By AARON GETTINGER
University of Chicago Commercial Real Estate Operations (CREO) intends to announce a new tenant to anchor the Hyde Park Shopping Center, which formerly housed Treasure Island Foods, sometime in the first quarter of 2019.
On Dec. 18, CREO marketing communications manager Amy Sroden said on the University’s 53rd Street blog that the U. of C. plans to announce the new grocery tenant in the first quarter of 2019, with construction such as roof repairs and utility upgrades also planned for early next year.
Treasure Island’s unexpected closing coincided with developments that have left its industry in flux. A 2017 study by the Inmar Willard Bishop Analytics predicts that traditional supermarket chains will decline nearly a quarter by 2021 while fresh format (like Mariano’s), limited assortment (like Aldi) and super warehouse (a hybrid between a warehouse and traditional supermarket) stores are expected to experience double-digit growth. The report also expects exponential growth in e-commerce.
Business Insider reported last year that grocery sales in the U.S. have fallen, with stores cutting prices to compete with each other in the industry — something akin to what department stores and mall retailers did during the Great Recession, from which they never recovered.
And a report issued earlier this year by the Jones Lang Lasalle real estate firm saw that grocery openings had declined nearly 29 percent in 2017, “as brands took a step back to examine existing footprints and reevaluate company strategies.” They found that having “fresh, healthy and affordable” goods in stock as well as private labels that “allow brands to quickly respond to market changes while eliminating third party costs” and online and mobile integration were common to grocery companies that had success in 2017.
The report also found that investment into grocery-anchored centers like the Hyde Park Shopping Center increased 5.3 percent in 2017, one of only a handful of retail sectors to see growth that year. Such centers were called “a safe bet for investors” and “stable.”
The University of Chicago, which owns the Hyde Park Shopping Center, is attempting to find a new grocery anchor in this context. Angie Marks, Associate Vice President of Real Estate Operations, said she is encouraged by the number of potential tenants interested in occupying the space. She said that McCaffery Interests, CREO’s broker and landlord representative, began communicating with grocery chains’ tenant representatives immediately after Treasure Island closed.
Leases at such spaces regularly extend a decade or two, meaning that grocery brands are behooved to take their time, research and meticulously plan new openings well in advance. The amount of construction time necessary to prepare the space for operation also varies significantly depending on which anchor is chosen.
“While several specific grocers are under consideration as potential tenants and in discussions with [CREO], standard industry confidentiality agreements are in place and the University is unable to disclose the details of those discussions,” Sroden wrote. “Once a new tenant has been announced, the full build-out of the store will begin and more details will be provided regarding the timetable until opening.”
Marks also declined to name chains interested in the space: “In these kinds of negotiations, you operate under confidentiality provisions,” she explained. “No tenant wants their competitors to know where they’re interested in potentially locating, so we really have to be respectful of the process and we really can’t name names.”
Marks declined to comment on chains’ impressions of the Hyde Park business climate; asked about broader trends affecting the grocery store industry, she acknowledged them but said CREO was pleased to be having ongoing conversations with “several potential tenants that would be good, quality options for the community.”
She did say that CREO has incorporated consumer feedback about desired amenities into its search alongside asking tenants about their product offerings and how they will complement existing area options and the planned Jewel Osco in Woodlawn and Shop and Save in South Shore. Additional criteria include tenants’ needs compared with the anchor space and the reasonability of tenants’ timeframes for construction and opening.
A U. of C. Office of Civic Engagement survey released in November found that 81 percent of respondents said Treasure Island’s proximity to their home or workplace was among their favorite features of it. Seventy-eight percent of respondents said a produce department would be “very important” in the next anchor; 63 percent said price or value, and 56 percent said a meat or fish department.
Over 75 percent of respondents said a bakery, deli, extended hours, household items, price and value, specialty foods and meat, fish and produce apartments would be at least somewhat important.