term requirements to top tier credit
tenants.
What is your favorite part of the job?
We are fortunate to have a diverse set of clients from individuals to
development companies to small private and large public REITs.
This allows us to have different sets of goals for each client and to
tailor our strategy and process to suit each client’s needs.
It allows us to be creative on each project, rather than to simply
employ a standard protocol, which makes each day interesting.
Recently Sold
Net Lease Properties
Pick ‘n Save
Pewaukee, Wisconsin
Private Seller | Undisclosed Price
New Listings
PNC Bank
Touhy & N. Lawndale Avenues
Skokie, Illinois
3,315 SF
Snapshot: Typical Deal Points of These Two Tenants
McDonald’s +-1 Acre of Land needed to build a 4,000 Sf Building.
Ground Lease structure, 20 Year Term, 10% increases each 5 years, 10%
increases in each option period. Average ground lease rate of $75,000, translating to a rent of $18.75 per square foot.
Walgreens +-1.5 acres of Land needed to build a +-14,820 SF Lease of
Building. Traditional NNN Lease structure, 75 Year Term, no increases in rent,
with an ability to exit after year 25, either each year or every 5 years. Average
rental rate of $23.60 per square foot.
If we are to assume a 4.25% cap rate for the McDonald’s and a 5.50% cap rate
for the Walgreens, which are market rates for well-located properties, the Year 1
yield spread is 1.25%, which is relatively significant. However, when looking at
a holding period of 20 & 25 years, the average annualized yield spread narrows
to just 0.57% and 0.31% respectively. This “merging” of yields is due to the
increases in a typical McDonald’s ground lease. Another interesting fact in this
analysis is that by year 16, the McDonald’s property begins to generate more
cash flow per invested dollar than the Walgreens.
Additional Investor Attractions
McDonald’s
Bellwood, Illinois
Private Seller | $1,354,049
Chase Bank
11205 W. Lincoln Highway
Mokena, Illinois
4,305 SF
In today’s marketplace, many investors and professionals are starting to look
with a cautious eye at historic low cap rates for top properties. There is a concern in general about low cap rates, but market leaders for low cap rates in the
Net Lease space such as McDonald’s seem to have drawn an even higher level
of criticism. A closer look at some of the fundamentals surrounding McDonald’s investments in comparison to the ever popular Walgreens shows some
favorable comparisons.
Another attraction for McDonald’s investors is the fact that by most metrics in
many markets, the McDonald’s rent is more replaceable than the Walgreens,
and there is generally a wider array of potential users that could fully utilize the
site and/or building. In today’s market, a decent outlot building might command
a rent per square foot of $20-35 for a 4,000 SF space, and a ground lease
could be anywhere from $60-225,000 for a good suburban pad. There are
many users such as other fast food operators, fast casual, some full service
restaurants, bedding, financial, cellular and dental that would all happily take
a 4,000 SF+- space or a 1 acre pad and pay a similar rent to McDonald’s or
perhaps more. On the other hand, there are fewer 15,000 SF users (small grocery, hardware, education & discount) in the marketplace and almost none who
regularly can afford to pay $25.00 per square foot on that entire space.
Two final points that some investors believe make the case even stronger for
McDonald’s are the fact that they see McDonald’s business model and financial
position to be even more secure than the venerable Walgreens. While these
ideas are certainly debatable and perhaps splitting hairs, the credit ratings of
S&P do show “A” for MCD and “BBB” for Walgreens, indicating two additional
levels of security.
The point of this discussion is not to say that Walgreens investments do not
have merit, (as Walgreens generally have the best hard corner locations, offer
5 years of additional base term to investors, and can be subdivided down the
road to attain the same level of rents from smaller users) but more to highlight
the diversity of investments within the Net Lease universe and point out that at
times these investments are more than just the cap rate being highlighted up
front. We enjoy helping both buyers and sellers understand and evaluate these
intricacies so they can make the best decisions with their investments.
Mid-America Asset Management | Project Leasing
Broker Profile
Jaime Bertsche,
Vice President
What are some of the current
projects you’re working on?
Mix of city and suburban properties
from Rockford to the Loop.
