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  #3241  
Old Posted Oct 1, 2010, 4:38 AM
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http://www.chicagorealestatedaily.co...ns-som-mastros

Illinois Supreme Court won't take up Block 37 appeal

The Illinois Supreme Court on Wednesday declined to hear an appeal by Joseph Freed & Associates LLC entities over the appointment of a receiver at the new Block 37 mall. The Chicago-based developer early this year appealed the receiver's appointment by a Cook County Circuit Court judge. In a ruling March 31, the Illinois Appellate Court rejected Freed's arguments and affirmed the lower court's appointment of CB Richard Ellis Inc. executive Karen Pence Hollan as receiver of the State Street mall. A Freed spokeswoman says company executives are now “exploring our legal options.” The Supreme Court's move marks another setback in the case for Freed, and comes just a few weeks after Charlotte, N.C.-based Bank of America Corp. prevailed in getting Freed's defenses to the foreclosure lawsuit dismissed. A spokeswoman for B of A declines to comment.
     
     
  #3242  
Old Posted Oct 6, 2010, 5:52 AM
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Wow, it finally looks like things are sort of coming together at Block 37 for once.
  • Disney opened last week. While I'm not a fan, it seems to be driving more people into the rest of the mall
  • Andy's Frozen Custard opened today
  • I believe that the rest of the pedway tenants (Which Wich, Simply Thalia, some candy store) should open pretty soon
  • Looks like there's some progress on the Local Charm and Akira stores on floor one
  • On the second floor, Malabar is supposed to open next week and Michelle Tan looks almost ready:
     
     
  #3243  
Old Posted Oct 6, 2010, 1:45 PM
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What's the latest news on the movie theater and food court?
     
     
  #3244  
Old Posted Oct 6, 2010, 2:40 PM
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Thanks for the update, Spyguy.

I plan to wait a while before visiting Block 37 again. The progress there is too slow and painful to bear. I'll come back in the Spring and hopefully it will have more bustle as more tenants move in.
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  #3245  
Old Posted Oct 7, 2010, 2:23 AM
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hopefully by the holiday season the mall will be filled or somewhat occupied
     
     
  #3246  
Old Posted Oct 12, 2010, 7:37 PM
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http://www.chicagorealestatedaily.co...-block-37-loan

B of A looks to sell Block 37 loan
By: Eddie Baeb October 12, 2010


Bank of America Corp. is moving to sell the Block 37 loan, on which the bank sued to foreclose about a year ago.

The bank has hired Eastdil Secured LLC to market the loan, confirms a spokeswoman for B of A who declines further comment.
     
     
  #3247  
Old Posted Oct 15, 2010, 2:23 PM
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So I decided to walk through the mall last night since I had some time to kill before The Lion King, and I was actually quite impressed with the mall. I like how it seems to fit in with the theater district. I really liked the LED Screens in the attrium area. I am really hoping that the mall will start to fill up. I could really see it doing well once completely filled.
     
     
  #3248  
Old Posted Oct 23, 2010, 8:10 PM
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First the good news

Akira opened - it only took about a year.

Block 37/ Facebook

And a law firm leased some space in the office tower.
     
     
  #3249  
Old Posted Oct 23, 2010, 8:32 PM
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Now the bad news (or good)

http://www.chicagobusiness.com/artic...UE01/310239984

Bank blocks buildout of Chicago's Block 37 retail mall
By: Eddie Baeb October 25, 2010


...One of the five banks in the property's lending group won't agree to fund interior construction for five prospective tenants, including a movie theater and a health club that would fill out the top two levels and take the place of the gym and the theater that bailed out before the Loop complex opened last November.

...The five would-be tenants—XSport Fitness, Studio Movie Grill, Adagio Teas and women's fashion shops Eileen Fisher and Charming Charlie—would occupy more than 85,000 square feet, bringing the four-level mall to 70% leased.
---

Where to begin...
  • Adiago Teas - don't know much about them but looks OK
  • Eileen Fisher - already mentioned, very good tenant to have

Then we move on to the others which belong in a stripmall or an old, dying mall*
*Block 37 is still new.
  • XSport - cheap gym that already has another location on State. I still maintain that a gym won't add any vitality to the project or street, but if you're going to have one at least get something on the level of Equinox or David Barton.
  • Charming Charlie - cheap jewelry/accessories store like Claire's. Enough said.
  • Studio Movie Grill - cheap chain from suburban Texas. This thing is going to fail miserably in Chicago - website is junk, theaters looks dated, the seats are basically office chairs, no stadium seating, small screens. They really need to look for something better like Gold Class Cinemas or Muvico.

IMO the best option is to forget about leasing the 3rd floor to retailers because all you're going to get are useless gift shops or stores that last 6 months before closing. Take all of the space facing State Street and turn it into either an upscale gym or entertainment space (bowling, live theater, etc.) Fourth floor should be filled with the movie theater and other entertainment options.

