'Shops & Lofts' moves forward -- with rentals
Part of the art of the deal is knowing when to walk away – and when to just shift gears.
A couple years ago, NCP lead agency Quad Communities Development Corp. was working with urban-oriented commercial developer Mahogany Ventures on a mixed-income, mixed-use project called the “Shops and Lofts at 47.” The concept combined ground-floor retail and upper-story condos along Cottage Grove Avenue and around the corner on 47th Street.
Photo: Courtesy Mahogany Ventures
The rekindled 'Shops and Lofts' project will look the same from the outside as originally depicted in this architectural drawing, except for a structured second-floor parking garage.
“They were probably hanging off a cliff,” says Bernita Johnson-Gabriel, executive director at QCDC, who’s been nurturing the project along with James Wilson of the city’s Department of Planning and Development.
“The condo market just crashed," she says. "There was no way they were going to be able to get money to finance the deal. They weren’t exactly saying, ‘We’re out of here.’ But James and I knew they weren’t going to be able to move forward with the plan they had.” (For an earlier article about the original plan, please click here.)
A conversation between Johnson-Gabriel and Wilson sparked the idea of converting to rentals, but Mahogany had little experience in that area. Enter The Community Builders, a national non-profit with expertise in managing rental properties.
'Worth a try'
Photo: Alex Fledderjohn
QCDC Executive Director Bernita Johnson-Gabriel (right) put the revamped deal together with help from Ald. Toni Preckwinkle (4th), the Democratic nominee for Cook County Board president.
“We weren’t sure it was going to work, but we thought it would be worth a try,” Johnson-Gabriel says. “They kind of hit it off.”
“It is going very well,” says Frank Petruziello, managing partner with Mahogany, a joint venture of his retail development firm Skilken and Adam Troy of Troy Enterprises. “Our cultures have meshed. We are continuing to do what our strength is, which is the retail. [The Community Builders] will be doing their strength, which is affordable rental housing.”
“This, for us, represents a very good, collaborative model,” agrees David Block, director of planning for The Community Builders. “We’re doing what we know best, and Frank is doing what he does best. The partnership is working very well. It’s been a good learning experience for both of us.”
Photo: Courtesy QCDC
Retail businesses elsewhere on Cottage Grove Avenue stand to benefit from the 140 additional households the Shops and Lofts project will bring to the community.
“We know that they can,” he says. “We have quite a bit of money invested in it, for the years we have been working on it – not only money, but emotional energy. It’s in everybody’s interests, and everybody knows this, that we find a way to meet the current market.”
Petruziello expects the project to break ground in late 2010 or early 2011. It will be built in two phases, with 70 rental units in each phase, about 28,000 square feet of retail in the first phase and another 20,000 in the second phase, and second-floor structured parking with one space per unit to provide a buffer between the two, he says.
Same skin, different interior
Mahogany is currently negotiating with a national grocery chain that would fill 18,000 square feet of the retail space, and the company is hoping to sign leases with a variety of smaller storefronts like a coffee shop and a dry cleaner, to fill about 10,000 square feet more during the first phase.
Photo: Courtesy QCDC
Shops and Lofts is part of a larger strategy to revitalize Cottage Grove Avenue in Bronzeville.
Building the parking structure has provided perhaps the stiffest challenge of the tripartite venture, Block says, but multiple layers of financing have gotten it most of the way there. “We think we have it figured out, but not 100 percent,” he says.
The next step will be completing the land acquisition – Mahogany owns some of it, the city owns some, and the city is appraising a third parcel that it intends to buy, Petruziello says.
“We are hoping for a friendly sale, and a quick friendly sale,” Johnson-Gabriel said, during the October “Chicago Rising” conference sponsored by LISC/Chicago. “There was no way anybody was going to build more condos. We had to think outside the box, and bring people together who had never met.”
She adds that QCDC did not undertake a comprehensive review of other possibilities to re-do the deal. “I wish I could tell the story that we looked at this model, and this model, and this model,” she says. “But no, it was just sitting around the table chatting.”