Chicago TREND
Chicago Community Trust
May 26, 2015
Origins
The TREND Concept: Using Retail “Plus” to
Drive Neighborhood Development
Current
Neighborhood
Status
Retail
The Sweet Spot:
Where Retail
Accelerates
Neighborhood
Transformation
Neighborhood
Trajectories
3
RETAIL DEVELOPER AND BROKER
ENGAGEMENT
Local Field Work Completed
1. Tom Bernier, Bucksbaum Retail Properties; 2. David Doig,
CNI; 3. James Matanky, Matanky Realty Group; 4. Paul
Stewart, Capri Capital; 5. Leon Walker, DL3 Realty; 6. Rich
Warren and Randy Ross, Community Development Strategies;
7. Ken Gold, Skilken; 8. Michael Marchese, Harlem Irving
Companies; 9. Edmund Woodbury, McCaffery Interests; 10.
Richard Tucker, Tucker Development; 11. David Baum, Baum
Realty; 12. Todd Cabanban, Cabanban, Rubin, & Mayberry;
13. Lauren Lowry, Finders Plus, 14. Mike Mallon, DKMallon
Developer Broker Meeting Held on May 12, 2014
Meetings with Representatives of LISC, MPC, WBC, DPD,
Illinois Restaurant Association, Bronzeville Retail Initiative,
Chatham Business Association, Cook County Land Bank, etc.
RETAIL DEVELOPER AND BROKER
ENGAGEMENT
National Field Work Completed
1. Big Boxes – Target, Walmart, Petco, Marshalls, Meijers
2. Specialty – Starbucks, Chipotle, Studio Movie Grill, Kumon,
UPS Store
3. Restaurants – Panera Bread, Buffalo Wild Wings, Famous
Daves, Macoroni Grill, Del Taco, Culvers, Moes Southwest
Grill, Jimmy Johns, Bloomin Brands
4. Others – Save a Lot, Sears, Walgreens, CVS
Attended ICSC Convention May, 2014 and 15 (met with 34
retailers and introduced Chicago TREND to the ICSC National
Underserved Markets Initiative Committee)
Strategy
How Retail+ Can Lead:
Getting to Strategic, Viable, Scale
THE TREND TOOLBOX
 Market Research, Analytics and Products
 Leadership and Coordination; “Master
Deal Broker”
 Retailer Attraction Focused Financial Tools
Shopper Survey Completed
Online Survey
 Survey firm (6,000 surveys)
 The Chicago Rehab Network (1,200 surveys)
 20 community/neighborhood organizations and
community colleges (800 surveys)
 50 local blogs
 Traditional media outreach campaign
 New survey to be conducted in 2015
8
Survey coverage – race distribution
Shopping destinations outside neighborhood
DNT taxonomy – updated
 DNT taxonomy/typology reapplied to Chicago
neighborhoods using updated 2010 data, to examine how
neighborhoods changed from 2000-2010
 23 input variables contributing to this classification:
People
Housing & Land Use
Business
Median household income
% single family detached
# unique business types
Income Diversity
% vacant housing units
# social capital (normalized
by population)
Age Structure (% 0-18, % 1934, % 35-64, % 65 plus)
% owner occupied housing
units
% retail businesses with
more than 20 employees
% single parent households
Median age of housing
structures
# retail establishments
normalized by land area
% foreign born
% residential parcels
# services normalized by
land area
% households moved in less
than 5 years
% industrial parcels
# entertainment normalized
by land area
% households moved in over
10 years
% vacant parcels
Taxonomy Structure
lower income
higher income
URBAN
TAPESTRY
DNT taxonomy – transition 2000-2010
Transition Matrix – Chicago, 2000 to 2010
Count in 2010
5
87
167
97
176
7
142
92
18
9
3
4
5
6
7
8
1 23.08 53.85 15.38
0.00
7.69
0.00
0.00
0.00
0.00 13
2
1.12 49.44 30.34
0.00 15.73
1.12
1.12
1.12
0.00 89
3
0.73 16.79 77.37
0.00
1.46
0.00
3.65
0.00
0.00 137
Port of Entry
4
0.00
2.26
0.75 57.14 36.09
0.75
0.75
2.26
0.00 133
Urban Tapestry
5
0.00
5.30
5.30 11.36 61.36
0.76
6.06
9.09
0.76 132
Coming Attractions
6
0.00
0.00
0.00 10.53 26.32
5.26 10.53 47.37
0.00 19
No Place Like Home
7
0.00
0.00 10.60
0.66
9.27
0.00 78.81