Market review/analysis:
The excitement seems to be back with
new tenants entering the market in the
grocery, furniture, mattress, specialty
fitness and QSR categories. The QSR
category seems to remain the most active with even a few bidding wars going
on for prime space in strong markets.
Given the overall competition in the
grocery category with new specialty
grocers coming to the market, it will
be interesting to see what shakes
out, how they all compete and what
happens with the balance of the former
Dominick’s boxes still available.
a proposal all within a few weeks and
he signed the first draft of the lease
with no comments. I thought this was
going to be the easiest job ever!
What are your favorite parts of the
job:
I work with a great group of people
and also appreciate that every day is
something new. I always say I’m never
What is your favorite Mid-America
bored with this job. I also like driving
story:
by one of my centers and knowing
When I started 10 years ago, my first
I was responsible for helping a new
deal was with a mattress store down in business open up.
Bourbonnais. I cold called them, met
the owner for a showing, negotiated
Key clients:
Invesco, Smithfield, Deutsche Bank
(RREEF), Prudential
Recently Completed Transactions
Tuesday Morning
11,998 SF
Rice Lake Square
Wheaton, Illinois
DSW Shoe Warehouse
23,773 SF
Village Sq of Northbrook
Northbrook, Illinois
Zip Fitness
22,002 SF
Arlington Plaza
Arlington Heights, Illinois
Jewel Osco
77,303 SF
North Lake Commons
Lake Zurich, Illinois
The Evolving Grocery Landscape After Dominick’s
Marget Graham, Principal
Just one short year ago, the October 2013 Chicago ICSC was dominated
by the influx of new and expanding grocers leading a resurgence in new development and further diminishing the Chicago area market share once dominated by Jewel-Osco and Dominick’s. Rumors continued to ensue about
the demise of Dominick’s and leading candidates to acquire the chain. No
one would anticipate the late October announcement by Safeway to close
its 72 remaining stores by early 2014, adding over 4.0 million SF of anchor
space to the market. Established grocers became immediate beneficiaries
as shopping habits changed and more than a billion dollars in annual sales
was reallocated overnight.
One year later the Chicago grocery landscape is more competitive and
diverse than ever. Nearly one-third of the former Dominick’s locations have
been acquired by three grocers: Mariano’s (12), Jewel-Osco (10) and Whole
Foods (7). Dominick’s closures drove many loyal consumers to local independent grocers, who acquired roughly 25% of the former Dominick’s portfolio: Caputo’s (5), Tony’s Finer Foods (3), Pete’s Fresh Market (2), Cermak
Foods (2), Heinen’s (2), Garden Fresh Market (1), Valli Produce (1), Piggly
Wiggly (1) and Family Fresh Market (1). Today, approximately 20 stores
remain unclaimed.
Despite the tremendous growth opportunities available for larger format,
full-service grocery stores based on Dominick’s departure, the smaller format
specialty grocers have continued an aggressive expansion campaign to
compete. A notable entry to the Chicago market is Fresh Thyme, a 28,000
SF natural and specialty food grocer founded by former Sprouts executives
and backed by Meijer, who opened their first Chicago units in Mt. Prospect
and Deerfield in 2014, with plans to open 48 stores in five years across the
Midwest. Aldi, Save A Lot, Trader Joe’s and The Fresh Market have all continued to selectively add stores, offering specialty options for the consumer at
every price point.
The one constant in the retail world is there will always be change. For decades, Chicago was the only major market in the country where two grocers
dominated 75% of the market share. While the dust is just beginning to settle following Dominick’s departure, the real question that remains is whether
there will be room for so many players.
Mid-America Asset Management | Property Management
Nationally Recognized in 2014
Fastest Growing 3P
Property Management
Largest Property
Management Firms
Best of the Best
Property Managers
Top Retail
Managers
New Properties Under Management
The Landings
of Bolingbrook
Bolingbrook, Illinois
112,519 SF
Prairie Point
Aurora, Illinois
91,535 SF
Touhy
Marketplace
Skokie, Illinois
185,303 SF
North Main
Shopping Center
Rockford, Illinois
98,628 SF
Glidden Crossing
DeKalb, Illinois
98,683 SF
Ford City Mall
Chicago, Illinois
970,557 SF
Constantly Updating and Improving to Better Serve Our Clients
Michelle Panovich & Kay Nelson, Principals
In an effort to continually explore more cost effective and efficient ways,
Mid-America Asset Management developed a Tenant Service Coordinator
(TSC) position well over a decade ago. As this position evolved, and our
management assignments grew, we saw the ability to leverage our buying
power and directly cut bottom line expenses for each of the centers we
managed. Today, our TSC oversees the annual bidding process for all of our
major bid packages, which includes Snow Removal, Landscaping, Sweeping
and Maintenance and Waste Removal.
