FEATURE ARTICLE, MAY 2005

CLOSE-UP ON CENTRAL ILLINOIS
Steady growth and continued development are creating an active real estate market in Central Illinois.
Lindsey Walker

Heartland Real Estate Business recently spoke with several local brokers and developers across Central Illinois to discuss the state of commercial real estate. In Peoria, Champaign-Urbana and Bloomington-Normal, steady growth and active development are currently creating a hot market.

Peoria

Healthy, vigorous growth, especially in the retail and hospitality markets, continues to drive economic development in the greater Peoria area, according to Gary Matthews, president of East Peoria-based EM Properties. “Evidence of the strong retail sector is the current retail vacancy rate between 8.2 percent and 10 percent in Peoria when compared with 10 percent in Champaign and 11.2 percent in Chicago,” he says.

Projects, such as the modernization of the Interstate 74 highway system, are helping to accommodate the continued growth in Peoria, Illinois.

One of East Peoria’s most recent retail additions is a new 88,000-square-foot Kohl’s, which opened as the first retailer in the Main on Main retail center located at the intersection of Main and Camp streets.

Peoria’s newest retail mall is The Shoppes at Grand Prairie, a 500,000-square-foot open-air lifestyle center that opened in the northwest retail corridor in April 2003. Developed by Cullinan Properties, the project is anchored by Bergner's, Dick's Sporting Goods, Linens ’N Things, Borders Books & Music and Old Navy and has a 60-plus tenant mix of specialty stores and restaurants. Many stores, such as Coldwater Creek, White House Black Market, The Bronze Frog, Jos. A. Bank and Johnny’s Italian Steakhouse, are exclusive to the Peoria market. Banana Republic, Caché and Gordman’s are also new to the market. “The introduction of The Shoppes at Grand Prairie has played a vital role in establishing the Peoria region as one of mid-America’s most unique secondary marketplaces,” Ham says.

“The retail fever that Lowe’s Home Improvement Warehouse and the first Wal-Mart Supercenter brought to the then-industrial covered banks of the Illinois River across from downtown Peoria several years ago is continuing,” Matthews says. “East Peoria’s Riverside Center and surrounding area is one of the most significant retail success stories in Central Illinois.” Developed by Gary Matthews, Riverside Center features Central Illinois Bank, OfficeMax, Fashion Bug and several other retailers in the Shops at Riverside and Riverside Plaza. Riverside Center restaurants include Texas Roadhouse Café, Chili’s, Applebee’s, Ming’s and Arby’s. “A major contributing factor to the commercial vitality of this area is great access and visibility from Interstate 74 and the network of state and local highways providing easy access,” Matthews says.

Just to the south of this site, a $50 million Embassy Suites Hotel and adjacent 50,000-square-foot conference center are planned for the north side of the Bob Michel Bridge. John Q. Hammons Industries and the city of East Peoria expect to begin construction this spring. EM Properties plans to complement that project with GEM Tower, a 50,000-square-foot glass bank/office tower, and two adjacent upscale restaurants.

In the housing arena, downtown Peoria is seeing a strong movement toward expanded downtown living options, particularly in the form of adaptive re-use condominiums and luxury apartment rentals, according to Ham. More than 100 units have been redeveloped by four key developers in former warehouse and industrial buildings along the downtown portion of the riverfront.

Across the river in East Peoria, private developers and city officials are moving forward with developments on a 7-acre site where Caterpillar Inc.’s first factories in Illinois once stood.  “In addition to a Caterpillar Heritage Museum, city officials are planning Peoria Area Technology Park on the prime 65-acre urban location, the largest parcel of developable land within the urbanized Peoria-East Peoria area,” Ham says. 

A new Central Illinois economic development initiative known as TransPORT has also captured the attention of local developers. The Heart of Illinois Regional Port District, a 6-county tract along 60 miles of the Illinois River, features unique multi-modal connections and strong logistics infrastructure that is currently underutilized. “TransPORT is currently executing a $250,000 study on capacity and infrastructure throughout the District,” Ham says. “The study is expected to identify five to 15 prime sites for intermodal terminal developments along the Illinois River.”

Champaign-Urbana

In addition to hosting some of the primary retail corridors of Central Illinois, Champaign-Urbana is also steadily becoming a well-rounded office/industrial and multifamily market to watch, according to Alex Ruggieri, a senior advisor with Champaign-based Sperry Van Ness — Ramshaw Real Estate. For example, plans are already finalized for the relocation of a 150,000-square-foot SuperValu food distribution facility, and The University of Illinois Research Park also has been deemed a huge success as a property that developer Fox/Atkins says “offers high-tech, multi-tenant facilities in a community Newsweek magazine regarded as one of the ‘Hot Top Ten Tech Cities in the United States’. “The park has captured everything from major anchors, such as Motorola, to newer groups, such as iCyt bioscience technology company,” Ruggieri says.

