FEATURE ARTICLE, MAY 2011

RANDHURST VILLAGE NEARS COMPLETION
Redevelopment of one of the country’s first malls excites and engages its community.
Amy Bigley and Randall Shearin

The nearly 1 million-square-foot, open-air Randhurst Village offers a variety of restaurants, including  Blackfinn, Billy Goat Tavern and Tony Sacco’s.

While many projects have stalled or been postponed, Casto is under construction with its Randhurst Village project near Chicago. The nearly 1 million-square-foot mixed-use project is one of the largest under development today. Randhurst Village is a redevelopment of the former Randhurst Mall, a Victor Gruen-designed mall that was one of the first enclosed centers in the United States. But few things about Randhurst Village are enclosed — the center is planned entirely as open-air, with existing mall tenants converting their stores to  freestanding formats.

Casto became involved with the project in 2006. The company had formed a relationship with JP Morgan Strategic Property Fund through other properties it owned. JP Morgan had been involved with the property for more than 40 years. Over the years, the property experienced some redevelopment and retenanting. In more recent years, JP Morgan hired a developer to bring in Bed Bath & Beyond and Costco but later concluded it needed more than  retenanting.

“The center needed major surgery,” says Brett Hutchens, partner with Casto. “We developed an acceptable plan for redevelopment that the Village of Mount Prospect embraced.”

The project has been on schedule since receiving its approvals. It took Casto about 18 months to negotiate exits with some tenants and modifications with those who were staying at the center. As that was happening, planning and entitlements were going on in the background with the Village. Demolition of the existing center began in the summer of 2008, and new construction began in August 2009.

Scheduled to open on April 29th, a new state-of-the-art, LEED-certified theater is being constructed for AMC Theatres. It is one of only a handful of LEED-certified movie theaters in the U.S. The existing AMC Theatres complex at the center will be razed this month, and that area will be redeveloped as a second phase, including PetSmart, planned for an early 2012 opening.

“We couldn’t be more excited about the opening of AMC Randhurst 12,” says Christina Sternberg, senior vice president of domestic development for AMC Entertainment Inc. “The theatre is our company’s first LEED-certified building and an example of our desire to be a steward of the earth. We carefully planned the design and building of AMC Randhurst 12 to reduce the cost of construction and address environmental issues, while giving us a great opportunity to inform our guests about the importance of undertaking eco-friendly building measures. As a result of these calculated design and building processes, the theatre ended up exceeding industry standards for energy efficiency by nearly 21 percent.”

Completion of the center is anticipated in June 2011. Casto engaged Beame Architectural Partners to design Randhurst Village. It is the same firm that designed Casto’s award winning Winter Park Village in downtown Winter Park, Florida.

“Randhurst is very similar to a few of our other projects, Lakeside Village and Winter Park,” says Hutchens. “The theater is at the end of the street and it is proximate to the shops. We like for people to exit the theater and literally step into the main retail portion of the project.”

Hutchens reports that the existing tenants are thrilled about the redevelopment of the center and have been extremely supportive.

Centrally located at Rand and Elmhurst roads in Mount Prospect, Randhurst is an attractive home for tenants that may have over-expanded during the early 2000s to growing areas further out in the suburbs, or to infill markets closer to Chicago.

“Many retailers put too many stores in suburban markets,” says Hutchens. “Now, many of them are repositioning in the market. Randhurst Village is the perfect reposition site for several tenants because it offers ideal spacing between Woodfield and Deer Park.”

Randhurst Village’s demographics include an affluent market base with 322,000 people within a 5-mile radius, an average household income of $84,000 and a daytime population of 230,000. As for the average shopper? Hutchens believes the redevelopment is filling a void in the area, especially for the affluent and incremental shopper, and current tenants will experience an upswing in clientele once the center is complete.  The new AMC Cinema will set new standards in Chicago and thus create an expansive draw.

Randhurst Village’s centralized location is a driving force for tenants throughout the Chicagoland marketplace. Retailers like Sports Authority, Old Navy and PetSmart are consolidating multiple stores to relocate to this central position in the market.

“We’re not seeing new store growth, but we’re seeing store closures and repositioning to create better spacing,” explains Hutchens. “That’s the trend that our leasing program is experiencing right now, and frankly, we think there’s a little more of that to go in this market.”

A challenge for Casto during construction has been developing the project while keeping the existing anchors open and reformatting their stores. All of the existing anchors are staying. The Carson-Pirie-Scott store has completed a $10 million remodel to the interior and exterior of its store. Bed Bath & Beyond is getting an exterior remodel that will be consistent with the new aesthetics.

Although the majority of development and construction came to a halt during the recession, Casto continued its redevelopment efforts with the center.

In addition to support from the local residents and the Village, the continued low cost of construction supplies has helped the project tremendously. Hutchens reports that the current construction costs are less then what Casto originally budgeted.

Even with development going smoothly, Casto is experiencing timing challenges leasing the fashion lifestyle segment of the property. 

“This segment of the industry was hurt severely in the last few years but seems to be getting back on its feet,” Hutchens says. 

Hutchens still feels confident that retailers will come, especially with Randhurst’s appeal for repositioning within the Chicago market.

“This is a large project that sits on fantastic real estate and is 84 percent leased.  We have reserved an area of the project for the ‘lifestyle’ tenants and can be patient in order to end up with a quality project. We’ll have a lifestyle segment to the project — about 40,000 to 50,000 square feet — but we think that’s probably going to come in late 2012,” notes Hutchens.

Casto is currently focused on developing the restaurant and lifestyle area around the new cinema. The company is in negotiations with a Mexican restaurant and already has Blackfinn, the Chicago icon Billy Goat Tavern and Tony Sacco’s Pizza on board. Additional restaurants, including Five Guys Burgers, Chipotle and Jersey Mike’s, recently opened in a dark restaurant outlot, which was revived and expanded to complement the center. Other restaurants now open in the center include Steak-n-Shake, Pei Wei Asian Diner and Buffalo Wild Wings. 

Len Kareska, real estate broker for Pei Wei, says the he is very pleased with the Pei Wei opening.

“I live in Chicago and know this market well,” says Kareska. “We targeted Randhurst as one of our entry points in Chicago. We have other projects with Casto and knew they would develop a quality project. Our sales are great now and we expect them to improve with the opening of the new AMC.”

Several anchors that were added or renovated in recent years, such as Costco and The Home Depot, will only go through minimal changes to be consistent with the new center’s design. The entire project is being designed to LEED-Silver certification. At approximately 84 percent leased, Randhurst Village boasts a mix of retailers, including Costco, The Home Depot, Sports Clips, T-Mobile, Bank of America, Carter’s, Charming Charlies, Blackfinn Restaurant, Vida, Wet Seal, Old Navy, The Sports Authority, Bed Bath & Beyond, T.J. Maxx, Card Frenzy, GNC, Subway, Jewel Osco and Carson Pirie Scott.

Chicago-based Great Street Realty Partners is working with Casto to lease the project.

“Randhurst has created a lot of buzz in the leasing community,” says Jon Reese of Great Street. “It’s encouraging to see a development of this size and quality actually occur. The Carson Pirie remodel brings the store in line with the new generation of department stores and there is nothing like the new AMC Cinema. It is a game changer for this property.”

Once complete, Randhurst Village will be a live, work and play destination for the Chicago market. Casto plans for the mixed-use center to have office space, a hotel, retail, entertainment and restaurants along a well-planned streetscape, including parks, landscaping and benches. The diverse mix of retailers and restaurants will be an attractive draw for residents and visitors alike.

©2011 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.