0.00
0.66 151
Close, Cool and Commercial
8
0.00
3.30
7.69
3.30
8.79
2.20
2.20 68.13
4.40 91
Fortune 100
9
0.00
0.00
3.85
0.00 11.54
Truly Disadvantaged
Transient Underdeveloped
Stable Low Income
1
2
Count in 2000
Types in 2000
Types in 2010
3.85 15.38 19.23 46.15 26
13
Services
Services: Identifying Opportunity,
Facilitating and Expediting Development
Bring “Big Data” to Neighborhood Retail Development
 Identify neighborhood trajectories, high-impact and market-viable retail
Master Broker and Expediter
 Nexus of information and networks, connecting developers, retailers,
community organizations
 Leverage synergies between retail opportunities and non-retail private and
public investments (“Retail Plus”)
 Work with City departments to expedite strategic deals
Retail Coalition of the Willing
 Organize and nurture retailers interested in locating in urban neighborhoods,
similar to a trade organization
 Develop and implement co-tenancy and clustering strategies to reduce risk
Discussion Draft
15
Trend Tool Concepts
Tenant Attraction
Program
Facilitating Retail Development
Typical Retail Development Process in Chicago for Projects More Than 150,000 SF
Step
Typical Time Required
Can Trend Help?
Market Analysis
1-3 Months
YES
Site(s) Identification, Due Diligence & Final Selection
2-6 Months
YES
Preliminary Financial Feasibility Analysis & Financial
1-2 Months
YES
Site Control
2-10 Months
YES
Preliminary Design & Cost Estimates
2-4 Months
Secure Pre Development Financing
2-4 Months
YES
Anchor Tenant Letters of Interest (40-50% SF)
3-6 Months
YES
Approvals, Entitlement Process
4-8 Months
YES
Securing Tenants Leases
3-12 Months
YES
Design, Construction Bids
1-3 Months
Final Financial Feasibility Analysis
1-2 Months
Obtain Firm Financial Commitments
2-3 Months
YES
Securing Permits
2-6 Months
YES
Close on Property & Financing
1-4 Months
YES
Construction and Construction Management
Marketing, Final Leasing
Opening: Total Time from Initial Market Assessment
12-18 Months
3-5 Months
YES
42-96 Months
YES
Coalition of the Willing –
The Big Guys
Trend Tool Concepts
 Anchor Attraction
 Credit Tenants
 25,000+ SF
Coalition of the Willing –
Special Second Store Expansion
Trend Tool Concepts
 Well Run Local Favorites
 Add Interest to Mix
 Support Entrepreneurial Growth
Coalition of the Willing Sit-down National Restaurant Franchises
Trend Tool Concepts
 Now Spending Leaves City
 Operator Identification and Training
 Liquidity and Net Worth
Coalition of the Willing Alternative Tenants
Trend Tool Concepts
 Non-retail tenants to round out mix
 Service Oriented Establishments
Gap Financing Program
Trend Tool Concepts
 Subordinate Loans for Retail Development
 Flexible to Secure Key Retailer
 Patient (20 year term) but Higher Return (5%)
 $1M Maximum Per Project
Provided to developers for predevelopment costs, construction
costs, tenant improvements. Could
cover development of outlots or
tenant improvements.
Tenant Attraction Program
Trend Tool Concepts
 $2M Recoverable Grant Program
 Rent Subsidy to Attract Desired “Key” Tenants
 Up to $500,000 per tenant lease over five year term
The maximum annual rent subsidy will be based on a five year
declining scale of $5-$4-$3-$2-$1. (For example – for a 5,000 sq. ft.
retail space the incentive would be $25,000; $20,000; $15,000;
$10,000; $5,000 for a total of $75,000)
 Provided to developers or landlords to pass on to
tenants to subsidize costs during first five years.
Funds can be used for tenant improvements or to
cover for low sales.
Neighborhood Retail Equity Fund
Trend Tool Concepts
 $50M Fund; $10M invested by Chicago TREND
 Established Real Estate Equity Fund to be GP
Partner; Chicago TREND to be LPs.