The TSC maintains a large database of highly qualified and carefully screened
vendors. This annual bid process allows our vendors the ability to bid on
a larger portfolio of properties and the opportunity to be more competitive,
which results in cost savings directly to our clients. This approach allows for
better control of bid services and ensures that we continue to engage highly
qualified and competent vendors. Our eight year average resulted in over a
14% savings to the bottom line on the services included in this program.
Additionally, by allowing our vendors the opportunity to bid one-time projects
such as parking lot repairs, lighting and painting in the same manner, we
have also experienced success in reducing expenses. Next on our agenda,
the implementation of a direct on-line access bidding tool. This approach
will streamline the bidding process for our Vendors and hopefully result in
additional savings for our clients.
As an added benefit, when you become a Management Client of Mid-America Asset Management, as part of our overall tenant sales reporting program
we provide quarterly Health Ratio Reports. This information provides a measure of a tenant’s sales performance to the cost of their occupancy. Prior to
the economic turndown, this was a much easier task because ULI published
sales data gathered from companies like ours and assembled a national
report. This was last published in 2010.
At Mid-America, we opted several years ago to compile the information from
all of our managed properties in all offices and create our own data table.
This has just, once again, been updated. The info is not available outside
the Company, however, it is used to prepare our quarterly Health Ratio Reports and when evaluating tenant requests or issues.
Mid-America Asset Management | Construction Management
Our Construction
Management Team
John Zoerner,
Vice President
What are some of the
current projects you’re
working on?
Multiple projects at the Streets
of Woodfield; Pullman Park;
TJ Maxx, Old Navy, Party
City and Performance Bike at
Village Square of Northbrook;
Palmolive Building Offices;
Massage Envy at River Forest
Town Center; Multiple projects
at Rice Lake Square.
Market review/analysis:
This is the most active retail construction market that I’ve
seen since the early 2000’s. The number of small shop
buildouts that are happening right now is very similar to
the late 1990’s, and we hope that is a sign of a demand
for new retail developments.
Favorite Mid-America story:
About ten or twelve years ago, we were working on a
large project that required a number of different permits.
After meeting with the building commissioner of this
particular municipality, our project was assigned to one
individual. We were assured this person would pay close
attention to our project and see that all necessary permits
would be issued. Our team sat down with them and
began to answer their questions. About twenty minutes
into the meeting, the person assigned to our project fell
asleep at the conference table. We sat there with our
architects and engineers, waited while this person caught
up on their beauty sleep, and then continued answering
their questions after they woke up.
Patty Mahony,
Vice President
What are some of the
current projects you’re
working on?
Deerbrook Mall Redevelopment,
several capital improvement
projects at Ford City Mall,
Geneva Commons,
Gateway to the West Loop, and
Shops of Heatherfield
Market review/analysis:
Over the last 12 month period, I
was involved in my first groundup construction since 2003.
Heading into 2015, we have
plans for additional ground-up construction, which is a strong
indicator of the retail market’s recovery.
Favorite Mid-America story:
One of my first projects with Mid-America was a site work
project for the Highlands of Lombard. A portion of the
property was a former cemetery, which was relocated to a
nearby site by the property developer. While excavating, the
equipment operator discovered that a former resident was
left behind. Appropriate measures were taken to rectify the
situation, but the operator decided he needed a few days off.
Deerbrook Mall Redevelopment
Patty Mahony, Vice President
The closing of the Great Indoors and more recently Bally’s Total Fitness and Best Buy,
created an opportunity to revitalize the Deerbrook Mall, located at the corner of Lake
Cook and Waukegan Roads in Deerfield. Over the last few years, interior mall spaces
were purposely left vacant and leases allowed to expire, to position the mall for redevelopment. Along with Ownership, Mid-America has a long history with the mall and
a vested interest in the mall’s success, so serious thought was given to strategy and
long range goals.
