CHICAGO—Big box retailers have shuttered a score of locations across the nation in recent years, with many more to come, and one of the big challenges facing property owners these days is figuring out how to respond. Skokie, IL-based Next Realty, LLC has found perfect solutions for several locations, including a just-completed lease with Advocate Health Care that will convert the space at 3154 N. Clark St., formerly occupied by The Sports Authority, into a new medical office center serving Chicago’s Lakeview neighborhood.
Advocate, a provider quite familiar to most local residents, now has a long-term lease for the entire property, which includes 40,400 square feet of ground floor space, 10,100 square feet of basement space and a two-story parking facility for 115 vehicles.
“We were negotiating very hard with several retailers,” Marc Blum, president of Next Realty, tells GlobeSt.com. “But leasing this space to Advocate was the right thing to do,” both for Next and the surrounding neighborhood.
As a well-established healthcare provider, he points out, it has investment-grade credit, a status many retailers can’t meet. And even those that do have great credit, such as T.J. Maxx andValue City Furniture, may still need a lot of truck traffic going in and out, not necessarily a good fit for a dense residential neighborhood such as Lakeview.
And many healthcare providers have deep pockets, an important consideration when renting out a newly-vacant big box space. Some tenants have occupied these buildings for decades, leaving the mechanical systems obsolete or in need of repair.
Furthermore, healthcare providers also want to create a great environment for their patients, and many will readily spend to achieve it. In this case, Blum says, “Advocate will keep the core and shell of the primary structure but otherwise will undertake a comprehensive makeover of the property, customizing the interior spaces for its specialized needs and the exterior according to the health system’s overall brand.” It has already started demolition and construction work and plans to open the new facility by early 2018.
This new location for Advocate will house clinical and ancillary operations including internal medicine, cardiology, cardiac testing, obstetrics, endocrinology, neurology, x-ray and laboratory services.
Amy Levin, director of leasing at Next Realty, represented Next in the lease transaction. Advocate Health Care was represented by Gary Fazzio, vice chairman, brokerage services, andSharon Kahan, first vice president, both of CBRE.
This transaction was just the latest in a series that Next has completed with major healthcare providers in Chicago. Northshore University Health System, for example, agreed to take over approximately 35,000 square feet of space at Lincolnshire Commons previously occupied by Barnes & Noble. And in 2013, Next converted a former restaurant building on an outlot at Deerbrook Mall in Deerfield into a 20,000 square foot medical office property for Northwestern Memorial Health.
“Finding 50,000 square feet of free-standing retail space with parking in Lakeview is like finding a unicorn; it just doesn’t exist,” Blum adds. “While it is never easy to lose a significant tenant like The Sports Authority, this is a great outcome.” The property had been a sports-related outlet for decades, and “my gut tells me Advocate will be there at least that long.”