In short, if they don't get better anchor tenants than X-Sport or Studio Movie Grill then I feel confident in saying that the mall portion of Block 37 is mostly a lost cause.
     
     
  #3250  
Old Posted Oct 23, 2010, 8:48 PM
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Thorough analysis spyguy. I feel like we owe you a fee for that...
     
     
  #3251  
Old Posted Oct 23, 2010, 9:25 PM
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Anyone other than me think that Akira is engaging in classic over expansion in the chicago market......seems like they are opening everywhere. I would not be surprised to see several of their stores close in the next 12-18.
     
     
  #3252  
Old Posted Oct 29, 2010, 2:10 PM
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Quote:
Originally Posted by spyguy View Post
http://www.chicagobusiness.com/artic...UE01/310239984

Bank blocks buildout of Chicago's Block 37 retail mall
By: Eddie Baeb October 25, 2010


...One of the five banks in the property's lending group won't agree to fund interior construction for five prospective tenants, including a movie theater and a health club that would fill out the top two levels and take the place of the gym and the theater that bailed out before the Loop complex opened last November.

...The five would-be tenants—XSport Fitness, Studio Movie Grill, Adagio Teas and women's fashion shops Eileen Fisher and Charming Charlie—would occupy more than 85,000 square feet, bringing the four-level mall to 70% leased.
---

Where to begin...
  • Adiago Teas - don't know much about them but looks OK
  • Eileen Fisher - already mentioned, very good tenant to have

Then we move on to the others which belong in a stripmall or an old, dying mall*
*Block 37 is still new.
  • XSport - cheap gym that already has another location on State. I still maintain that a gym won't add any vitality to the project or street, but if you're going to have one at least get something on the level of Equinox or David Barton.
  • Charming Charlie - cheap jewelry/accessories store like Claire's. Enough said.
  • Studio Movie Grill - cheap chain from suburban Texas. This thing is going to fail miserably in Chicago - website is junk, theaters looks dated, the seats are basically office chairs, no stadium seating, small screens. They really need to look for something better like Gold Class Cinemas or Muvico.

IMO the best option is to forget about leasing the 3rd floor to retailers because all you're going to get are useless gift shops or stores that last 6 months before closing. Take all of the space facing State Street and turn it into either an upscale gym or entertainment space (bowling, live theater, etc.) Fourth floor should be filled with the movie theater and other entertainment options.

In short, if they don't get better anchor tenants than X-Sport or Studio Movie Grill then I feel confident in saying that the mall portion of Block 37 is mostly a lost cause.


At first when seeing this article I was angry at the one bank that is holding up the lease-out of the top floor (is there a conceivable negative development in this saga that would actually surprise anyone at this point?), But on second glance, I definitely agree with Spyguy here - these seem like fairly undesirable options, and the bank's stonewalling could actually be a blessing in disguise. A gym was always a bad idea because of the lack of synergies of the use - even back to the days of upscale David Barton being in the mix - it's just not a complimentary use and cross-traffic generator - just an income generator for that specific space. And although a movie theater remains a fantastic use of part - or for that matter all (that's an option they should definitely be exploring) - of the 4th floor, it would be highly desirable for it to be upscale - discount or no-frills theater chains are a no-no for this site. When it first looked as though Muvico was falling apart, they should have went hard after Gold Class. Also, AMC is starting an upscale theater w/food segment - at least on the west coast.....they should be going after them aggresisvely as well....
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  #3253  
Old Posted Oct 29, 2010, 2:12 PM
SamInTheLoop SamInTheLoop is offline
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Quote:
Originally Posted by lawfin View Post
Anyone other than me think that Akira is engaging in classic over expansion in the chicago market......seems like they are opening everywhere. I would not be surprised to see several of their stores close in the next 12-18.
Yes. I assumed they were moving their location further south on state to block 37 but i guess not the case....
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  #3254  
Old Posted Oct 29, 2010, 2:55 PM
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Originally Posted by SamInTheLoop View Post
Yes. I assumed they were moving their location further south on state to block 37 but i guess not the case....
In the three groupings of Akira stores I can think of (lincoln park, wicker park, loop) there are always multiple stores in a fairly close proximity.

The thing is, usually each store serves a different clientele, shoes, men, women etc.

Its kind of unusual, but maybe it works. I also wonder what the total square footage of a grouping of stores is. if the total size is similar to say the H&M on state (which serves each of the client groups in one store) I would imagine store costs are only negligibly higher - but with much higher percentage of store fronts.
     
     
  #3255  
Old Posted Oct 30, 2010, 2:58 AM
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Spent a good amount of time in the Block 37 mall today.

I'm all in all optimistic. It still could use more vibrance, but I thought the foot traffic was decent. A lot of people were in the Disney, Akira, and Zara stores.

