East Coast grocer to open in Lincoln Park Hospital
By: Micah Maidenberg
Boutique grocer Mrs. Green’s Natural Market plans to open a store in a development on the site of the former Lincoln Park Hospital, ending a long search for the project’s developer.
Mrs. Green’s, a unit of Irvington, N.Y.-based Natural Markets Food Group, signed a 20,000-squarefoot, 20-year lease in the Webster Square development at the southeast corner of Lincoln and Webster avenues, said Richard Zisook, one of the principals at Chicago-based Sandz Development Co., which is redeveloping the Lincoln Park property.
In December 2011, Fresh Market Inc. backed out of its lease with Sandz, telling the developer it couldn’t live with restrictions on how it could use loading docks for the store, a key provision in a deal struck in August of that year between Sandz and elected officials, including Mayor Rahm Emanuel.
That Sandz was able to find another grocer despite the loading zone restrictions shows the strength of the boutique grocery market, said Jason Gustaveson, vice president of Chicago-based Stone Real Estate Corp., and the attractiveness of Lincoln Park’s family-heavy, and affluent, demographic mix.
“I think there is a market for these small groceries that can serve these pockets of population,” said Mr. Gustaveson, who represented the landlord in the deal bringing Plum Market to an Old Town property last year. “If they can open the doors and be competitive on price to Whole Foods and Trader Joe’s there’s probably room for them.”
Mr. Zisook declined to discuss terms of the leases with Mrs. Green’s. The firm will comply with the 2011 agreement governing development of the former hospital property, which is written into the plan governing the site’s development, he said.
“I wanted a tenant that would be an amenity to the neighborhood as well as an amenity to myself, for our development,” Mr. Zisook said. “That’s what we intended in the first place.”
“Chicago is just a very dynamic, alive city that is interested in good food that is healthy for them,” said Robin Michel, CEO of Natural Markets Food Group. “What we see in Chicago is the ability to mirror our model in New York.”
Ms. Michel declined to comment on the terms of its lease with Sandz. The firm hopes to open before Thanksgiving, offering shoppers produce, sundries and prepared foods, focusing on organic and natural items, she said. There are 11 Mrs. Green’s stores in New York and Connecticut.
The Lincoln Park store will be the first in Chicago, but Natural Market also operates Wilde & Greene, a restaurant in the Old Orchard Mall.
LOAN FOR GUT REHAB
Separately, Mr. Zisook said Sandz landed a $20 million construction loan from Green Bay, Wis.-based Associated Banc-Corp. to finance a gut rehab of the six-story vacant hospital building at the northeast corner of Geneva Terrace and Webster Street. A spokeswoman for the lender did not return calls.
Sandz plans to convert the building into a 75-unit apartment building. The apartments will range from 600 to 1,100 square feet, with one unit spreading over 3,500 square feet.
Mr. Zisook said construction on the building is under way and will result in a luxury building with bigger windows and a new facade. Sandz aims to lease the units for close to $3 per square feet, among the highest rates in the city.
“Lincoln Park is downtown” when it comes to rental rates, Mr. Zisook said.
The property’s prime location in the heart of Lincoln Park should help Sandz achieve strong rents, said James Jann, principal at Chicago-based JAB Real Estate Inc. But renters who can pay a premium for an apartment also are prospective buyers.
“One of the challenges is to attract renters who are fully capable of buying, given they can afford those kinds of rent, and convince them the rental lifestyle is the one they want,” he said.
Sandz, however, also hopes to catch a piece of the condominium market, eventually building out 100 to 120 condos in the former 11-story hospital building on Webster Avenue.
Mr. Zisook said he’d need to pre-sell at least one-third of the units before landing financing for the condo building.
“There’s a market there and we feel we can fulfill it,” he said.
