“For Lease” signs abound in the once-prized crown jewel of Des Plaines' downtown, a stark reminder of the still struggling economy.
The new owner of Metropolitan Square, which emerged from foreclosure earlier this year, is trying to generate interest in the property that has seen a growing number of vacancies in recent years, including the departure of the Jimmy Buffett-themed Cheeseburger in Paradise.
Other businesses, among them MBD Martial Arts Studio on Miner Street, have relocated to older buildings downtown seeking lower rents.
The shopping center, located north of Miner Street near Northwest Highway and Lee Street, opened in 2006 and today is anchored by Shop-N-Save — covering a third of the total square footage and the center's biggest draw.
A handful of businesses remain, including a Potbelly Sandwich Shop and Panera Bread that generate the most foot traffic during lunch hour. Employees at non-destination storefronts, such as Hair Cuttery and Lee Nails Salon, say business has been down.
“We came in when there was a downturn,” said Patrick Petrillo of Long Grove, whose family has been operating an Allstate Insurance office in Metropolitan Square since January. “We actually got a good rate for this place. Five doors down, the florist just moved out because the rent was too high.”
Petrillo feels confident his business will survive because it's not one that relies on walk-in customers, though he admits foot traffic within the square could be better.
He said he has heard rumors of a bar coming in where the Cheeseburger in Paradise once stood, which could generate some buzz.
“I feel like this particular area is a pretty niche market,” he said. “I feel like the location is good because there's a lot of different things here.”
The distressed Metropolitan Square property was acquired by Austin-based World Class Capital Group, LLC, in May for about $6.5 million. The loan outstanding on the property was $17 million.
Nate Paul, president and CEO of World Class, said he expects new businesses to open soon. The company is soliciting groups who in the past expressed interest but were unable to make a deal with the previous property manager, he added.
“Right now, we are negotiating with some new tenants,” Paul said. “We're in the middle of renovations and working with all the existing tenants on renewing leases. We're excited about the future. I think we'll see some new tenants come in throughout the rest of this year and early next year as well.”
Metropolitan Square is presently about 75 percent occupied. The property has been generating interest from a mixed blend of businesses, Paul said.
“We're looking for a diverse tenant base from restaurants to other retailers,” said Paul, whose company has properties in 15 markets, mostly in southern states such as Florida, North Carolina and Texas. “We're looking to grow our presence in Chicago.”
Metropolitan Square attracted company officials because it is considered “a high quality asset” from the construction standpoint.
“We think with the right management and the right tenant mix it could thrive as a dense, urban infill center,” Paul said. “Our goal is to retain all tenants who are there right now. We're hoping for all the businesses to thrive. We're working pretty much with every tenant to negotiate leases.”
Des Plaines City Manager Mike Bartholomew said city officials heard complaints from businesses that rents were too high with the previous owner. The property manager at the time blamed the rise in tenants' rents over the years on Cook County raising its property tax assessments.
“As long as the lease rates are market driven, they'll be fine,” Bartholomew said.
“I'm glad there's new owners involved and that Metropolitan Square is out of bankruptcy,” he added. “That doesn't mean that the economy is any different from what it was two, three, four months ago. They have a couple of very good leads to fill some of the vacancies, specifically the old Cheeseburger in Paradise.”
The city's new community and economic development director, Alexander Dambach, will be working with Metropolitan Square's property managers and the Des Plaines Chamber of Commerce & Industry on economic development initiatives for downtown, Bartholomew said.
Metropolitan Square's impact on the city's own finances cannot fully be measured as the Illinois Department of Revenue keeps sales tax information confidential and cannot release it under state law.
Metropolitan Square generated $75,183 of the roughly $4.2 million in property tax revenues anticipated from the downtown tax increment financing, or TIF, district in 2012, Des Plaines Finance Director Dorothy Wisniewski said.
In a TIF district, extra property tax revenue generated by redevelopment is used to help pay for some of the costs of projects like Metropolitan Square.
The slow economy has cut into property values downtown though, and tax revenues from the area are falling rather than rising.
“Equalized assessed values have decreased significantly in the TIF district,” Wisniewski said. “A lot of people have appealed (their assessments) especially in TIF 1 (the downtown district). We are estimating $4 million in 2013.”
That would represent a 5 percent decline from this year. Despite the challenges, though, the district is in better shape than a couple of other TIF districts in the city, which are operating in the red.
“Our downtown TIF district is the healthy one,” Wisniewski said.Copyright © 2013 Paddock Publications, Inc. All rights reserved.