Once this foreclosure mess is finally sorted out, I think the mall will have good potential. However, I think they should eliminate the 3rd and 4th levels and turn them into office or perhaps meeting space--this thing is adequate as a 2 level mall. If a hotel is ever developed here, that space could also provide a decent sized ballroom, I imagine.
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  #3256  
Old Posted Nov 1, 2010, 12:55 PM
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^ I think the 3rd and 4th floors should definitely still be targeted for mostly entertainment/dining space, as I think is still currently the plan....I believe it's been pretty much universally realized that making retail shop space work above the 2nd floor is a challenge almost anywhere (sure there are notable exceptions), and isn't the highest and best use for fls 3 and 4 at block 37.....as for ballroom/meeting space for future hotel above the retail podium, I believe (not 100% certain but fairly sure) that's been planned for in a future floor 6 and or 7......
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  #3257  
Old Posted Nov 1, 2010, 6:06 PM
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The only way I can think of the higher levels being used is if more stores were to move in that were double height or multiple floors. Example: Crate and Barrels that have moved into two level malls have actually crammed in 4 levels with lower ceiling heights. Something like that may work, with whatever store you can attract that would do something like that...but it probably wouldn't help with much concourse traffic.
     
     
  #3258  
Old Posted Nov 2, 2010, 1:29 AM
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If the 3rd/4th floors contain anchors that draw people up there, then the stores should get filled.

The anchors have to be chosen carefully, though, and if possible, they should be destinations that won't lose their appeal once they stop being trendy. A movie theater is a good idea. Bowling alleys have been used, but I'm a little skeptical. It wasn't too long ago that bowling was a fairly uncool activity with only niche appeal. It could easily go back to that status.
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  #3259  
Old Posted Nov 2, 2010, 1:36 PM
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Originally Posted by ardecila View Post
The Pritzker family Crown family owned it, in some capacity. The Merc hadn't owned it since it moved to Wacker in the 1970s.

I don't think it will be a Block 37, though. The problem with Block 37 was the fact that the city kept demanding a complex mixed-use project, but in order to do that, the markets for each component needed to be strong at the same time. We finally got something built, but two major developers had to take a loss, and the mall is still mostly empty. The only reason construction went forward this time is because Mills and then Freed were persuaded that the mall would work economically. Both were wrong, of course.

There was always far too much government involvement in general in block 37 (real estate development is clearly not a core competency of any government unit), and I agree with you that the edict for a large mixed-use project further set it up for 'challenges'...such projects have a fairly poor overall track record - at least financially speaking - across the U.S. due in part to the complexities in hitting multiple property type market cycles within the same project. However, there is nothing fundamentally 'wrong' with the retail component at block 37 from a market viability perspective....the concept, layout, etc works - provided its filled with wise choices as tenants. The reason the mall is only 40% or whatever leased has little to do, frankly, with market fundamentals - it has virtually everything to do with the project being dramatically undercapitalized, the construction loan presumably being tremendously underwater, seemingly little money either being available, or being made available for necessary tenant improvement work to both land tenants initially and allow them to open once signed on, and.....oh yeah - the project going through the foreclosure process. What caused all this? Certainly the fact that it would appear that far too little equity was contributed to the project (the property was remarkably over-leveraged) certainly didn't help....but also let's not forget that commercial real estate values in general nosedived 30-50% (for development projects, it would probably lean toward the high-end of this range, if not even slightly higher) over the 2008-2009 period. Finally, although this project has faced so many setbacks over the past 20+ years that I've completely lost track, one of the more (granted, in hindsight, which is invariably 20/20), shall we say, boneheaded decisions, was the selection by the city 7 or 8 years ago of Mills Corporation to be the master developer. It was a positively indefensible choice that I believe really hobbled the project in so many ways during the height (2003-2006) of the decade's commercial property boom, which by the end of 2007 or so a fabulous, vibrant, gold-plate tenanted mixed-use office/retail/entertainment/dining residential/hotel/transit could have been successfully delivered to the market...

I take it this should be moved to the block 37 thread...
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Last edited by SamInTheLoop; Nov 2, 2010 at 3:22 PM.
     
     
  #3260  
Old Posted Nov 2, 2010, 1:43 PM
SamInTheLoop SamInTheLoop is offline
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Originally Posted by ardecila View Post
If the 3rd/4th floors contain anchors that draw people up there, then the stores should get filled.

The anchors have to be chosen carefully, though, and if possible, they should be destinations that won't lose their appeal once they stop being trendy. A movie theater is a good idea. Bowling alleys have been used, but I'm a little skeptical. It wasn't too long ago that bowling was a fairly uncool activity with only niche appeal. It could easily go back to that status.

Yeah, I agree re: the whole upscale bowling thing. The mobs can be fickle when it comes to trends like that, and it could turn out to be a fairly short-lived fad....
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