CHICAGO | 108 North State (Block 37)

[SamInTheLoop]

I think it's been more than 10 months now since CIM Group closed on their purchase of Block 37. In the blink of an eye, it will be one year. They've certainly got nothing to show for themselves yet, hopefully they are not squandering precious time here. From my perspective, even given the very real challenges at hand, there would be absolutely no credible excuses for having purchased this project in April 2012 and not having it 75-85% tenanted and occupied in time for the 2013 holiday season. Time, she's a 'tickin............

Heard-on-the-street?
Rumors?
Innuendo?
Supposition?

Anybody got anything here?

[Mr Downtown]

Well, first they have to find suckerstenants who think that being hidden away inside a building is a good retail strategy.

[ardecila]

What if they closed the street stairs to the Red and Blue Line stations? People heading to the platforms would have to pass through Block 37. You'd need signage, of course.


src

[Beta_Magellan]

The first story and pedway are decently rented-out—people on their way to and from work aren’t going to make a detour to the second story just because you’ve blocked off their access to State and Dearborn.

[Rizzo]

Originally Posted by Beta_Magellan

The first story and pedway are decently rented-out—people on their way to and from work aren’t going to make a detour to the second story just because you’ve blocked off their access to State and Dearborn.

I'd like to point out that the rented spaces are either right by the entrance or have street access. Some of the basement locations are specialty fast casual. Which wich is the only landlocked tenant in that place that is extremely busy.

I don't think any level of demand is ever going to get this place completely back on track. It's basically another Chicago place. Busy street level stores and restaurants that cater to the loop workforce.

[untitledreality]

Originally Posted by ardecila

What if they closed the street stairs to the Red and Blue Line stations? People heading to the platforms would have to pass through Block 37. You'd need signage, of course.

Restrict access to a public amenity and force feed people through a failed real estate project owned by a private entity?

To hell with CIM Group and this project. They bought it, let them fix it.

[sloop.chi]

They need to develop a residential /hotel portion on the north end and add a multi entertainment component similar to the AMC in Streeterville. Mix in some restaurants and that should get the ball rolling.

[Rizzo]

Originally Posted by sloop.chi

They need to develop a residential /hotel portion on the north end and add a multi entertainment component similar to the AMC in Streeterville. Mix in some restaurants and that should get the ball rolling.

I agree. At the same time, I think 'economic reasons' has become somewhat of a scapegoat for this property's failure. While I agree the timing was bad, the mall is just flat out terribly designed. The owners must accept this and consider whether a renovation is necessary to attract big-box type outfits on the upper floors and improve visibility of retailers on the lower levels.

Developers also need to come to terms that they can't be the next Water Tower Place. WTP was built in a time where large indoor malls made sense and were in vogue. Not anymore...where people prefer the street level convenience in downtown shopping districts. The only reason why WTP continues to be successful is because of their A-list roster of tenants and prestige. Block 37 must take a different route and shoot for something similar as sloop.chi mentioned. Tenants that need large amounts of space and double height ceilings.

Also, the addition of hotel or residential may allow subtraction of mall space for banquets and conferencing. I imagine holding a banquet on the 4th floor overlooking state street would be pretty damn marketable.

So to do this, they need to stop the wall decorating and sign modifying in the mall and move forward with renovating and reconfiguring the atrium once they've gotten the hotel and residential components locked down.

[ardecila]

Originally Posted by untitledreality

Restrict access to a public amenity and force feed people through a failed real estate project owned by a private entity?

To hell with CIM Group and this project. They bought it, let them fix it.

You mean a real estate project that received substantial public assistance?

Taxpayers have skin in the game, too, so if CTA could help the mall succeed at no cost to CTA, that option should remain on the table.

[untitledreality]

Originally Posted by ardecila

You mean a real estate project that received substantial public assistance?

Taxpayers have skin in the game, too, so if CTA could help the mall succeed at no cost to CTA, that option should remain on the table.

There are already Block 37 Lake and Washington entrances, the job should be to making those a more attractive option than just dumping into the station from the street... not removing options.

Who cares that the city dumped money into the project? Will it improve CTA ridership by removing the easiest access points? Why risk adversely effecting ridership in an attempt to boost retail numbers at a indoor mall with inherent falls?