As the business market becomes more active, so does the retail and multifamily arenas, according to Ruggieri. “Multifamily trading in the submarket has been brisk, including recent sales of large student apartment complexes such as the Atrium and Melrose in Urbana,” Ruggieri says. Cobblefield Point, for example, is a 122-unit residential condominium development in Champaign’s Turnberry Ridge. Units are currently selling in the $130,000s for 1,200 to 1,400 square feet. “In terms of retail, an aggressive facelift is planned for General Growth Properties’ Market Place Mall, including a 10,000-square-foot expansion to accommodate upscale stores such as Coldwater Creek,” he says. 

Bloomington-Normal

The Bloomington-Normal market continues to see a significant trend of retail, restaurants and banking development, and the Veterans Parkway retail corridor continues to be the preferred location, according to Mike Flynn of Bloomington-based Coldwell Banker Commercial Heart of America Realtors. Most significant has been the construction of the Shoppes at College Hills mall, a lifestyle center being developed by Cullinan Properties as an add-on to the existing Von Maur, Target and Hobby Lobby stores. All announced tenants to date are new to the Bloomington-Normal market. These include Jos. A. Bank, Ann Taylor Loft, Chico’s, Coldwater Creek, Gordman’s, J.Jill and Yankee Candle. A 3-acre outlot is being developed as a new 129-room Hampton Inn, replacing the former Hampton Inn on IAA Drive.

Other significant retail developments in the works include Meijer’s 207,000-square-foot store being developed on a property located off the corner of Veterans Parkway and College. Also, a little further north on Veterans Parkway, near Menards and Sam’s, The Home Depot is negotiating for a 12-acre site across from Furniture Row, which recently opened a 54,000-square-foot facility. Further south on Veterans Parkway, near State Farm Insurance World Headquarters, local developer Central Illinois Properties has completed Corporate Commons and Prospect Commons. Nearby, Doug Reichl of Chicago-based Tartan Realty has purchased corner acreage at Washington and Veterans Parkway for a new strip center to be occupied by a Starbucks Coffee Drive-Thru, Potbelly Sandwich Works, Rocky Mountain Chocolate, Nextel, EB Games and All About Eyes. Central Illinois Properties is developing other strip buildings in Corporate Commons featuring tenants such as Echo Valley Meats from Peoria, Nail Trix, U.S. Cellular and Alphagraphics. Adjacent to Corporate Commons, in Prospect Commons, Central Illinois Properties is constructing a 13,000-square-foot building to lease to Friar Tucks, a new liquor store in Bloomington-Normal.

Several new banks have located to Bloomington-Normal within a two-block area at Washington and Prospect roads, according to Flynn. The Flanagan State Bank has purchased a multi-tenant facility on the southeast corner of Washington and Prospect roads and is operating out of the first floor. One block to the north at the intersection of Prospect and Maloney Drive, MidAmerica National Bank has opened in a 5,040-square-foot space on a long-term lease with Central Illinois Properties. Mendota, Illinois-based First State Bank has also purchased 2.4 acres at Hershey Road and Eastland Drive for a future bank facility, and Minier State Bank has contracted a lot at the corner of Towanda Barnes and GE roads. The existing Heartland Bank and Trust has opened a satellite facility on the west side near the Wal-Mart SuperCenter. Bank of Illinois is also building a new 40,000-square-foot facility in downtown Normal.

Crossroads Center, formerly Bloomington-Normal Factory Stores, is now owned by Sugar Oak Properties. Bon Worth has signed a lease for 23,500 square feet. Jewel-Osco recently moved a few blocks east on College Avenue to the Parkway Center, signing a long-term lease for 51,300 square feet formerly occupied by Phar-Mor. Blackstone Group of Illinois is developing and about to open the fifth Walgreens drug store in Bloomington-Normal at Ft. Jesse and Towanda Avenue in Normal.

Retail vacancy rates in the Bloomington-Normal region are approximately 10 percent for strip and power centers and 7.5 percent overall.

The U.S. Cellular Coliseum, a state-of-the-art multi-purpose recreation and entertainment facility, is topping the commercial real estate list in Bloomington, according to Ruggieri. Scheduled to open in March 2006, the Coliseum will feature 7,000 seats and approximately 180,000 square feet of space. The building is being built by Bloomington-based Johnston Contractors.

The multifamily arena has also been healthy with more than 526 units added per year at a total valuation of more than $87 million, according to Ruggieri. The hospitality market is seeing activity as well, with John Q. Hammons Company set to build a 230-room Marriott business-class hotel and conference center in the heart of downtown Normal.

Submarkets to watch are the West Bloomington-Normal interstate area near the Crossroad Center and Wal-Mart SuperCenter, as well as both downtown areas, according to Flynn. Additionally, the Route 9 Empire Street corridor between Veterans Parkway and Towanda Barnes Road, including Central Illinois Regional Airport, is growing more retail and restaurant activity. “In the future, the Towanda-Barnes Road corridor on the east edge of the airport is expected to see significantly more residential and retail development from Towanda to the north to Downs from the south,” Flynn says.

Central Illinois is enjoying a hot market, according to Ruggieri. “Commercial properties are trading and leasing at a steady pace, local companies are expanding, owners are improving facilities and those from outside the market are choosing to relocate here,” says Ruggieri. “Very active is the best way to describe it.”

©2005 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.