Shopping Center Business

MAY 2015

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226 • SHOPPING CENTER BUSINESS • MAY 2015 of that development. This is a location that has sat vacant for many years. North- brook is a prime, upscale community on the North Shore of Chicago. It had been under the control of another developer years ago, and that team ran into prob- lems due to the recession. The city of Northbrook worked with the existing development team, who arranged a deal for Mariano's grocery store. It is currently under construction. Other retail tenants include a well known local dry cleaner and some service retail tenants. Northbrook has a tax increment financing (TIF) incen- tive in place to assist with the financing. SCB: Do you see public finance pack- ages or assistance for many mixed-use projects? Kehr: Because of the cost of making infrastructure improvements, we are seeing mixed-use projects in infill areas or close-in suburbs frequently requiring some governmental assistance to improve that dated infrastructure to support the development. In those cases, the residents of that area are going to provide some assistance over a short period of time to the developer. That is typically paid back within five years. In return, the municipal- ity — Northbrook, for example — has long term benefits through increased sales tax revenue and increased property tax rev- enue from the improvements on the site. SCB: Nationwide, TIFs have been fading away since the recession. In Illinois, there still seem to be quite a few around. Are you still seeing them active? Kehr: They are still used in Illinois, but municipalities have also gotten creative in how they incentivize development beyond the TIF vehicle. In Naperville, that was a planned unit development, and a sales tax rebate was used there. I know of another community on the North Shore that is considering a new TIF and will also assist with acquiring a property that will round out the development site that the city cur- rently controls. We have financed several developments using TIFs. Now, a lot of those monies come on the back end. We will assist with bridge financing until the TIF can begin reimbursing. SCB: Are demographics a factor for the bank when you finance mixed-use? Kehr: As the lender comes into the picture, the developer has already dealt with the demographics, particularly with retailers and analyzing the potential for the office user or multifamily dweller. The developer will show us their information. In general, we are financing in commu- nities that we know well. One client of ours is working on a new project. They are in the process of soliciting community input for a location on the north side of Chicago. In the neighborhood they want to develop, there has been an influx of Millenials, even though there is already a strong, dense community in the neighbor- hood. That developer, while still getting the community input, has seen a lot of interest on the part of retailers because of the growth in the Millenial population there. SCB: What are some of the trends you are seeing among the retail tenanting in mixed-use projects? Are developers after more national tenants? Kehr: What we are seeing is probably specific to the Chicago area. A number of our infill markets have featured a gro- cery anchor. The grocery market here has shifted dramatically over the past few Liberty Center Opening Fall 2015 Liberty Township, Ohio Steiner + Associates | Bucksbaum Retail Properties, LLC ka - Executive Architect 216.781.9144 architecture | land planning interior architecture

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