 Initiate Projects with Refined Market Data and
Predictive Analytics (Master Deal Broker)
 Attract Developers and Retailers on the Leading
Edge
 Higher Risk and Higher Equity Return
Neighborhood Retail Bank Debt Program
Trend Tool Concepts
 $10M Loan Program for Small Retailer Expansion or
Improvement (working capital, tenant fit out,
equipment;)
 Consortium Banks to invest $8M; $2M invested by
Chicago TREND (25% subordinate loan participation)
 $250,000 maximum loan amount
Implementation Plan and
Goals
Milestones
By end of Year 1:
Organizational milestones:
●
Steering committee organized and meeting
●
Fiscal agent and host agent selected and operational
●
Investment and operating policies developed and approved
●
Staff positions filled
●
Contracts and operating procedures finalized with service providers
●
Phase I financial tools operational
Discussion Draft
27
Milestones
By end of Year 1:
Development milestones:
●
8,500 additional Shopper Choice survey responses received and the
results incorporated into models and analytic tools
●
Complete estimation of shopper and neighborhood choice models and
simulation tools to predict impact of investments on shopper choices,
neighborhood attributes, and neighborhood trajectory
●
Retail Coalition of the Willing operational, albeit informally
●
Recommendations delivered to at least two developers about types of
retailers to solicit to lease uncommitted space and achieve desired
community change
●
Provide data and offers of financial assistance that leads to new leases
at developments currently underway or infill in priority commercial
corridors
Discussion Draft
28
Milestones
By end of Year 2:
Organizational milestones:
●
Partners identified for Phase II financing tools and formalized by
memoranda of agreement
●
Strategy, services and priorities re-assessed and recommendations
prepared for funders
●
Phase II funding secured
Discussion Draft
29
Milestones
By end of Year 2:
Development milestones
●
Predictive model developed and tested
●
Retail Coalition of the Willing formalized and functioning
●
Commit or fund approximately $5 million in financing to impact three
strategic neighborhood retail developments and directly secure an
estimated 13 key retail tenant leases
●
Working with City of Chicago and Cook County officials for expediting
approvals, licenses, land assembly, etc.
Discussion Draft
30
Organization Structure and
Governance
Founding Entrepreneur: Lyneir Richardson
 Executive Director, Center for Urban Entrepreneurship and Economic
Development, Rutgers Business School, Newark, NJ (current)
 Chief Executive Officer, Brick City Development Corporation, Newark,
NJ (2009-2014)
 Vice President-Urban Development, General Growth Properties, Inc.,
Chicago, IL (2004-2009)
 Founder, Lakeshore Development & Construction Company, Chicago,
IL (1995-2004)
 Vice President, Thrush Construction, Inc., Chicago, IL (1993-1995)
 Attorney, First National Bank of Chicago, Chicago, IL (1990-1993)
 Entrepreneurial projects include consulting and commercial real estate
advisory services for property owners
32
Organizational Structure
Steering Committee of 15-20 members representing retailers, developers, brokers, CBOs,
investors and banking partners, city, data partners, civic and trade organizations.
Steering
Committee
Fiscal
Sponsor/Agent
Executive
Director
Partners
Staff
Financial or
Banking
Financial
Analyst
Data
Data Analyst
Legal
Admin
Assistant
Lead Partners: ICSC, Neilsen, LISC, ULI, CCLF,, Econsult, RES, ….
Discussion Draft
33
Organization and Ecosystem
Civic and
Community
Organizations
Public
Sector
Steering
Committee
(Investors)
CHICAGO
TREND
(4 people)
Data and
Financial
Tools
Retail and
Mixed-Used
Developers
Retailers
(Coalition of
the Willing)
Retail
Brokers
Banks
Accelerating Desired
Neighborhood
Transformation
Core Staffing; Distributed Product Delivery; Fiscal Agent
Next Steps / How You Can Help
 Identify pilot projects with goal of making first investments in
approximately six months
 Identify and help secure key retailer engagement (e.g. Walgreens,
Chipotle, Starbucks, FedxOffice, Target, TGI Fridays)
 Identify potential members and help establish Steering Committee -senior leadership with credibility, relevant expertise, key partners
 Seek lead operating partners to administer financial products in first and
second phase
 Engage bank, additional foundation, retailer, other investors: secure PRI
loan and fund operating grant
Discussion Draft
35
Chicago TREND
Chicago Community Trust
May 26, 2015