Making Mixed-Use Work

Chicago-Area Development Shows How to Put the Pieces Together.

Mixed-use developments often are attractive to developers, leasing agents, owners, and tenants precisely because they combine a number of uses. Access to amenities such as a gas station, bank, restaurants, health club, or child-care center is an important advantage to companies looking to relocate.

The success of mixed-use developments is based on the value that can be created throughout the project. When companies seek to expand their presence, they increasingly find attractive opportunities in mixed-use developments.

Cantera, a 650-acre mixed-use development in suburban Warrenville, Ill., west of Chicago, is an example of successfully putting all the pieces together.

Early Development Cantera, which means quarry in Spanish, is on the site of what used to be the Elmhurst-Chicago Stone Co. In the mid-1980s, the company ceased operations at its Warrenville quarry. The announcement attracted little attention outside the town of then-11,000 people.

However, Warrenville Mayor Vivian Lund wanted to ensure that the next use for the large land parcel would benefit the community. She had the area declared a tax-increment financing district in 1986 to attract developer interest and ensure development in a controlled manner.

In the late 1980s, the land group at Jones Lang LaSalle (then LaSalle Partners) identified the intrinsic benefits that the quarry location had to offer.

One benefit was the nearby presence of a sprawling research facility for BP Amoco (then Amoco). AmProp, a wholly owned subsidiary of BP Amoco, ultimately would become a partner in the undertaking, along with Jones Lang LaSalle and Elmhurst-Chicago Stone Co., in an entity known as Warrenville Development LP.

Because Warrenville had established a TIF district to attract a master developer to the site, Jones Lang LaSalle considered the mixed-use concept immediately. The scale of the parcel also drove a need for more than one kind of use, which would make it less susceptible to market fluctuation.

Mixed-use often is considered a less risky investment for building owners choosing a location because of the value added through the long-term enhancements provided. A tenant that buys a piece of land in a park within a TIF district already gets the benefit of having improvements in place that other developers might not be able to finance and that a community wouldn't necessarily be interested in financing, such as a significant road network.

Before solidifying a master plan, the group had to prove that the quarry could be transformed. The land reclamation project at Cantera became the Midwest's largest for a mixed-use development. Importing more than 1 million cubic yards of dirt and managing the corresponding operation were massive logistical undertakings. Most important in this process was ensuring the structural integrity of the reclamation through each phase of initial development.

The next initiative was construction of a roadway network, water and sewer systems, and the Interstate 88/Winfield Road interchange, which runs through the heart of the development. It came about through the combined efforts of city, county, and state authorities, a time-consuming process to secure intergovernmental agreements.

The Master Plan From 1991 to 1994, the focus at Cantera was establishing a solid working relationship with community officials and matching the community's interest with the developer's market knowledge.

Part of the goal during this initial stage was to help community officials envision the level of quality of the completed development so that they had confidence in the regulatory decisions that they were making. These included establishing a flexible general site plan that could respond to the market, creating development control regulations for the new regulatory scheme that was introduced, providing preliminary engineering and landscaping based on a master concept plan, and negotiating the redevelopment agreement with the city.

Land reclamation work continues and is nearly complete; a marketing program began in 1994 with the first land sale in 1995. The horizontal development is slated to be finished by the end of 2001.

Original estimates for development at Cantera surpassed 9 million square feet. Modified estimates still reach as high as 7 million sf, for a total development value of more than $3.5 billion. But from the beginning, there was little doubt that the project was viable. Since the development partnership provided its own capital for improvements, financing the $120 million total project cost was less of an issue. Once the TIF agreement, zoning, and capital were in place, the project's risk was greatly reduced.

Creating the Right Mix Cantera's general site plan establishes a variety of uses, including retail, hotel, office, light industrial, and multifamily. Developers sought to balance night and day activities at the site so everything wouldn't shut down at the end of the workday.

As developers determined the most desirable mix for Cantera, they integrated low-rise office and flex space in more landlocked areas south of the interstate and dedicated the northern half of the project to midrise office, child-care, and multifamily uses. The first business opened in 1996.

The 5 million sf of office development at Cantera now includes space for McDonald's, BP Amoco, and numerous other companies. Office lease rates range from about $14 per square foot to $17.50 psf.

