COVER STORY, OCTOBER 2007

NEWCITY RISING IN CHICAGO
Structured Development is bringing a NewCity to the North-Clybourn corridor in Chicago.
Kevin Jeselnik

The central plaza in Structured Development’s NewCity project in Chicago.

Chicago’s North-Clybourn retail corridor is a perfect storm of circumstances that seems ready-made for success. The area, formed by the intersection of Clybourn and North avenues just a little west and north of downtown Chicago, is destination Number 1 for many retailers in the Windy City market. For many retailers, their North-Clybourn location boasts some of the largest sales per square foot volumes in the entire country. According to J. Michael Drew, a principal at Chicago-based Structured Development, for Whole Foods — which will soon relocate from its current 38,000-square-foot store in North-Clybourn into an 80,000-square-foot space — only its flagship store at the Time Warner Center in New York City boasts a higher sales volume.

“The demographics for this area are off the charts, with an average household income of $129,000,” says Drew, whose firm is developing an expansive mixed-use community in the neighborhood. “[North-Clybourn] has the ideal demographics, and residents’ only choice for shopping prior to the development of the neighborhood was to go north to the Old Orchard shopping center or down to Michigan Avenue. It was a no-brainer for retailers to fill in Clybourn and North.”

The central plaza will be a hot spot for entertainment, with restaurant patios around the perimeter and multiple events, from movie showings to art fairs, being held on the grounds throughout the year.

Also a no-brainer was Structured’s decision to snap up the 8.5-acre site of the neighborhood’s former YMCA for the development of the area’s first major mixed-use community, NewCity. Heretofore, the corridor’s retail presence has been primarily composed of infill development, where retailers redeveloped and retrofitted various existing properties. It was the easiest way to open stores in this emerging market, and many retailers have greatly benefited from getting in early.

With NewCity, Structured and its partner Commonfund Realty, the nation’s larges dedicated non-profit investment manager, are bringing a ground-up, fully realized vision to the area. The triangular site is bounded by Clybourn, Halsted Street and Eastman Street, which the developers are extending from its current end-point at Halsted through the project. The development will include approximately 400,000 square feet of retail space on the first two or three floors of the five buildings that comprise the project, with residential units atop the retail. The buildings will range from eight to 23 stories, and will be built around a central 60,000-square-foot plaza, which Structured is modeling after European plazas.

Structured Development, along with Commonfund Realty, is developing NewCity, an approximately 1.2 million-square-foot mixed-use community at the intersection of Clybourn Avenue and Halsted Street in Chicago’s North-Clybourn retail corridor.

For the retail component, Roundy’s, which has plans to bring 13 new stores to Chicago over the next 3 years, has committed to a two-story, 80,000-square-foot space on the southeast corner of the site along Clybourn. The grocer plans to utilize the pedestrian-friendly sidewalk and outdoor design to hold a market outside its store on occasion. The retail emphasis will be on smaller specialty stores that are new to the neighborhood and to the city.

The location is the easiest way to sell the site, Drew says. “It is a unique opportunity to have such a large parcel of land right on the edge of an established retail district. Retailers tend to follow each other, and it is an easy sell when we just show them the numbers [other retailers are seeing]; the sales per square foot are there and the retailers see it.”

The retail leasing team, which includes Chicago-based Mid-America Real Estate Group and New York City-based RKF Retail Property Advisors, are also seeking out entertainment ventures and at least three restaurants.

NewCity will feature approximately 400,000 square feet of retail on the building’s bottom two or three floors, with 490 residential units taking up the upper floors of the five buildings.

The central plaza will play host to numerous events throughout the year, from movies to art fairs to farmer’s markets. It will also feature a curb-less drop-off for taxis, making it easy to get into and out of the center. There will be a 750-space parking deck on the south end of the site along Eastman, as well as approximately 400 underground residential spaces. To create an entrance to the site away from the congested traffic areas, and to improve the neighborhood’s transportation system in general, Structured will be taking Eastman all the way through the project on the south side, and adding two new traffic lights where the street intersects with Halsted on the west and Clybourn on the east.

The residential component will feature a mix of one-, two- and three-story units, with an average unit price per square foot of $400 to $425. In all, the project will feature 490 residential units, including 49 affordable and 49 Chicago Housing Authority replacement units.

In total, the project measures approximately 1.2 million square feet. Structured has received zoning and City Council approval, and plans to break ground in the near future. Demolition should begin before the end of the year, with development beginning in 2008. The project has met little resistance, in part because it is bringing a project with a lot of mass to an emerging residential and retail market, and also because the development team is asking for no assistance from the city. No TIF money was sought for the project, even though Drew notes that it will generate between $10 million to $12 million a year in incremental tax for the TIF district, as well as an additional $8 million to $10 million in retail sales tax. “We opted not to pursue TIF funds for a lot of reasons,” Drew explains. “Not the least of which is that we feel the project stands on its own.”


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