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A shopping center is reborn.

Renovating a property is a form of rebirth; by destroying the old, something new and better rises from the ashes. For the Batavia Plaza Center, a community center in suburban Chicago, the image is a literal as well as a figurative one. When the center was first built in 1960, a controlled fire, set and monitored by the Batavia Fire Department, was used to destroy derelict manufacturing buildings and make way for the new center.

However, 30 years later, the center was in need of another rebirth. The original anchor tenant, Jewel Food Stores, had vacated 12,000 square feet in the 38,800-square-foot center and moved to a larger space in a newer property at the edge of town.

While the loss of such a major tenant is always difficult, the property's owner and original developer, Batavia Enterprises, Inc., saw the vacancy as a chance to renovate the by-now dated center exterior. During its entire occupancy, Jewel had opposed any major renovations, so the center looked much the same in 1988 as it had in 1960. Yet, the burgeoning Batavia population, which had reached a total of 73,000 by early 1991, and strong demographics of the area indicated that the center was still a highly desirable location for future growth and prosperity.

Rebirth-leasing

Notified by Jewel of its intent to vacate in 1988, the company worked up a demographic study of its market and set out to find another independent food store as a replacement. The company spent a year searching a five-state area for a new grocery tenant. They did market surveys, cold-called chains, and did mailings. In the end, they found that their 12,000-square-foot space was too small to accommodate most groceries' current size demands (closer to 20,000 square feet).

Long-term tenants on either side of the space, who had been with the center since it opened, limited the possibility of expanding to accommodate a grocery, so Batavia Enterprises decided to go back to the drawing board.

Next, the firm considered splitting the space into two 6,000-square-foot stores, but they found that most retailers were downsizing and did not want that much space in a downtown convenience location. Dividing the space also would have left the center without an anchor. Again, the firm reconsidered its strategy.

The firm had begun talking to Walgreen's while it was still in the midst of its intense search for a grocery store.

Walgreen's was attracted to the Batavia Plaza Center first by its location. Situated on the town's principal street, directly next to the only bridge crossing the Fox River, the center was on the main route for almost every trip made by local residents. And when it saw the McDonalds across the street, Walgreen's was certain that the location was a winner.

The drug store chain was also attracted by the town's demographic projections. Census data provided with the firm's marketing package projected a 70.4-percent population growth in Batavia between 1986 and 2010 and an even greater 89.6-percent average growth in the center's primary market area.

One hurdle facing negotiations with Walgreen's was the presence of another drugstore in the same complex. Although technically not a part of Batavia Plaza Center, the independent drugstore was part of the same site. The company informed both the drugstore owner (who was in the process of buying the business) and Walgreen's of the other's existence, but both felt they could compete effectively.

The proximity of the two drugstores also seemed less problematic because the center had successfully supported two hardware stores--a True Value and a Coast-to-Coast--for the entire 30 years it had been in operation. Customers used both stores, depending on what inventory was available. This synergy convinced Batavia Enterprises that the same relationship was possible for the drugstore tenants. As it has turned out, the independent has established a niche with deliveries and personalized service that complements Walgreen's faster service and lower pricing.

Batavia Enterprises also faced a potential conflict with the liquor store already in the center, but was able to negotiate a lease with Walgreen's to substitute a new "food mart" section in place of liquor. The food mart, which emphasized snack food and repeat purchases such as milk, benefitted from the shopping pattern previously established by the vacating Jewel grocery.

Renovation-physical

While the company was looking in vain for a grocery tenant, it began the renovation of the center. Leaving the vacant 12,000 square feet for last, construction crews started exterior renovations of the other stores--including a Ben Franklin variety store, a restaurant, and a liquor store. Although this decision to proceed without an anchor was risky, the company hoped that the newly renovated center would be more attractive to prospects.

A design was chosen that emphasized a homey, timeless look. Historical references in the design, such as the rounded arches with keystones, linked the building with the many historical buildings already owned and managed by Batavia Enterprises.

Another important goal of the renovation was to reduce maintenance costs for the center. For a year before drawing plans for the renovation, Batavia Enterprises studied other centers all over the country to pinpoint features they liked and though would work at Batavia Plaza.

Wooden columns, which needed constant repainting and repair, were replaced with pored concrete pillars. Downspouts inside the columns funnelled rain water directly into flower beds. In this way, plants needed extra watering only during drought conditions.

Standard flat roofs gave way to high, peaked roofs. High peaks allowed the architect to conceal the barrel roof of the Walgreen's space and blend it in more thoroughly with the overall design. The metal, standing seam roofing material and concealed gutters added a contemporary look and eliminated the need for repainting and reroofing. The peaked roof also enhanced the center's visibility for drive-by customers.

New facades were added using a Cota, an exterior plaster system, but heights were kept above 10 feet to avoid accidents and vandalism. White aluminum soffitts replaced dark wood ones, adding brightness and again eliminating repainting chores. Multiple access panels were added to reduce the need for disruption during repairs. Finally, a stereo system increased ambience with piped music.

