HEARTLAND SNAPSHOT, MAY 2004

Central Illinois

Alex Ruggieri, Senior Advisor, Sperry Van Ness/ Ramshaw Real Estate

The Central Illinois retail market is showing a clear gravitation to upscale stores, according to Alex Ruggieri, a senior advisor with Champaign, Illinois-based Sperry Van Ness/Ramshaw Real Estate. This trend began when General Growth Properties took ownership of Market Place Mall a few years ago. The company’s initial action was to add upscale stores, which included signing Famous Barr as an anchor tenant. This trend has continued in recent retail developments featuring better women’s apparel and finer men’s clothing such as Talbot’s, which located in the Old Farm Shops in southwest Champaign. Located on U.S. 45 South in Champaign, The Old Time Meat and Deli, an upscale butcher shop and meat service, recently opened in the Hillcrest Plaza on south Neil Street. “This epitomizes the trend toward upscale product,” Ruggieri says.

The big news in Champaign is the announcement of the return of JC Penney to Market Place Mall. The signing of this retailer is a major coup for General Growth Properties because the retailer closed the store 5 years ago and left the area. Also, two Wal-Mart Supercenters are under development, one in Champaign and the other in Urbana. Both Wal-Mart stores are expected to exceed 100,000 square feet and will include grocery portions. Other smaller neighborhood developments include the Galleria on Windsor Road and Hillcrest Plaza on Neil Street, both located in Champaign.

The North Prospect corridor of Champaign is still the dominant retail development scene. “This area has quickly become the main power corridor in retailing in our area because it offers a variety of retailers in one location,” Ruggieri says. “This trend will continue in the near future due to the volume of traffic created by the extensive development in the area during the last 10 years.”

According to local appraisers, the vacancy rate may be as high as 10 percent. “The vacancy is the result of growth and not stagnation in the local economy,” Ruggieri says. For example, Best Buy recently vacated a store on Marketview to build a larger store on North Prospect. Also, Menards closed its Marketview location and opened a 100,000-square-foot superstore on Town Center Boulevard. “The vacancy is the result of growth and not stagnation in the local economy.”

The Village of Savoy, which is located on U.S. 45 south of Champaign, is another area of note. “This dynamic community has made a point of attracting upscale development and has proven its ability to get things done,” Ruggieri says. “A new Wal-Mart and other ancillary retail are forming what could be a powerful corridor of retail development on the south side of Champaign-Urbana.”

Also, the planned Curtis Road interchange in Savoy, which will provide access to Interstate 57 when it is completed in the next 5 years, has already generated excitement due to the fact that it will open hundreds of acres of ground for additional development.

The Central Illinois multifamily market will most likely see a slowdown in apartment construction, according to Ruggieri. While there are several notable projects on the drawing board and currently under construction, the activity does not compare to the massive number of units that have been built in this area in recent years. “This activity, combined with increased competition, may put downward pressure on rents particularly in the campus market,” Ruggieri says. “Most apartment development is taking place on the fringes of the city limits. This is due to available land and lower development costs.”

Some significant projects are underway in this area. Creek Development is building Amber Point, a 250-unit upscale apartment project located near the Stone Creek golf course in Urbana. The developer has completed 80 units, which is the first phase of the three-phase development.

Iron Wood Homes is developing several projects in the Champaign market. Twin Oaks, located on Bradley Avenue across from Parkland College, has completed and fully leased 114 one-bedroom units. Carisbrooke, located near Market Place Mall, currently has 160 units out of 320 units completed. Barrington Apartments, located on West Springfield, has 70 units that were completed in 2003. Finally, Wellington Place, located at Bradley and Duncan in west Champaign, will have a total of 192 units when completed in 2005. The first phase will have 40 apartments balanced evenly between one- and two-bedroom units and 11 townhomes. The project will be completed by the fall of this year.

A notable downtown project is One Main, which is being developed by Jon Sokolski and Mike Kulas. This project is the first major construction project in the downtown area in decades. One Main is a 140,000-square-foot multi-story project with a style that blends with the character of the downtown landscape. The mixed-use project will feature 28 condominium units, 30,000 square feet of retail and designated office space. Volition, a computer gaming company, recently signed a 50,000-square-foot lease at the project.

Around the campus of the University of Illinois in Champaign, there are two noteworthy projects. JSM’s East Campus Commercial Center will offer first-floor retail and 62 apartments on the second and third floors. Campus Properties is developing a $15 million project, located on Springfield and Fourth streets, which consists of 72 four-bedroom units.

The vacancy rate for properties in the campus area is about 3 percent with higher rates occurring in properties that are furthest from the center of campus. Off-campus properties in town have a vacancy rate of about 5 percent.

“The most interesting area for the near future will be the redevelopment of the Burnham Hospital site,” Ruggieri says. This large tract of ground is owned by the city of Champaign and is located on the edge of the University of Illinois campus. The city plans to redevelop the site and is actively seeking a developer.

The Central Illinois industrial market is seeing a number of existing companies expand. Hobbico recently completed a $5.6 million, 96,000-square-foot expansion to its warehouse in Champaign, and Colwell will start a $12 million, 165,000-square-foot expansion in Champaign in June. Other companies that have recently expanded or are currently expanding include Siligen Closures, Meadowbrook Farms and Cingular Wireless.

Development is occurring in the urban areas of Champaign-Urbana where infrastructure is in place to accommodate growth. Several businesses in the Rantoul area have experienced growth in the past 6 months.

“Champaign County has very few industrial/distribution spaces available at the present time,” Ruggieri says. “Build-to-suit options are available for developers who have a strong reputation for completing projects in a timely manner.”

Areas to watch for future development are the Apollo subdivision, located on North Market Street in Champaign, and the Route 150 corridor between Champaign and Mahomet.

In the office market, the most significant development in years has been the University of Illinois’ recent decision to develop a research park on its South Campus. The park, which was developed by Atkins-Fox Development, is anchored by Motorola and SAIC, and includes a state-of-the-art business incubator that contains laboratories and space for start-up companies.

The Atkins Group is developing Stone Creek Commons in Urbana, an upscale alternative for companies wanting an Urbana address. There are two buildings currently completed: an 11,000-square-foot facility fully occupied by the Atkins Group’s corporate headquarters and a 9,800-square-foot speculative stand-alone office building. The park can have up to 16 lots and build out as many as 240,000 square feet of office space.

“Most of the recent office development has been confined to these two parks,” Ruggieri says. “Given the limited scope of our smaller market, the existing developments should accommodate future demand for some time.”

©2004 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.