The approximately 47-acre mall was originally
developed in three phases. The first phase was
constructed in 1968 with Jewel and Turn-Style
as the main anchors, an enclosed mall was
constructed in 1972 as phase two and Montgomery Ward was built in 1973 as the third
phase. Renovations took place in 1985, when
Bally Total Fitness remodeled the original Montgomery Ward’s Auto Service Center and again
in 2002 when The Great Indoors was built at the south end of the mall. Two outlot
buildings were built along Waukegan Road in 2003, to accommodate smaller tenants.
Redevelopment Proceeds in Phases
When the opportunity for redevelopment first presented itself, the Deerbrook Team
considered various scenarios for renovating the mall and determined that demolishing
the interior mall and creating mid-box retail spaces would create value and also bring
new life to the dysfunctional existing mall. An opportunity also existed to build outlot
parcels at the perimeter of the property, due to the large parking fields. While the final
site plan has yet to be solidified, the mall will once again be developed in phases.
Phase 1 of the redevelopment began in 2013 with a building addition and drive-thru
constructed for an existing building at the corner of Lake Cook and Waukegan Roads.
Starbucks relocated to this position in January 2014. The adjacent Devon Bank was
demolished in 2013 and was replaced with a 3,500 SF building with space for two
tenants and a large dining patio. Subway will open in this location in October 2014
and MOD Pizza will open in early 2015.
Phase Two of Redevelopment
Underway
Phase 2 of the redevelopment, currently underway, includes demolition of the former Bally’s
building to create an outlot parcel along Waukegan Road, as well as a lease with Hobby Lobby
to occupy the former Best Buy space. The outlot
is already generating great interest with restaurant
uses seeking a position with a drive-thru.
Negotiations are currently underway with Jewel, one of the mall’s original anchors, to
build a larger prototype store which would include a drive-thru pharmacy. An existing
courtyard and the former Starbucks and Subway spaces as well as the existing Jewel,
will be demolished to create a site for the new Jewel. Grocers have historically been a
driving force in redevelopment and we are confident that a revitalized Jewel will be an
integral part of the mall’s reemergence as a shopping and dining destination.
Our leasing team has been actively marketing the redevelopment, with positive
responses from retailers and fast casual restaurant users. With its prime location in
the northern suburbs, a large parking field with several access points and the synergy
created by new tenants, Deerbrook Mall is poised to regain its foothold in the retail
market.
Mid-America Real Estate - Wisconsin
Wisconsin Market Highlights
New Faces in Milwaukee
Teresa Shemitis, Vice President
Max Jacobson, Senior Broker Associate | Tenant Rep
Ground Up Development Going Strong!
The Corridor, formerly known as Ruby Farms, along Bluemound Road
in Brookfield, consists of a 65-acre site being developed by Irgens
Partners. Considered one of the top remaining developable sites in the
metro area, this site extends from Bluemound Road to I-94. The development includes 585,000 SF of corporate offices comprised of three
five-story buildings, a proposed medical/health wellness facility, and
along Bluemound Road, 140,000 SF of retail, handled by Mid-America
Real Estate - Wisconsin.
Mequon Town Center, located at the NWC of Mequon Road and
Cedarburg Road, is a mixed-use development currently under construction. The three acre development, by WiRED Properties and Shaffer
Development, will include 28 luxury apartments and street front retail.
Tenants will include Colectivo Café, Café Hollander, Sola Salon and
Elements Massage, to name a few.
Freshwater Plaza is a proposed development just south of downtown Milwaukee on First Street and Greenfield Avenue. Developed by
Wangard Partners, this will be Cermak’s Fresh Market’s second location
in Wisconsin and will incorporate 22,000 SF of retail.
Grocery Leading the Pack!
Retail development continues to be strong in southeastern Wisconsin,
with grocery leading the way. Fresh Thyme Farmers Market will be
opening two stores in 2015 with plans for future growth. Their first store
will be on Milwaukee’s
east side as part
The greater Milwaukee area
of The North End
continues
to see a demand for
development located
retail
growth
with small shop
on Water Street and
retailers,
mid-box
and anchor
Pleasant Street. The
tenants.
