Four Indicators of the New Downtown Neighborhood Look and Feel
Once upon a time, centers of town were anchored by a large department store on a main street dotted with other retail establishments. Sometimes, a park or a town square serves that anchor role. These days, that role is increasingly being filled by a surprising type of store: the neighborhood grocery store. Additionally, strong town centers on the whole are becoming a driver for where people are moving.
Town centers are helping attract people to specific neighborhoods and suburbs.
"The suburbs are actually very strong," said Greg Warsek, Illinois Market Manager for Associated Bank. "We're seeing terrific opportunities. … Depending on what they're trying to do in each one of those submarkets, there's a lot of real interesting opportunities where there hasn't been much development in the last 20 to 30 years."
The magic recipe for success right now? A developed town center, a nice metro stop and multi-family units. These amenities allow for residential and retail opportunities.
Empty-nesters are downsizing into apartments and condos.
"What we're seeing more of is maybe redevelopment of some of these retail storefronts, making it a little nicer town center," Warsek said. "But the big thing we're seeing are new apartments and for-sale opportunities. A lot of people want to downsize out of their homes into in-town living in their communities. The kids go off to school, they don't need the big house anymore but they want to stay in the community, they're still entrenched and some choose to downsize into ownership, which is condo, and then others – which is one of the big trends – a lot of empty nesters going into apartments. You sell the home, you untap all that capital, you invest it and you become a renter, gives you a lot more flexibility."
An updated metro stop and a neighborhood grocery store can do wonders.
"Another great example is the Ravenswood metro stop that they completely redid," Warsek said. "There's a Mariano's right there that we financed for a very good client of ours. That was a redevelopment opportunity; we're financing the other corner on the other side which is a mixed-use, retail and apartments. So when you do that kind of thing, and it's pushing down the streets in either direction as a result. That's one of the busiest metro stops in Chicago."
According to Warsek, this business model – the grocery anchor that spawns other retail establishments – is becoming an increasingly popular one.
Grocery-anchored neighborhood centers are becoming the new hubs of activity in town and city centers. And Associated Bank enjoys financing these opportunities.
"We like grocery-anchored (construction), we like the Mariano's concept," Warsek said. "It's new construction. It's a well-managed company, and frankly the asset became even more desirable when Kroger acquired Mariano's, because now you have a very strong investment grade company behind these outstanding real estate investment opportunities."
One of the factors working in favor of this model is that despite some popularity around online grocery shopping, in-person shopping doesn't appear to be disappearing.
"We like the concept quite a bit," Warsek said. "Grocery-anchored, or even these freestanding grocery opportunities are not going away, they're not really what's being impacted by e-commerce. I think the whole concept of buying food online the way you buy everything else online is going to be slow to come. People still like the experience … there's a lot of prepared food, (you can) look at wines, there's flowers, there's just things that you can't experience online."