[ardecila]

Well, the ground floor is fully leased so I doubt it would make much of a difference. It won't help the upper floors. The basement has surprisingly high turnover given its location as a link between two subway stations and on the pedway system, so I don't really know what the problem is there. It might just be tenant selection - nobody knows what the hell a Beard Papa is, but a Popeye's might make a killing. A lot of CTA riders come from working-class communities and aren't interested in gourmet Japanese cream puffs.

The double doors at each end of the B37 basement are also a big psychological barrier. It would increase mall operating costs but it might be better to use air barriers for a completely open passage.

[woodrow]

^^ it is?? There is an empty store front on State Street, Alternatives is gone and there is a LOT of undeveloped space on the corridor towards Clark that has never been occupied.

[the urban politician]

I long ago proposed that the upper levels of this mall should be converted to another use. I still stand by that. If they build a hotel, then the upper levels can be devoted to hotel uses (restaurant/bar/meeting/ballroom/lobby, etc) space.

My guess is that CIM is taking a long time for this exact same reason. They are coming to the conclusion that they need to make a significant change, and perhaps they are planning exactly how they will reshape this project.

All I hope is that they eventually get things moving. State Street's revival needs it!

[ardecila]

Originally Posted by woodrow

^^ it is?? There is an empty store front on State Street, Alternatives is gone and there is a LOT of undeveloped space on the corridor towards Clark that has never been occupied.

Sorry, you're right. I meant that it's doing far better than the basement or upper floors.

If there's still an open space facing State, then I think we either need to blame economic conditions or an inept landlord. Seriously, why is the first floor not leased? Even the Dearborn side shouldn't be difficult. The Wabash side of Sullivan Center is fully leased, and that has less foot traffic than Dearborn.

[Beta_Magellan]

Wabash is already something of a secondary commercial street, while Dearborn barely has anything—there may be more foot traffic, but it’s the sort of foot traffic that’s going to look around and shop for stuff. People will go to Wabash to shop—they won’t go to Dearborn (there’s more residential along Wabash, too).

[Rizzo]

Originally Posted by ardecila

Sorry, you're right. I meant that it's doing far better than the basement or upper floors.

If there's still an open space facing State, then I think we either need to blame economic conditions or an inept landlord. Seriously, why is the first floor not leased? Even the Dearborn side shouldn't be difficult. The Wabash side of Sullivan Center is fully leased, and that has less foot traffic than Dearborn.

I wonder if they could get pop-up tenants, or are they too good for that? i mean the benefit of pop-up tenants is they can stay as long as they do very little modification to the white-box spaces and given short term leases. Sure the mall makes very little money from them, but it drives up traffic and potentially other business.

[wierdaaron]

At this rate they could move Taste of Chicago inside Block 37 and give each vendor their own retail unit for the week. I wouldn't need as much sunblock.

[woodrow]

Originally Posted by ardecila

Sorry, you're right. I meant that it's doing far better than the basement or upper floors.

If there's still an open space facing State, then I think we either need to blame economic conditions or an inept landlord. Seriously, why is the first floor not leased? Even the Dearborn side shouldn't be difficult. The Wabash side of Sullivan Center is fully leased, and that has less foot traffic than Dearborn.

Damn!! I was hoping you had some inside info!!

As to the State Street space, it is little. Very narrow frontage.

I also don't understand why Dearborn, and Randolph, haven't leased up. The foot traffic on both is high. Maybe on Randolph it is the uncertainty of possible construction interruptions (the apt/hotel tower). I assume that Randolph would be most affected by that,

[SamInTheLoop]

It was reported last week by commercial real estate industry newsletter Real Estate Alert that CIM just closed on $350 million of equity fundraising for an opportunistic (presumably heavily development/redevelopment-oriented) investment fund. With debt, my guess is that could be anywhere from perhaps $600 million - 1 billion of development/acquisition capital. Here's hoping that some of this gets allotted to the high-rise residential/hotel component of Block 37.......

[LaSalle.St.Station]

I'm in agreement that the indoor mall concept is a hard sell these days even if executed flawlessly in design. I think those who are pushing for a hotel solution are correct. The whole building plus the planned high rise portions should be redone as a hotel with base level retail. Basically a newer version of the Palmer House on State.