Retail Diversity
NAI Hiffman Development Services creates a mix of retail projects in suburban Chicago.
Chris Thorn

In suburban Chicago, NAI Hiffman is taking a diverse approach to retail development. The company is actively developing three different centers that each capitalize on a unique opportunity and niche.

“Retail is hot right now. Recent increases in retail rents are making this possible,” says Ryan Murphy, executive vice president and managing director of Oak Brook, Illinois-based NAI Hiffman. “It has changed what people can do with the look and feel of their centers.”

Rents have risen from $20 per square foot to the high $30's and even low $40's range during the past few years. The company feels the market is ripe for retail and is making a push with these properties.

In Oak Brook, Illinois, Hiffman is developing Oak Brook Promenade, a 180,000-square-foot lifestyle center, for St. Paul Properties. The center will be built on the grounds of a former 250,000-square-foot office park on Butterfield Road.

“The value of the ground went right past the value of the building,” says Dennis Hiffman, chairman and CEO of NAI Hiffman. “The household income in the area is astronomical and there is pent-up demand because the area is built out.” This powerful combination made the 25-year-old office space expendable.

In its place, Oak Brook Promenade will seek to capture the copious retail dollars in the area with a mix of lifestyle center tenants and high-end restaurants.

“We are attracting a lot of new entrants to the Chicago marketplace,” Murphy says. Although the developers are in the letter of intent stage now, they plan to announce a number of the approximately 25 retailers by the ground breaking this month.

The center will be designed with an eye to maturity. The landscape will include full-grown trees and each building will look different than its neighbor.

“We want to give it the feel that it has been here forever,” Murphy says. “Small town buildings have eclectic buildings attached to one another. We want to capture that.”

The center will also capture the attention of the market when it opens on October 16, 2006. “This is an average office park but it is an incredible retail site,” Murphy says.

The development team consists of Ken Erickson, project development manager; Mike Van Zandt, senior vice president; Jim Farrey, vice president; Clair Bitautas, vice president; and Anthony Turano, associate.

Hiffman is developing Design Pointe, a 150,000-square-foot shopping center dedicated to home design retailers and built with a Tuscan theme in Naperville, Illinois.

“Home goods is one of the hottest markets out there,” Murphy says. “You are going to see a lot of these concepts in the future.” Murphy points to increased consumer interest as well as this type of retailers' willingness to pay higher rental rates for better locations.

But not all of these retailers are willing to pay higher rents. Some prefer to own their space, and Design Pointe will accommodate them too.

“A lot of high-end, smaller retailers in Chicago would love a center like this but want to own their units,” Murphy says. “So we are including a condominium component.” Although the size of the component is still being determined, Murphy sees it as a major part of the center's appeal. “This could be one of the reasons the project is successful in the end,” he says.

Other reasons the project looks good on paper is its accessibility to Interstate 88, a good regional location and a high growth residential market. But it is maybe the center's singularly themed tenant mix that makes it appealing to shoppers and retailers.

“Tenants that are in the home design category get lost in other retail centers,” Murphy says. “In Design Pointe, they will get the synergy of being around similar tenants and feed off of that cross traffic.” Groundbreaking is scheduled for August with a spring 2006 completion date.

Hiffman is developing Plum Farms at the corner of State Roads 59 and 72 in Hoffman Estates, Illinois. The mixed-use project will feature 220,000 square feet of high-end retail and approximately 200 multifamily units.

“This is kind of filling in the hole of the retail doughnut,” Murphy says. The company will break ground in spring 2006 with a scheduled completion date of spring 2007.”