When he set out to purchase Edmondson Village Shopping Center, Chicago TREND CEO Lyneir Richardson knew his revitalization plan faced enormous challenges.
The 1947 center was dilapidated and vacancy was high. The property had been seriously damaged by two fires, drug dealers were active on site and the back lot was covered in abandoned cars, overgrown grass and garbage. As due diligence proceeded, a mass shooting in the parking lot injured five teenagers, killing one.
Photos courtesy of Chicago TREND.
“But a year from now, this center will be a very different place,” Richardson said.
Today, Edmondson Village Shopping Center is the site of multiple construction projects as crews work to complete an Aldi grocery store, a primary care medical practice, multiple restaurants, and the new headquarters of Meals on Wheels. Leasing has been so successful that only one property – a 16,000-square-foot junior box – still needs a new tenant.
That dramatic change is the result of both Chicago TREND’s mission and some astute CRE practices.
The social enterprise began as a research team for the MacArthur Foundation, exploring how commercial properties in low- and moderate-income neighborhoods could impact those communities’ economic success. The research results were so striking that MacArthur provided Chicago TREND with $5 million in low-cost capital and the company began searching for properties to rehab.
A few practices have proven pivotal to successful turnarounds.
Capital stack and crowdfunding
The cost of Chicago TREND’s ventures is covered by a mix of funding sources: 65 to 70 percent from first mortgage, 20 to 25 percent equity, and the remainder from grants and subsidies.
A key element in that mix is crowdfunding. For as little as $1,000, community members and others can buy a stake in the property.
“We think of it as a fintech tool that allows us to do old-fashioned community organizing,” Richardson said.
Through its website and community meetings in libraries, apartment buildings, church basements, and even barber shops, Chicago TREND details its business plan and projected returns. To date, more than 250 individuals have invested in the Edmondson Village project, including people personally impacted by previous crimes in the neighborhood.
“Once people have a little ownership stake, then this project isn’t just about supporting a company or redeveloping a private property. It’s an economic development strategy that local residents participate in and benefit from,” Richardson said.
“When someone owns a piece of a project, they not only tend to shop there, but also protect it and take pride in it. That community engagement is missing from a lot of urban development across the country,” said Tom Fidler, Executive Vice President and Principal of MacKenzie Retail. Henry Deford, Senior Vice President and Principal at MacKenzie Retail, brokered the sale of the center to Chicago TREND, and has been part of the leasing team for the site since.
Patience and prowess
Asked about the key factors enabling the turnaround of Edmondson Village Shopping Center, Fidler responds, “Patience.”
Due diligence on the center’s purchase took an entire year as MacKenzie and Chicago TREND worked to unwind and modernize 1947 development covenants governing the property.
In the three years since, Chicago TREND and MacKenzie have engaged in a highly collaborative, meticulous, and patient effort to attract the desired mix of non-extractive tenants to the site, which sees 50,000 cars pass by it daily.
“Chicago TREND has respected our professional guidance and given us a lot of leeway with merchandising the center and identifying new tenants,” Fidler said. In turn, “our team has been making sure we ask the right questions of tenants about the right components of menus, the right hours of operation, the right capital to make sure we are going to be successful.”
Companies featured in this article: Chicago TREND, MacKenzie Retail