MIDDLE MARKET HIGHLIGHT, JULY 2006

Bloomington/Normal, Illinois
Kevin Jeselnik

The Bloomington/Normal market is one of the fastest growing communities in Illinois, with an approximately 16.5 percent growth rate during the past decade. The market, with a population of approximately 140,000 people, also perpetually boasts the lowest unemployment rate in the state, according to Michael O’Neal, sales associate with Bloomington-based Coldwell Banker Commercial Heart of America Realtors.

“It is a strong, stable economy,” he says. “State Farm Insurance is the major employer; the company employs approximately 14,300 people.” The area’s economy is also supported by Country Insurance and Financial Services, which houses its headquarters in Bloomington. The manufacturing industry is also well represented, with Mitsubishi Motors’ only North American plant and a Bridgestone/Firestone plant located there.

The majority of commercial real estate growth is coming in the retail and restaurant sectors currently, with a number of developments underway. Most of the activity is occurring along the Veterans Parkway/Business Interstate 55 corridor. The Home Depot opened a 102,000-square-foot store with a 28,000-square-foot garden center at the beginning of June and Meijer recently opened a 207,000-square-foot store. Also, the 54,000-square-foot Furniture Row recently opened in Normal.

Towards the end of 2005, Cullinan Properties’ Shoppes at College Hills came online. A redevelopment of an existing mall, the project was renovated into an open-air lifestyle center. Existing anchors Target, Von Maur, and Hobby Lobby maintained their stores and were joined by lifestyle tenants such as Gordmans, Ann Taylor Loft, Jos. A Bank, Coldwater Creek, Starbucks Coffee and Coldstone Creamery. A plan to develop a five-story, 129-room Hampton Inn & Suites was also just announced for a tract of land adjacent to the retail space.

“The retail market just continues to grow,” says O’Neal. “Once the population reached critical mass of 100,000, retailers began to enter the market because the demographics were right.”

A project that has been percolating for many years and is just now getting off the ground after being taken over by the Dial Companies is the Constitution Trail Centre in Normal, which will consist of approximately 450,000 square feet of retail space when complete. With a Schnucks grocery store and Carmike Cinemas as lead tenants, opening is slated for spring 2007.

An area to watch for future development is along East Route 9, near the Central Illinois Regional Airport. A Buffalo Wild Wings restaurant recently opened near the airport and a full-service Holiday Inn is expected to break ground in the near future with completion scheduled for 2007.

As for the downtown markets, O’Neal says that both cities have made concerted efforts in recent years to focus on redevelopment of existing properties. In Bloomington, the 7,000-seat U.S. Cellular Coliseum opened in April, hosting an arena football team, a professional hockey team and various concerts and performances. Adjacent to the coliseum, the Pepsi Ice Center opened in June as a public ice center for the community. In Bloomington’s designated Cultural District, the former Scottish Rite temple has been redeveloped into the Center for Performing Arts after a several million dollar renovation and is expected to open by the end of the year. Another trend has found many existing downtown buildings redeveloped into condominium or apartment residences, as increased appetite for urban living has spread.

In Normal, the most significant in-town project underway is John Q. Hammons’ nine-story, 230-room Marriott hotel and convention center, which will feature approximately 20,000 square feet of conference space.

Vacancy rates for retail space are very low, ranging from 7 to 8 percent, historically. “We add, literally, hundreds of thousands of square feet of retail product every year, but the vacancy stays at the same level,” O’Neal says. Multifamily vacancy remains at approximately 15 percent, while office space sits at approximately 20 percent downtown and 13 percent in the rest of the market. The vacancy rate for industrial space is approximately 10 percent, while flex office/industrial product is roughly 15 percent vacant.

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