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Discussion Heats Up About East Lakeview Wal-Mart

CHICAGO (CBS) -- Discussion of a possible Wal-Mart in East Lakeview quieted down for a few months, after Wal-Mart dismissed as false the rumors that they had signed a lease or letter of intent in the neighborhood.

That all changed at a community meeting Monday night.

At the meeting, Ald. Tom Tunney (44th) said he had met with representatives of Wal-Mart in the time since the rumors sprang up. Representatives of Mid-America Real Estate Group, which manages the Broadway at Surf retail complex where the rumored Wal-Mart was to be located, also said they had met with the retail giant.

In December, reports in Crain's Chicago Business and the Chicago Sun-Times said Wal-Mart had filed a letter of intent for space in the Broadway at Surf complex, in the 2800 block of North Broadway, and that a lease had been executed. The rumored Wal-Mart was to be a 30,000 square-foot Neighborhood Market focusing on groceries and limited general merchandise.

But at a December community meeting, Tunney read a statement saying Wal-Mart had not signed a lease or letter of intent at the Broadway at Surf building. The retailer only said it was evaluating "a number of potential opportunities."

In the time since then, a Facebook group dedicated to fighting the Wal-Mart has remained active with more than 600 members, but otherwise talk of a possible Wal-Mart quieted.

But Tunney said about 10 days ago, he met with representatives of Wal-Mart.

"I think that if there is a motivation for them to come into our community, they will be, like any other retailer, welcomed under the zoning requirements that are there," Tunney said.

The purpose of the Monday night meeting was not to discuss Wal-Mart, but to talk about a proposed zoning change in the neighborhood that would affect the Broadway at Surf building. In January, Tunney filed a proposed zoning change that would downzone the east side of Clark Street and the west side of Broadway between Surf Street and Diversey Parkway.

The proposal calls for changing the zoning from B3-2 and B3-3 community shopping districts – which allow for stores of up to 75,000 square feet – to B1-2, which limits the size of any business to 25,000 square feet. The purpose is to bring the blocks into conformity with the building that now houses a soon-to-close Borders bookstore at 2817 N. Clark St.

Tunney said the zoning change would not necessarily make any difference if Wal-Mart wanted to move into the building. In addition to two new Supercenters within the Chicago city limits, Wal-Mart has already announced plans for two other smaller stores – a 26,000 square-foot Neighborhood Market in the Presidential Towers, 555 W. Madison St., and a 10,000 square-foot Wal-Mart Express store at 83rd Street and Holland Road in Chatham – in the same shopping center as a planned Wal-Mart Supercenter.

But Tunney put the planned zoning change on hold for 30 days after the owners and managers of the Broadway at Surf objected to it. This led to renewed rumors about plans for a Wal-Mart, and questions about whether the retailer might be eyeing the property for a larger store.

At the meeting, Mid-America Real Estate principal Dick Spinell and attorney Rich Klawiter argued that downzoning the property was bad for business.

Klawiter said downzoning the Broadway at Surf would immediately devalue the property, and also pose problems for financing and refinancing of debt, particularly since two existing tenants – Bed, Bath and Beyond and T.J. Maxx – already occupy more than 25,000 square feet and thus would have to be grandfathered in as "nonconforming" establishments.

Furthermore, Klawiter said, the property owners would be subject to too many restrictions if the community wanted to see a specific retailer that might require more than 25,000 square feet. He added that the building managers could designate space for smaller retail on their own, but "the rezoning is a very large catch-all."

Spinell added that a limit of 25,000 square feet for any new store would make it difficult to attract new retailers to the vacant spaces in the Broadway at Surf. In the past couple of years, a PetSmart, Hollywood Video, Wolf Camera and Maui Wowi Hawaiian coffee shop have all closed, and all of their spaces in the complex remain vacant. Attracting retailers to the vertically-oriented 135,000 square-foot building is difficult as it is, Spinell said.

Neither Klawiter nor Spinell mentioned Wal-Mart in their arguments against the downzoning, but neighborhood activist Bruce Alan Beal confronted them about the Wal-Mart during a question-and-answer session.

"I think what you're really trying to do is sneak a Wal-Mart in here that might end up being larger than 25,000 square feet," Beal said.

He asked Klawiter whether Mid-America had spoken with Wal-Mart, and whether it was true, as some neighborhood business owners had indicated, that confidentiality agreements had been signed that would forbid discussion of Wal-Mart's intentions.

While the Mid-America representatives confirmed that the firm has had discussions with Wal-Mart, Klawiter said, "Wal-Mart has told us that we are not authorized to speak for them."

Beal also raised questions about who actually owns of the property. Spinell said the building is owned by a pension fund managed by Invesco, an Atlanta-based investment management company. Mid-America is the leasing agent and property manager, but not the owner, Spinell said.

Spinell also said Mid-America has a "wish-list" of possible tenants in the building, among them a Nordstrom Rack, a Saks or a Forever 21.

The Broadway at Surf complex opened in 1997, following the demolition of an entire block that included the Times Square video arcade, the Broadway Girlies adult bookstore and peep show and the Paradise/Phoenix nightclub, among other businesses. In addition to the Bed, Bath and Beyond and T.J. Maxx, the Broadway at Surf is also occupied by a Cost Plus World Market, a Sprint Store and a Palm Beach Tan salon, as well as a Midwest Orthopaedics clinic.

Wal-Mart representatives are expected to attend a South East Lake View Neighbors meeting next month.

Adam Harrington,

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