Connecting Sound Economics With Experience in Real Estate
Success Story: Cermak Plaza – Berwyn, Illinois
Located in the near west suburbs of Chicago, Cermak Plaza is not just another shopping center.
Since its opening in 1956, at the height of America’s suburban shopping mall construction boom, the plaza has experienced a rich history which includes cameo appearances in Hollywood movies (1992’s “Wayne’s World” featuring Mike Myers & Dana Carvey and 2008’s “Wanted” starring Angelina Jolie & Morgan Freeman). Cermak Plaza has also featured visionary displays of contemporary art sculptures introduced by founder and passionate patron of the arts, David Bermant. http://www.davidbermantfoundation.org/#public-art
Being over half a century old the 310,000 square feet Cermak Plaza has an excellent location but was starting to show its age; it began to face intense competition in its trade area. In 2010 Concordia Realty www.concordiarealty.com began a dramatic revitalization of the property that would bring new occupants back to this local landmark. Concordia started Cermak Plaza’s turnaround by moving Walgreen’s to a never developed out-parcel, backfilling that space with K&G Menswear, expanding an already outstanding Marshalls to 33,000 square feet and replacing a vacant Circuit City with Office Depot and Dollar Tree.
Ethos Workshop was commissioned to design the new façade and Town Builder Studios was tasked to design the site work for the $15 million dollar project. The redevelopment included a complete façade upgrade including a series of structural steel wings that are illuminated at night with Lumenpulse RGB fixtures LED fixtures that give a nightly light show above the storefronts. The façade now has an artistic design aesthetic with modern, energy saving clean technology, as well as long product life and low maintenance costs.
A downloadable brochure can be found here
The solution also takes the greener element of LEDs a step further; Cermak Plaza powers the RGB fixtures with 12 wind turbines that cultivate energy from the edge of the plaza’s parking lot. In combination with the energy efficient lighting, the 35 foot tall turbines are a dynamic, visible and recognizable environmental statement as well as artistic feature that generate 1,500 to 2,500 kilowatt hours of electricity each year.
In 2011 one third of the shopping center was demolished and a new pad prepared for a 93,000 square for Meijer Marketplace ground lease. The last phase of the redevelopment was Meijer opening in 2012 and the refurbishment of the existing retro 1960’s neon pylon signs.
As a part of the redevelopment the front and east side parking areas were also redesigned with additional landscaped islands to improve traffic safety and beautify the center curb appeal. In addition, a StormTrap underground detention system was installed under the east parking area to divert storm water from the MWRD system.
The redevelopment has also included removing all of the known asbestos containing material from the property, removing more than 20 underground oil storage tanks and remediating soil contaminated with petroleum and perchloroethylene products.
The final phase included demolishing 25,000 square feet of existing shopping center on the east end of the property to build a 27,000 square foot Ross Dress for Less and expanding a 4000 square foot end cap for an Avenue store.
The work was paid for with three (3) tranches of debt financing plus a sales tax rebate from the City of Berwyn to accomplish the work.
Because of the the ever changing Retail Real Estate landscape and adverse political decisions, Meijer decided to close three (3) Cook County, Illinois stores in June 2017. Within five (5) months, Concordia Realty was able to secure Tony’s Fresh Market for a 71,000 square foot store. Tony’s is the dominant local grocer in Chicagoland with store sales productivity way above national averages.
Cermak Plaza’s website can be found here: http://cermakplaza.com
Pictures After Redevelopment
The details of how this was all achieved are below:
The redevelopment has created a beautiful, landmark property that is safer, cleaner, more functional and sparked a revitalization of the surrounding business district. The investment has paid off in a 312% increase in NOI and Cermak Plaza is currently 100% leased.
Below are some of the redevelopment highlights:
- Secured life company financing with the assistance of Matt Schoenfeldt and Jay Marshall of HFF www.hfflp.com in 2009 with 35% vacancy !!!!!!
- Ground leased 93,000 square foot pad to Meijer www.meijer.com for the 1st new ground up Meijer Market and 1st ground lease in Meijer Co. history – lease transaction attorney David M. Barry www.jwrb.com/about-the-firm/david-m-barry-jr (a 20+ year relationship)
- relocation of tenants
- demolition of existing buildings – contracted to long-term partner Robinette Demolition www.rdidemolition.com
- environmental remediation and State of Illinois compliance – long-term partners Pioneer Environmental www.pioneer-environmental-services.com and Eleni Kouimelis www.winston.com/en/who-we-are/attorneys/kouimelis-eleni.html
- Engaged OZ Engineering for geotech www.ozengllc.com related to stabilizing poor soils and delivering specified loads for pad
- Engaged SPACECO, Inc. www.spacecoinc.com to complete civil engineering for utilities and common area upgrades
- Worked with City of Berwyn www.berwyn-il.gov on zoning, permitting and sales tax rebate to Meijer for their construction costs
- Relocated Walgreens www.walgreens.com to 16,500 square foot outparcel
- Expanding Marshalls into vacated Walgreens to create a 33,500 square foot store for TJX http://www.tjx.com
- Leased remainder of vacated Walgreens to K&G Fashion Superstore www.kgstores.com a division of The Men’s Wearhouse www.menswearhouse.com
- Demised a 33,000 square foot vacant Circuit City into 2 spaces:
- Back-filled Dollar Tree space with Gap Outlet www.gapfactory.com store
- Obtained approvals from McDonalds www.mcdonalds.com and anchor tenants to add additional outparcel
- Expanded McDonalds parcel and extended their lease term with additional rent. McDonalds completed a tear-down redevelopment of their restaurant.
- Ground lease final out parcel land (it had been parking lot for close 60 years) to Longhorn Steakhouse (Darden Restaurants, Inc.) www.darden.com
- Completed a 27,000 square foot lease with Ross www.rossstores.com which required the delivery of a “warm shell”.
- Worked with HFF and lender to secure additional $4 million financing to complete project.
- Engaged PFDA Architects, Inc. www.pfdainc.com to design shell. PFDA had worked extensively with Ross and knew their requirements and approval processes cutting time for delivery.
- Awarded contract to BuilTech, LLC www.builtechllc.com general contractors. The project ran into several major problems from unsuitable soils to underground water detention system – BuilTech delivered ON TIME. Great contractors!
- Negotiated a Tax Increment Financing agreement with the City of Berwyn for an additional $1 million to make the project work.
- Completed a Lease Termination with Meijer which purchased an $8,000,000 building for $400,000
- Completed a 71,000 square foot supermarket with the tenant paying a substantial portion of the Lease Termination Fee to former tenant.
The architectural design and lighting combination has created not only a powerful design statement, but even more importantly spectacular business results. The investment has paid off on the business side, and the renovation has inspired increased commercial interest within the City of Berwyn culminating in recent leases the property to 98% occupancy.
Site Plan before Redevelopment
Site Plan after Redevelopment
Pictures Before Redevelopment