Market will operate
28,000 SF on the first
floor with apartments on the upper four floors. Their second location
will be in Brookfield as part of a redevelopment of Plaza 173 located at
NWC of Bluemound Road and Calhoun Road. HSA Commercial Real
Estate is the developer.
“
Cermak’s Fresh Market will be opening their second Wisconsin store
in spring of 2015 just south of downtown Milwaukee in Walker’s Point.
Costco will anchor a mixed-use development site in Menomonee Falls
at Pilgrim Road and I-45. They are also proposing to develop stores in
New Berlin and Pleasant Prairie.
What do you do at Mid-America?
Represent national and regional tenants in the
lease and purchase of retail space, developing and
implementing successful strategies that best suit
each client’s requirements.
Alma Mater: University of Wisconsin - Milwaukee
Fun fact about me: Avid, I mean avid, outdoorsman. I recently returned from a week in the wilds
of Wyoming.
Wisconsin was recently awarded the management of
several new properties, pushing our management
portfolio to over 1.7 million SF, making it the largest
third-party retail property management firm in the state.
Jim Vaillancourt, Director | Property Management
What do you do at Mid-America?
Oversee the property management efforts of over
1.7 million square feet of retail shopping center
space in Wisconsin, and am responsible for tenant
relations, budgeting for capital and operational
expenses, and coordination of day-to-day management functions.
Alma Mater: Upper Iowa University
Fun fact about me: I’m a brand-new proud dad
of baby number one, Chase Sebastian Vaillancourt.
Emily Scharpf, Assisant to Director | Property Management
What do you do at Mid-America?
Assist Director of Property Management in maintaining tenant relations, corresponding with vendors, and coordinating day-to-day management
functions at the properties.
Alma Mater: University of Wisconsin - Madison
Fun fact about me: I’ve been called The World’s
Most Fanatic Fan of All Teams Wisconsin - Badgers, Packers, Brewers, I love them all!
New Listing | Freshwater Plaza
NEC of 1st Street & Greenfield Avenue
Milwaukee, Wisconsin
Active Retailers!
The greater Milwaukee area continues to see a demand for retail growth
with small shop retailers, mid-box and anchor tenants. Notable retailers
who are very active with expanding units throughout Wisconsin include
Panera, Chick-fil-A, Panda Express, Starbucks, Chipotle, Mattress Firm, Dunkin Donuts, Burger King, Shoe Carnival, Dick’s
Sporting Goods, and Hobby Lobby.
Retailers entering the market include Corner Bakery, Sketchers,
MOD Pizza, Mooyah Burgers, SOLA Salon, and Ross Dress for
Less.
22,500 SF Retail Available
Mid-America Real Estate - Minnesota
Recognition Throughout 2014
Recently Completed Transactions
Nordstrom Rack
33,000 SF
Shops of Knollwood | St. Louis Park
Represented Tenant
Best Retail Deal of the Year
Mike Sims & Patrick Daly
TJ Maxx | Michael’s
24,329 SF | 21,916 SF
Shingle Creek Crossing | Brooklyn Center
Represented Tenants and Landlord
Corporate Sponsor
Award
New Faces in the Minnesota Office
Cameron Beiersdorf,
Assistant Property
Manager
Jack Trautz,
Property Manager
Stacie Cotten,
Property
Accountant
Rising Star
Mark Robinson
Kim Jacobsen,
Project Director
Charlie Hexum,
Retail Leasing
Specialist
Suzie George,
Administrative
Assistant
Minneapolis Restaurant Scene Takes Off
Carrie Charleston, Retail Leasing Specialist
Merchant
Ling & Louie’s Now Open on Nicollet Mall
The Minneapolis restaurant scene is heating up. Longtime executive chef
of NYC’s Cafe Boulud Gavin Kaysen has left NYC to open his first restaurant, Merchant, in his hometown of Minneapolis, MN. Mid-America’s Tenant
Representation team represented Merchant in the transaction.
The former founder of Kona Grill and owners of Rojo Mexican Grill have
now opened Ling & Louie’s Asian Bar & Grill. Ling & Louie’s has been described as a cross between P.F. Chang’s and Kona Grill. The new restaurant will serve Asian staples like sushi, pad Thai, lettuce wraps, potstickers
and noodle & rice bowls.