One million sf is dedicated to high-technology and research and development companies, and 1 million sf is devoted to retail entertainment and service providers. These include Crème de la Crème, a full-service nursery and preschool; the 128-room AmeriSuites hotel; Old Kent Bank; a Life Time Fitness center; a Lion's Choice restaurant; and the AMC Cantera 30 Theatres complex, which has five restaurants including Rock Bottom Brewery and Max & Erma's. The AMC complex takes advantage of Cantera's tollway visibility.

Cantera's special-district zoning was key to the project. By design it was more flexible, which prevented developers from having to continually seek zoning relief to accommodate potential buyers.

For example, developers wanted a high-profile retail tenant. When AMC Theatres expressed an interest in opening a 30-screen multiplex at Cantera, the flexibility of the master plan allowed Jones Lang LaSalle to identify the right site for AMC. Although the site that met AMC's requirements was earmarked for office, the site was able to accomodate the retail entertainment use.

Cantera includes more than 500 multifamily homes; residential property accounts for about 900,000 sf of the 7 million sf slated to be developed.

The project also includes preserved areas, such as the restoration of 30 acres of prairie land, 10 acres of wetlands, an 11-acre lake preserve, a waterfowl habitat, and a 1.5-mile riverwalk along the DuPage River, which borders the complex's western edge. Developers foresee future recreational activities available at many of these preserves.

Award-Winning Efforts Cantera has earned a high level of national recognition, in part from the challenge it initially represented. It received a 1998 Award for Excellence from the National Association of Industrial and Office Properties and the 1998 Development of the Year award from Crain's Chicago Business and LaSalle Bank.

Warrenville has benefited from the addition of a significant stream of permit fees to city coffers and the added commerce that new businesses have brought and the more than 4,000 employees they have hired.

With Cantera recently about 81 percent sold, the focus now is on concluding deals for the development's remaining available acreage. The variety of options possible (from lease to build-to-suit-to-own to build-to-suit-to-lease) within a highly flexible, self-sufficient entity of this scale is an advantage to both future tenants and the developers.

By taking advantage of the ease and convenience of commuting via I-88 and by bringing technology, transportation, and a variety of amenities to the development, Cantera has addressed the needs of 21st-century business.

Juliane Kelly

Juliane Kelly is project executive for Cantera and senior vice president at Jones Lang LaSalle in Chicago. Contact her at (312) 228-2725 or Mixed-Use BreakdownHospitalityAmeriSuites Hotel -- 128-room hotel OfficeBP Amoco Corp. -- build-to-suit, 200,000 square-foot office; 157,000-sf conference center Convergent Communications -- lease, 4,798 square feet ENSR -- lease, 20,500 sf First American Title Insurance -- lease, 39,931 sf Grange Mutual Casualty Co. -- lease, 7,200 sf International Truck and Engine Corp. -- BTS, 260,000 sf Marconi Communications -- BTS, 40,000 sf McDonald\'s Corp. -- lease, 17,000 sf Midstates Corporate Federal Credit Union -- purchase, 60,000 sf Montgomery Watson -- lease, 17,000 sf Neumann Homes -- BTS, 60,000 sf Paychex -- lease, 47,000 sf Phonak -- BTS, 72,000 sf Tellabs -- BTS, 137,000 sf Toyota Motor Credit Corp. -- lease, 13,083 sf R&D/IndustrialD.A. Stuart Co. -- BTS, 30,000 sf Ed Hoy\'s International -- lease, 75,000 sf Ellison Machinery and Robotics Co. -- BTS, 22,800 sf Power Trends -- lease, 55,500 sf SMC Pneumatics -- lease, 18,600 sf Tox Pressotechnik -- BTS, 30,000 sf ResidentialConcord Homes -- 32 acres, 160 town homes Village Green Cos. -- 29 acres, 343 apartments Retail/EntertainmentAMC -- 46 acres; 109,468 sf 30-screen theater and five restaurants Family Golf Center -- 35-acre golf facility Lion\'s Choice -- 3,700 sf fast-food restaurant  ServicesCrème de la Crème -- BTS, 20,450 sf nursery and preschool center HQ Business Centers -- lease, 22,339 sf Lifetime Fitness -- 115,000 sf BTS fitness center Old Kent Bank -- BTS, 4,500 sf bank Orthopaedic Associates of DuPage -- BTS, 60,000 sf medical office building Source: Cantera Development Summary, June 2000


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