Algonquin Commons' new owner plans to invest about $30 million in outdoor shopping center
The new ownership of Algonquin Commons has plans for a new entertainment area and new tenants for the currently quarter-vacant outdoor shopping center.
California-based Red Mountain Group Inc. plans to invest about $30 million for Algonquin Commons' redevelopment, through renovation and re-tenanting, the village of Algonquin announced last month.
"We're super excited about the indoor-outdoor covered entertainment area because we're hoping to make that a focal point for the community so that there can be social events," Susan Rounds, vice president of marketing for Red Mountain Group, said in an interview.
As of now, the 1-acre entertainment area will span across two buildings, in the middle of the parking lot near the Orange Theory Fitness, Sylvan Learning Center and Bonefish Grill.
In this space, Rounds said, the Red Mountain Group wants to offer televised sporting events, outdoor movie nights, outdoor dining and holiday functions.
Jason Shallcross, the village of Algonquin's community development director, said the village is "thrilled" with the Red Mountain Group's plans, adding the entertainment area will make the Algonquin corridor the "commercial-entertainment place to be."
"We feel like that's really going to be a huge draw for the center, not only locally but also regionally," Shallcross said in an interview.
Red Mountain Group's core business model is acquiring distressed shopping centers in need of rehabilitation.
"That's what we've been doing for over 20 years," Rounds said. "And so this opportunity became available."
Algonquin Commons isn't distressed in the same way other places Red Mountain Group has worked on is, but it still fits within the distressed category as it was previously bank-owned.
Shallcross said the Commons has been banked-owned for about a decade, and the Red Mountain Group bought it out of receivership.
When a center is held in receivership, any lease that needs to be renewed has to go before a judge, which Shallcross was a factor in Algonquin Commons' vacancies.
A bank also was not going to invest money or update the Algonquin Commons, Shallcross said, making it even more exciting for the village to see the Commons come out of receivership.
Usually, Red Mountain Group buys shopping centers that are anywhere from 40% to 100% vacant. Algonquin Commons has about 25% of its spaces vacant. In comparison, Shallcross said, villagewide commercial vacancies sit around 8%.
"This is such a large shopping center that even a 25% vacancy is pretty significant, just because of the size of the shopping center," Rounds said.
Along with the new entertainment area, Red Mountain Group is looking to re-tenant the shopping center, Rounds said.
Right now, it has a lease signed with Ashley Furniture, and two other major tenants that Rounds declined to name are expected to come to the Commons as well.
Although the COVID-19 pandemic made ordering products online and having them shipped to people's houses easier, there still is a demand for shopping centers that offer restaurants and retail in person, Rounds said.
"Those aren't things that you can really replace," Rounds said. "Everybody's ready to get out and eat in a restaurant, even if it's outdoors."
As for the existing spaces at Algonquin Commons, Red Mountain Group will look at freshening it up and taking care of any repairs that need to be made.
"When you drive to the center now, it's a pretty good-looking center," Rounds said. "But there are a few things that need to be touched up and repaired, and we'll definitely be doing that quickly."
Red Mountain Group expects it will have the covered entertainment area ready by the end of next summer. Ashley Furniture should be up and running before the holidays this year, if not sooner than that, Rounds said, with the other two tenants to be in place within three to five months depending on how the permit process goes.