The landscaping and entry were also given a major overhaul. Bulbs, trees, and low-maintenance shrubs were generously sprinkled at the entry and in parking-lot islands. Planters with rotating bulbs and annuals were added on the newly widened sidewalk.

Access from Wilson Street, at a slightly higher elevation than the center, was enhanced as well. An obsolete Photomat was replaced by a sloping, lighted walkway, which drew walkers gradually into the stores. Again, heavy use of plantings added to the ambience.

Overall wattage output in the center was raised by 300 percent. Metal halide light fixtures were added to the center's canopy to add warmth and a sense of security at night. Additional light poles were installed to brighten the parking lot.

A new monument sign, echoing the new peaked roofs, was added. The entry also was expanded to encourage walking into the center. Pedestrian access is particularly important for residents of the senior housing complex down the street, many of whom are loyal customers of the restaurant and the Ben Franklin.

For driving shoppers, the parking lot was resurfaced and restripped. To ensure that the new look was complete, the company even repaved a portion of an adjacent city parking lot after the city backed out of an agreement to repave their portion of the lot. Despite the addition of the planted islands and the inclusion of handicapped parking, only one parking space was lost.

Rebirth--phase II

All exterior construction was completed in October 1990, and a grand opening was held to celebrate the reopening of the center. At the same event, the company announced that Walgreen's would be the center's new anchor tenant. Over 200 local dignitaries attended a party held in the still vacant space formerly occupied by Jewel. The high school band played.

Work then began on phase two of the renovation: completely refitting the former grocery for Walgreen's. To make the space conform to the Walgreen's store prototype, a mezzanine level at the back of the store had to be raised and columns moved. The store was rewired and repainted. Halfway through the renovation, Walgreen's corporate office changed the standard color scheme for all stores; the walls were repainted again. The entire interior renovation was completed in four months, and Walgreen's opened its store in April 1991.

Batavia Enterprises had planned no interior renovation in its rehab, except for refitting the food store for Walgreen's. However, an added benefit of the renovation was that many tenants took the opportunity to update their interior spaces and install new displays and stock. The center became new looking inside as well as out.

Rebirth--the rewards

The timing on the renovation proved fortuitous. Shortly after the lease with Walgreen's was finalized, the national Coast-to-Coast hardware chain went bankrupt, vacating another 6,000 square feet in the center. Without the benefit of the center's new look, it would have been difficult to capture strong new tenants.

Replacing a food store with a Walgreen's also improved the center's traffic patterns. Most of the weekday traffic had occurred in early afternoon or just before the dinner hour, when shoppers ran in for a quick, last-minute purchase. These late, hurried stops did little to generate traffic for other tenants. And the intermittent traffic either jammed the center's parking or left it largely empty.

Conversely, the wider variety of products at the Walgreen's generates a more moderate but steadier stream throughout the day. The Batavia Walgreen's did twice the amount of business in its first two weeks of operation as similar stores in neighboring Aurora and St. Charles. Thus, the entire center has benefitted.

Financially the renovation also proved a success. Approximately 40 percent of value was spent on the total renovation, 20 percent of which was spent on the interior renovation of the food store space. Because it did not have an anchor tenant when renovation began and felt they would not be able to obtain acceptable financing, Batavia Enterprises used its own capital to finance the exterior renovation. The interior finishes for Walgreen's were paid for through financing. Consequently, the payback on the renovation will be about five years.

Rents were increased an average of 50 percent to $12 per square foot, almost entirely because of the renovation. Even with new landscaping, more lighting, and a larger parking area to maintain, common area maintenance chargers were increased by only 3 percent or $0.70 per square foot. Maintenance savings from the new exterior design helped to hold down costs. The total increase in the building's pro forma was 150 percent.

Because of the center's new look, several retailers have contacted Batavia Enterprises and expressed interest in leasing, even in this down market. The Hobby-Works, a local entrepreneur, saw the renovated center while driving through town and contacted management. Retailers that did not fit the center profile were offered space at another new company center in nearby Elburn. Thus the synergy created by the renovation was carried one step further.

While renovation is always a risky undertaking, especially when one-third of your space is vacant, the decision has paid off in a fully occupied center ready to compete successfully into the 21st century. An added benefit is the pride of ownership that the owners/ managers of Batavia Enterprises feel whenever they pass by.

The Batavia Plaza renovation was the recipient of the 1991 "01e" award, presented by the Batavia Chamber of Commerce to the businesses which have made a substantial commitment to the development of Batavia through new construction or renovation.

Dan Stellato, CPM(TR), is vice president of Batavia Enterprises, Inc., Batavia, Illinois. He is a licensed Illinois real estate broker, a member of the St. Charles Planning Commission, and a graduate of North Center College in Naperville, Illinois.

Batavia Enterprises, Inc. is a 30-year-old property management firm managing property th roughout the Fox River Valley. The firm owns, manages, and leases commercial, industrial, and residential properties in the metropolitan Chicago area.
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Title Annotation:renovation of the Batavia Plaza center in suburban Chicago
Author:Stellato, Dan
Publication:Journal of Property Management
Date:Mar 1, 1992
Words:2019
Previous Article:What not to negotiate.
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