Gavin has signed a 6,400-square-foot lease at 211 North 1st Street in
Minneapolis. In 2007, Gavin was selected as a Food & Wine Best New
Chef and in 2008, during his second year at Café Boulud, he received the
James Beard Foundation Rising Star Chef of the Year Award. Additionally,
Chef Gavin Kaysen has served as the Head Coach for the Bocuse d’Or
USA Foundation, on whose board Daniel Boulud serves as Chairman.
Kaysen’s investors include Daniel Boulud (his old boss), as well as Thomas
Keller (owner of the French Laundry in Yountville, Calif.) and Jerome Bocuse, one of the directors at the Bocuse d’Or USA Foundation.
The restaurant, named one of the Most Anticipated Restaurant Openings
by Eater National and Tasting Table National, is expected to open in November 2014 in the North Loop neighborhood which has become known
for its chef driven restaurants. North Loop is also home to Smack Shack,
Bar La Grassa, Borough, and Bachelor Farmer.
Giordano’s Famous Chicago Pizza
Giordano’s Famous Chicago Pizza has signed a lease for 4,000 SF for a full
service/full liquor restaurant on Hennepin Avenue in the Uptown neighborhood in Minneapolis. This will be Giordano’s first location in Minneapolis and is anticipated to open in March of 2015. Mid-America’s Tenant
Representation team represented Giordano’s in this transaction. Giordano’s
is currently looking for two to three more full service locations and multiple
limited service/delivery/carry out locations.
The 15,000-square-foot restaurant is four levels, the main floor, a mezzanine level, the lower level which has also has a kitchen and private dining
room, and a rooftop patio with full bar and kitchen (only the second one on
Nicollet Mall). The restaurant will also have a street-level patio along Nicollet
Mall, with folding doors leading into the dining room.
This same group will open a new ‘70s-themed sushi restaurant in the North
Loop neighborhood next spring called Shag.
The Third Bird
Local restaurateur Kim Bartmann opened her latest concept, The Third
Bird, in the former home of Café Maude in Loring Park. This is Bartmann’s
eighth restaurant. She also owns Bryant Lake Bowl, Pat’s Tap, Red Stag
Supper Club, Cafe Barbette, Gigi’s Café, Bread and Pickle and Tiny Diner.
Bartmann had the collaboration of some very well-known restaurateurs,
Steven Brown owner and Chef of Tilia and Sommelier Bill Summerville
formerly with La Belle Vie and now with Gavin Kaysen’s Merchant.
Brut
Two former head chefs at riverside restaurant Sea Change located at the
Guthrie, Jamie Malone and Erik Anderson are teaming up for a new place in
the North Loop neighborhood to launch Brut. There isn’t a disclosed location
yet. In the meantime, the pair will be doing a pop-up restaurant in the space
once occupied by the Lynn on Bryant, which closed earlier this year. Malone
and Anderson are both former “Best New Chefs” alumni of Food + Wine
magazine.
Mid-America Real Estate - Michigan
Recently Completed Transactions
Landlord
White Lake Commons
Clarkston | Kimco Realty
Neiman’s Grocery
Goldfish Swim School
Canton Village Plaza | Canton Township
Romeo Commons | Macomb Township
Tenant
Galleria of Troy
Troy | Group 10
Bonefish Grill | Carrabba’s Italian Grill |
Verizon Wireless | Jersey Mike’s
Gordmans
Saqinaw Square | Saginaw
Lakeshore Marketplace | Muskegon
Wilsontown Center | Wyoming
Kay Jewelers
Wells Fargo Plaza | Marquette
Edelweiss Village | Gaylord
Green Ridge Square | Grand Rapids
Hunter’s Square | Farmington Hills
Kroger Surplus
Macomb Township | Emagine Theater
Commerce Township | Planet Fitness
New Broker in the
Michigan Office
Bryan Weiss,
Associate Broker
“We’re excited for Bryan to join the Mid-America
team. His industry experience and personal drive
will no doubt benefit our team and clients.”
