Brickyard Makeover to Get $26.5M TIF Boost

The development team revealed Tuesday GMAC is providing the largest share of the financing with $50 million in debt, while Goldman Sachs will inject $33.5 million in cash in addition to the land. Also, Mid-America Asset Management principal Michael George confirms Target and Lowe's as co-anchors of the new, smaller mall as well as an existing Jewel-Osco.

Plans call for Whitehall Street Real Estate Limited Partnership IX to sell the buildings occupied by Target and Lowe's to the retailers for a combined $15 million, commission members were told.

With vacancy now hitting 80% two years after anchors Montgomery Ward, Kmart and JCPenney left, sales have fallen to $50 million a year at the center, down 75% from four years earlier. Sales and property taxes have dropped proportionally, from $10.1 million in 1998 to $2.77 million last year.

While the new plans call for turning the 878,000-sf indoor regional mall into a 565,000-sf outdoor variety modeled after "lifestyle" centers with an urban touch, sales are projected to improve dramatically. Now generating an anemic $57 per sf in sales, the new mall is expected to generate $459 per sf to $550 per sf, or $250 million to $300 million year.

"We believe we've prepared a very effective redevelopment plan," says George, whose company became involved with the Brickyard Mall when it was assigned to find a replacement for Kmart, the first of the three lost anchors. "It's our view that when we finish redeveloping the Brickyard, it'll be the finest redevelopment project in the US."

Part of his belief is based on tenant selection. He argues Jewel/Osco would be the first choice of retail developers seeking a grocery anchor, while Target would top the list of potential open-air department stores. While Home Depot may win its category, one is nearby, George notes. However, Lowe's is a strong second choice, even though it is just entering the market.

"We feel fortunate to have attracted three of the best merchants in their respective categories," George says. "We don't believe it's a life insurance policy forever, but it's the best there is today."

As a fallback, the smaller boxes can be re-leased easier than its predecessors, which proved virtually impossible to fill except for second-tier, discount retailers, he adds.

The TIF budget for the new 154-acre Diversey/Narragansett redevelopment area is $60.7 million, which nearly one-third of that for site preparation and environmental remediation. The Brickyard Mall site is a former landfill, where dirt scooped to create the Eisenhower Expressway was dumped along with cars, refrigerators and lead, city officials note.

With strong backing from 36th Ward William J.P. Banks and the commission's recommendation, city council approval is expected.