Developer ups retail ambitions for 86th-and-Keystone site

June 2, 2012
rop-restaurant-060412-15col.jpg A Wisconsin developer has proposed a four-story building with retail and apartments to replace the vacant and crumbling Woodfield Centre. (Rendering courtesy of Sitehawk Retail Real Estate)

A Wisconsin developer has beefed up plans for the southwest corner of East 86th Street and Keystone Avenue across from The Fashion Mall at Keystone.

A new version of the proposal from Hendricks Commercial Properties calls for a four-story “L”-shaped building with about 30,000 square feet of restaurants and retail on the first floor and 90 high-end apartments on the upper three floors.

The plans call for an urban-style layout with the building abutting the intersection and surface parking for shoppers and diners behind. An underground parking garage with about 100 spaces would accommodate residents of the development, dubbed Ironworks at Keystone Village.

The project likely would cost $20 million to build, industry sources said, and is far more ambitious than an earlier proposal that called for a small retail strip, a few outlots for restaurants and a possible hotel.

The leasing agent for the project, locally based Sitehawk Retail Real Estate, shared the new site plan with potential tenants at the annual International Council of Shopping Centers deal-making convention in Las Vegas in late May.

The goal is to land a restaurant anchor that would take up to 10,000 square feet and round out the mix with a few more fast-casual restaurants and a variety of other retail users, said Sitehawk principal Mark Perlstein.

The reception for Ironworks in Las Vegas was strong both for the location and the “cutting-edge” look, Perlstein said.

Renderings suggest an industrial-modern design for Ironworks. The name is an apparent reference to the developer’s signature renovation of a vacant factory in its hometown of Beloit, Wis., into an office and industrial campus.

“It’s really a billboard location,” Perlstein said of the site near Keystone at the Crossing. “It’s the last zoned developable parcel along the 86th Street trade area.”

Hendricks hopes to start construction by next summer and open the center by early 2014.

restaurant-map.gifA second phase could include a hotel. A site plan for the 6.4-acre property still shows a 1.5-acre parcel on the southern edge where Hendricks originally proposed a hotel.

The site represents one of the three best available properties in the market for sit-down restaurants, along with 96th and Meridian streets and Hamilton Town Center, in the eyes of broker Bill Talbot, who represents restaurants including McAlister’s and Weber Grill.

He figures the developers won’t have much trouble with their asking rents in the range of $30 and above per square foot. Pretty much every restaurant space closer to The Fashion Mall is taken.

The latest, Ocean Prime, is set to open in the next few days in the first floor of a redeveloped office building at the mall’s southeast entrance. Simon Property Group Inc. is working on a $50 million renovation of the mall that will bring a handful of smaller, new-to-market food court offerings.

“It’s as good as anything available for sit-down restaurants in the city,” Talbot said of the Ironworks site.

The property is zoned for the proposed use, and even if the developer needs to request a variance, it isn’t likely to encounter much resistance from neighborhood groups, which favor commercial uses at that corner.

Ruth Hayes, president of the Nora-Northside Community Council, said her board hadn’t been briefed about the changes to Hendricks’ plan but generally supports the idea.

Nora-Northside is aiming its ire instead at a plan by locally based Keystone Group for the intersection’s wooded northwest corner. (The group is concerned about losing trees and gaining traffic.)

Keystone is working on plans for a $40 million development with 240 high-end apartments, a small retail building and retail outlets on 12.6 acres it acquired in July 2011 for $3 million from the Federal Deposit Insurance Corp.

Keystone CEO Ersal Ozdemir described Ironworks as “complementary” to his proposal, which he vowed would be “attractive and exciting.” The company has not yet shared a rendering or site plan for its project.

Hendricks put its property under contract earlier this year with Jacksonville, Fla.-based Everbank, which took control of the vacant strip center in 2008 after the now-defunct Premier Properties USA Inc. defaulted on a loan. The land had been the centerpiece of Premier’s $750 million Venu proposal.

Everbank first offered the parcel for sale with an asking price of $6.75 million in 2008, but the price was well above what anyone was willing to pay, so the bank opted to wait. The local office of real estate brokerage Lee & Associates began marketing the property for the bank in 2011 with an asking price of $5.5 million.

In an unusual move, Lee & Associates has kept its sign on the property next to a Sitehawk sign touting Ironworks. The bank has opted to keep its sign up until Hendricks Commercial Properties completes its due diligence and closes on the deal, brokers said.•


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