-Brad Rosenberg, Principal
New Development, Grocery Sector Are Signs of Strength in Michigan
Tony Schmitt, Principal
During the recession, we all stopped reading articles about the downward
spiral of our national and local economies. Michigan was front and center
with all that was wrong in the world and we suffered numerous blows. It is
amazing what a few years can bring. We have a saying in Michigan: “If you
do not like the weather, just wait a minute.” We are happy to report the economic winds for our state continue to blow in a positive direction.
Dental, Outback Steakhouse, Applebee’s, Del Taco and more all set to open
fourth quarter 2014/first quarter 2015.
Michigan on the Up and Up
Macomb Mall in Roseville is being redeveloped to include Dick’s Sporting
Goods, H&M, Gap Outlet, and Ulta, as well as a new strip out front. The
Rouse Company is re-investing in a number of its malls, including Southland
Center in Taylor. Over the last two years they’ve added 120,000 SF of new
leases and recently announced a new Cinemark in their former Mervyns box.
Michigan is seeing Median Household Incomes back above pre-recession
levels, unemployment is at its lowest rate in six years, job growth is outpacing national average from 2010-June 2014, and GDP is back up above
pre-recession levels. Our headlines now are filled with information about
companies adding employment, expanding their facilities and bolstering the
overall economy.
In other box news, Field and Stream will be entering the market (taking a
former Circuit City site in Troy); LA Fitness continues its growth (redeveloping
a bowling alley in Roseville); Dave and Busters, after building new in Livonia,
is redeveloping a former Barnes & Noble in Grand Rapids; Planet Fitness
recently took the former Kroger in Woodhaven, Commerce Township, as well
as a former Menards in Grand Rapids.
Historically, Michigan never “over built” when looking at retail square footage
per consumer; it has been considered “under retailed” when compared to
other markets. As our economy rebounds, we are now running out of leasable space which is increasing rents and making new construction possible.
Our area is seeing a flurry of small strip centers being built which is attracting
the avalanche of fast casual users – all competing and driving up rental rates.
Looking affectionately back on the wonderful period from 2008-2010 when
we couldn’t give away A+ real estate at $15.00 per square foot, it is fantastic
to see rents in the $30’s-$40’s per square foot again for small shop space.
How is Detroit?
Prominent New Developments
As previously reported in our Michigan report, the A+ box vacancies are virtually gone allowing developers to capitalize on in-fill redevelopments. Some
prominent developments include the I-96 and Middlebelt area in Livonia. This
intersection will see a new Dick’s Sporting Goods, Menards, Culvers, Aspen
Finally, we want to touch on the city of Detroit. Much has been published,
good and bad, about its bankruptcy, employment and re-development. As
a lifelong “Detroiter”, meaning I have lived in the suburbs my whole life, we
watched Detroit deteriorate over the years, hoping that it would come back.
That time may just be here. There is a wait list for new residential in the
downtown and immediate neighborhoods. A $125MM, 3.4 mile rail line connecting downtown to midtown Detroit is under construction along Woodward
Avenue. The Red Wings just released plans for their new $650MM stadium
near Ford Field (Lions) and Comerica Park (Tigers) and new businesses
continue to move downtown. There is still work to do, but the turnaround is in
progress and it is awesome to see.
Michigan continues in the right direction which includes an improved economy, strengthened consumer confidence and increased retailer demand. We
look forward to assisting our clients in capitalizing on this positive trend.
Stay Tuned for Our New Website Launch
Coming Soon!
www.midamericagrp.com
• Improved
Check out our new
website features:
property search
• New broker search functionality
• Enhanced user experience
• Brand new Mid-America blog
• And more!
Illinois Office • One Parkview Plaza, 9th Floor • Oakbrook Terrace, Illinois 60181 • 630.954.7300
Chicago Office • 435 N. Michigan Ave., Ste 2009 • Chicago, Illinois 60611 • 630.954.7327
Michigan Office • 38500 Woodward Ave., Ste 100 • Bloomfield Hills, Michigan 48304 • 248.855.6800
Minnesota Office • 5353 Wayzata Blvd., Ste 650 • Minneapolis, Minnesota 5541 • 952.563.6600
Wisconsin Office • 648 N. Plankinton Ave., Ste 264 • Milwaukee, Wisconsin 53203 • 414.273.4600