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HARLEM IRVING 100 • SHOPPING CENTER BUSINESS • December 2016 The company is always looking at op- tions for upgrading tenant mix. Marchese says, "We sit down with our leasing team frequently and discuss underperforming tenants, and which tenants we can bring in to improve the the selection of stores. There are some tenants we'd love to have, but we know our demographic wouldn't respond to them. We are a very value-ori- ented center and the higher-end tenants are not going to do well here. We under- stand that. You serve the demographic you have — that is how we are able to achieve $530 a foot. It doesn't matter what tenants we would like. What does the customer want? That is what we ad- dress — very thoroughly." Fred Murray, executive vice president of leasing, recruits and signs tenants at Harlem Irving Plaza and a couple of the other retail properties. Looking back, he says that Target opened one of its first bi-level stores at The HIP in 2004. The 140,000-square-foot anchor "was a tremendous addition to the center. It is probably the strongest anchor in the cen- ter today," he says. THE DEVELOPMENT ANGLE "We are a build-to-own company. I think that is a special element about Har- lem Irving," Filler says. "That is how you can be around for 60 years and go through the Great Recession without a hiccup. We didn't develop during the recession, but at the end of the recession, our retail port- folio was 99 percent leased. The tenancy of our retail centers is very strong because we are long-term holders and we maintain very good relationships with our tenants." According to Lawrence Gerlach, vice president and CFO, "Our entire retail portfolio is currently 97 percent occu- pied. We are in the process of finalizing lease terms on two spaces which will get the company to 98.6 percent occupancy, close to our historical average." Gerlach notes that the company has 2.3 million square feet of retail space, as well as 505 rental apartments, which are 98 percent occupied. Two under-construc- tion mixed-use prop- erties will add 717 apartments to Har- lem Irving's portfolio by 2018. The Rise in Minne- apolis, the company's mixed-use project near the University of Minnesota, is on the light rail line. There isn't a grocery store within 2.5 miles of the site, Filler says, noting that students at the university and residents of the Prospect Park neighbor- hoods will appreciate the 29,000-square- foot Fresh Thyme Farmer's Market. "Plus, the rail stops at our front door. People will come on the rail to do their grocery shop- ping," he says. "Right place, right time — we are very fortunate to have landed that property." At Montrose & Clarendon, the 27-story building under construction in Chicago's Uptown neighborhood, Treasure Island Foods will occupy 30,000 of the 36,000 square feet of retail space. "Treasure Island has been in Chicago since 1962. They are urban Chicago and they understand the market. They will do a great job," Filler says. "There are always opportunities, you just have to be selective as to what opportunities you're going to spend your time on." As an example, during the recession, Harlem Irving was able to acquire a hotel in Surfside, South Carolina, just south of Myrtle Beach. "We purchased the hotel — a Holiday Inn — from a REIT," says Gerlach. "The hotel was doing great, but it was a down market and we grabbed it, even though it is not our normal product type. We are in the process of rehabbing every floor. Room rates and occupancy rates are up. Now we're just cleaning up after the hur- ricane, and we'll be ready for another out- standing year." Most of the company's retail projects are power centers, and it also owns a num- ber of strip centers. Harlem Irving has a couple of properties in Chicago proper, but most are in the suburbs surrounding the city. "In Chicago proper, we built Dun- ning Square Shopping Center, a 130,000-square-foot strip center with Jew- el and TJ Maxx at Irving Park Road and Narragansett Avenue in the late 1980s. We then built Washington Square, on the corner of North Avenue and Cicero. We opened in 2002. That one has Food 4 Less, which is Kroger-owned, and a Ross Dress for Less. It is a little over 200,000 square feet," says Marchese. ENGAGING CONSUMERS According to Marchese, promotion of retail projects is critical to draw today's consumer. "We have changed dramati- cally and aggressively in our approach to marketing," he says. "As time has gone on, retailers don't like to contribute much to- ward marketing, so we take it out of our pocket and we have established a very aggressive marketing program over the years. We take a lot of pride in that." Rendering of the retail and multifamily space at Montrose & Clarendon. Gerlach