Residents who have driven by the vacant Kmart building across from Paulus Park may have seen the optimistic sight of construction crews, but the property owner is cautioning that a new tenant is not imminent.
“It shouldn’t be misconstrued that if someone saw a dumpster out there and someone has a permit to remove some Sheetrock, that it’s a sign that a lease has been signed,” said Mark Hoffman, vice president of Garden Homes, a New Jersey-based real estate company that’s managed the property since 1987. “There is no formal lease that’s been signed and we are not doing that work associated with any specific tenants.”
It’s been nearly a dozen years since Kmart filed for bankruptcy and shuttered the store, located at 225 S. Rand Road, Lake Zurich. The 88,000-square-feet of empty retail space represents a significant portion of the village’s total retail vacancy.
With the calendar turned into 2014, however, Hoffman reiterated his confidence that the new year and an improving economy will bring a new tenant.
“I think you can logically draw the conclusion from looking at the building as to what we could do with it,” said Hoffman, explaining that a big box store remains the most likely replacement.
Hoffman added that he’s in discussions with a number of interested businesses.
Garden Homes owns and develops shopping centers anchored by big box stores, including Wal-Mart, Home Depot, Lowe’s and Linens n’ Things, among others. The company didn’t own the Lake Zurich property when the Northlake Commons shopping center was developed around the former Kmart and Dominick’s buildings.
Contrary to comments from village leaders last spring that the property owners weren’t motivated to rent the space, Hoffman said Garden Homes is committed to the site’s retail success.
“We recognize it’s not the greatest situation to have an empty space,” Hoffman said. “It looks a little tired and things don’t move as quickly or as fast as we all would like, but sometimes, to get something good that’s a good fit, we have to be patient.”
Finding that tenant would go a long way in reducing the village’s vacancy rate and increase its sales tax revenues.
The village’s vacancy rate was about 9.37 percent for the second quarter of 2013, an improvement over the 10.36 percent in 2012 and 13.18 percent in 2011.
The Kmart building accounts for about 4.4 percent of the village’s 1.98 million square feet of retail space and roughly half of the total vacancy rate.
The Dominick’s closing last month increases retail vacancy in the village to 217,000-square-feet, and both are located in the same Northlake Commons shopping plaza.