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MIDDLE MARKET HIGHLIGHT, JULY 2006
Peoria
Kevin Jeselnik
As the dominant market area between Chicago and St. Louis and Indianapolis and Des Moines, Peoria boasts a strong, vibrant economy, supported with diverse manufacturing, medical and high-tech bases. With major road construction on Interstate 74 — the only major interstate running through Peoria — nearing completion, Gary Matthews, president of EM Properties, thinks that consumer and commercial real estate activity should be picking up in the near future.
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A rendering of the new Embassy Suites and conference center, which are scheduled to open next summer in east Peoria along the Illinois River.
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Development is underway in three primary pockets of growth, starting in the northwest quadrant of Peoria, a town boasting a metropolitan statistical area of approximately 380,000. There, Cullinan Properties has developed the 500,000-square-foot Shoppes at Grand Prairie, which is anchored by a two-story, 180,000-square-foot Bergner’s, and features other tenants such as Dick’s Sporting and Clothing Goods, Old Navy and Linens ‘n Things. Two limited service hotels have been announced for the site and are expected to be underway soon.
Closer to the center of the market, near Simon Property Group’s Northwoods Mall, there is a lot of development activity. “Older centers are in the process of being remodeled,” Matthews says. “It’s definitely an area that is going to see some growth over the next couple of years.”
The third pocket of growth is east Peoria, along the river. Several projects are planned in proximity to Riverside Center, an existing shopping center along the Illinois River. Gateway Landing is a new development that will feature an Embassy Suites and a city-owned conference center set to open next summer, as well as two restaurant pad sites from EM Properties. The first restaurant tenant to sign for one of the available spots is Nashville, Tenn.-based Logan’s Roadhouse, which is expected to open in May of 2007. The retail market is strong, with an occupancy rate between 90 and 93 percent.
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EM Properties is developing GEM Tower, which is being built along the Illinois River adjacent to Interstate 74 in Peoria.
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Retail is not the only sector on an upswing in Peoria. “The market is starting to see an expansion in the office sector,” Matthews says. EM Properties is developing GEM Terrace, a five-story, glass-exterior office property on the bluff overlooking the river adjacent to I-74. The project has already received a commitment from a bank to anchor the project; other tenants will be announced shortly. And illustrating the long-term potential for Peoria’s commercial real estate market, EM Properties has also announced plans to develop an eight-story glass office tower also on the riverfront adjacent to I-74 and near the Embassy Suites and conference center. Construction of that project is scheduled to begin in the fall of 2007.
Office vacancy rates currently sit at approximately 10 percent. A majority of the product is either older, obsolete space or smaller, modern facilities. There is a demand for newer, high-quality large blocks of space.
In downtown Peoria, there is not a lot of activity, says Matthews. The primary reason is that east Peoria is directly across the river, and most of the shopping centers and restaurants are located there, providing easy access for downtown employees and residents.
There has been an increase in multifamily development in the northern part of the market, with several large condominium and apartment complexes built recently. The growth of Caterpillar, which has its corporate headquarters in Peoria, has aided the growing housing market. The company is currently building a new training headquarters and teaming with local organizations to develop a museum adjacent to its international offices. Other large-scale development initiatives include a $55 million expansion to the city’s civic center and OSF St. Francis Medical Center’s new $236 million hospital.
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