The developer of the vacant lot at Main Street and Chicago Avenue has switched gears and is now planning a mostly residential building, rather than an office tower.
OMS Evanston LLC recently drafted new plans that call for seven floors of apartments and just one floor of office space, rather than eight, according to economic development division manager Johanna Nyden. While the city initially pushed for an office building after OMS bought the site in 2010, finding tenants has been tricky, she said.
“A few months ago, it just became pretty clear that this was not going to work out from an office perspective,” she said. “One floor of office was our way of still maintaining an office footprint on the site.”
When OMS Evanston purchased the property for $1.65 million, it had been vacant since 2007. The former building, a two-story retail/office property, was demolished to make way for a mixed-use commercial and residential building, but the owner of the planned development fell into foreclosure.
OMS originally hoped to build a mixed-use retail and residential building on the site. However, based on feedback from nearby businesses, elected officials and city staff, OMS switched gears and proposed a mixed-use retail and office development instead.
“Businesses really want to be here, but we don’t have the contiguous space,” city manager Wally Bobkiewicz told residents at a meeting in June 2011. “If the developer can’t find tenants, then we’re going to be back to an apartment complex, likely with retail on the first floor. And what we’re saying, from the City’s perspective…is let’s try to find something better. Let’s try to find something that will be an engine for the community, that will bring people here to work, that will bring people here to spend money and to use the property in the highest and best ways.”
City council members also voted to give OMS Evanston $40,000 to help market the property.
Finding office tenants was complicated for multiple reasons, however, according to Nyden. In order to obtain funding for the building, the developers needed to attract a certain number of office space tenants. At 10,000 square feet and smaller, the size of the spaces available were only attractive to smaller businesses—which tend to make leasing decisions on a six to eight month horizon, according to Nyden. But the developers needed businesses to commit to leasing office space two to three years in advance, due to the time between raising capital and completing construction.
“The developers worked two years to make this office concept happen,” she said. “The size of the space, coupled with the movement in the market meant that we did not get anyone who decided to pre-lease the office building.”
A nine-story office building at Chicago and Main was also a risky proposition for financiers because there are no other office buildings nearby, according to James O’Donnell of OMS Evanston. To prove there was a market, the company had to pre-lease the building—and that just wasn’t possible, he said.
Under the new proposal, the building will still be nine stories tall and will still have ground-floor retail, but the seven stories of office space will be replaced with 112 residential units. Retaining one floor of office space was important, according to Nyden, because nearby businesses told the city that their foot traffic declined when the previous building was torn down.
“People working in that office building were shopping locally,” she said.
While OMS Evanston originally proposed CVS as a ground-floor tenant, city officials did not support the idea, and the developer is looking for other tenants, according to O’Donnell.
The 14,350 square feet of ground floor retail will be broken up into different sizes, ranging from 2,000 to 5,000 square feet. OMS is currently negotiating with multiple retail tenants, including a financial services firm and several fast casual restaurants, but it’s too soon to say what will move in.
As for the apartments, OMS Evanston will be targeting empty-nesters and young professionals with families, according to O’Donnell. The majority will be two-bedrooms, he said, and the building will be 100 percent rentals.
The switch from mostly office to mostly apartments also means big changes for the new Chicago-Main tax-increment financing district, which Evanston aldermen approved in January 2013. At the time, up to $10 million in TIF funds were earmarked for the new building, much of that going toward a public parking garage. Without a major office component, however, OMS Evanston is planning dramatically fewer parking spaces, all of which will be located underground.
Certain expenses related to construction of the office component, such as site construction and land preparation, are still eligible for TIF-financing, according to Nyden. But those expenses are expected to be much smaller than the cost of building a public parking garage. That leaves more money available for other businesses and streetscape improvements in the Chicago-Main TIF district, she said.
Because the proposed building is greater than 30,000 square feet, OMS Evanston must go through the planned development process with the city before beginning construction. Nyden said she expected the developer to appear before the plan commission for the first time within the next few months.
Assuming there aren’t major hiccups during the approval process, O’Donnell said he hopes to start construction in the spring of 2014, with completion slated for spring 2015.