Courtney Howlett is a conservative shopper who, amid these tough economic times, realizes the holiday cheer is past. "It's scary seeing these bigger stores closed," Howlett of Tremont said last week while browsing through The Shoppes at Grand Prairie, which recently saw the closing of Linens 'n Things. "I'd rather save my money. I'm starting nursing school. It's changing my spending habits."


 

Courtney Howlett is a conservative shopper who, amid these tough economic times, realizes the holiday cheer is past.

"It's scary seeing these bigger stores closed," Howlett, of Tremont, said last week while browsing through The Shoppes at Grand Prairie, which recently saw the closing of Linens 'n Things. "I'd rather save my money. I'm starting nursing school. It's changing my spending habits."

While TV and radio commercials boast "it's better here," some Peorians - retailers, Realtors and others - know better: The city isn't recession proof, especially when it comes to national retail corporations closing up shop and leaving behind empty buildings.

"We are not in the boondocks," said Brad Joseph, vice president of D. Joseph Sons & Associates Real Estate Co., the Peoria-based owners of the former Festival Foods building on Knoxville Avenue. "Peoria gets affected like everyone else."

In recent months, Krispy Kreme and Starbucks closed. Both closures were blamed on the slumping national economy, less than three years after the stores opened.

There are other vacated commercial businesses in the popular commercial districts in Central, North and Far North Peoria. Buildings that once housed Schlotzsky's Deli, Burger King and Denny's sit vacant near Northwoods Mall. The Shoppes has several vacancies, such as the former Vino 100 and Gifts, Tinder Box, Fuzziwig's Candy Factory and Teddy, Set, Go!

The Economic Development Council for Central Illinois maintains a comprehensive list of commercial properties vacant or for sale on its Web site in an effort to find parties interested in purchasing them. The site currently lists 117 of them, with properties in Morton, Pekin, Washington, Bellevue, Minonk and even Kickapoo.

"Many of these are vacant buildings," Peoria city economic development director Craig Hullinger said in an e-mail. "You can look at them two ways; a problem - empty building, or an opportunity - probably a low cost building for a business to use. Glass half full or half empty."

With the U.S. economy in a recession, there are concerns of more retail chains closing and leaving behind empty buildings, even though local mall managers appear not to be worried.

"(People) go home and watch TV, and (the media) is talking negative on the economy," said Randy Taylor, president of Pioneer Industrial Parkway, which includes Parkway Plaza near the former K's Merchandise. "We are doing OK right now."

From the city's perspective, public inspectors will be in charge of monitoring the maintenance of vacated properties. Beyond that, there are few programs or regulations discouraging corporations from coming to Peoria, establishing a local franchise and abandoning building infrastructure if they close.

"Just because it's empty doesn't mean they don't pay taxes," 5th District City Councilman Patrick Nichting said. His council district covers most of the city's north end. "When you begin to limit these things, you hurt all taxpayers. The free market resolves itself over time."

Economic woes

Nationally, news about the retail climate is dismal. Macy's, an anchor at Northwoods Mall, announced last week it is closing stores because of the economy. Borders Group Inc., a Shoppes' anchor, is in danger of being delisted from the New York Stock Exchange amid declining sales at its book stores nationwide and financing troubles.

The U.S. Census Bureau recently released information showing retail and food service sales for November were $355.7 billion, a decrease of 7.4 percent nationally when compared with November 2007.

But the local retail landscape, despite a few recent store closures, isn't so bad, according to local officials.

Last week, the Heartland Partnership issued a letter quoting local retail industry officials who say business was brisk during the holidays. One retailer said lines at restaurants are long.

Joshua Lewer, a Bradley University economics professor, said Tri-County retail sales were slowing, primarily in durable goods (such as furniture). He said the "good news" is that December's "consumer confidence" levels for the region were stationary.

Dan Maloof, of Maloof Commercial Real Estate Co., also believes the local economy, when compared with other cities, is much stronger. He said that has a lot to with the conservative nature of Peoria's commercial retail environment, which avoids risky investments and overbuilt shopping districts.

"We're way better off than, say, Springfield, Champaign, Bloomington and even the Quad Cities," Maloof said. "It's just really been in the last quarter, (the recession) is starting to trickle down in to the commercial stuff in Peoria."

Galesburg residents Michelle Bartlett, Danielle Phillipson and Nicole Ralston agree. They came to Peoria last week to shop at The Shoppes at Grand Prairie because they said there are more shopping opportunities here than compared to their hometown.

It truly is better here, they claimed.

"We don't have anything in Galesburg," said Bartlett, who watches what she spends because she is currently unemployed. "That is why we are here today."

Buildings reused

Despite the recent increase of vacated stores, there has been a rise in occupying empty buildings once operated by a retail corporation.

At The Shoppes, Kaiserhof restaurant recently opened in what was once an empty space. Heaven on Earth, which bills itself as more than just a florist, also is opening soon.

"The shopping center is very healthy," said Frank Natanek, group president responsible for real estate and marketing for Cullinan Properties, which operates The Shoppes. "Every bigger shopping center will have some kind of turnover. It just happens. With a recession, the vacancy sticks around a little longer."

At Northwoods Mall, almost every retail space is filled. National chain B. Moss Clothing Co., a women's apparel store, filed for bankruptcy last month and is closed.

"The mall, as a whole, is doing well," said Bob Schertz, the mall's marketing manager. "We haven't had any indication any of the stores had a bad holiday."

Nearby, the former Ned Kelly's restaurant is reopening as Feldan's. On Knoxville Avenue, the former Leath Furniture store is now Richwoods Christian Center.

Perhaps the largest of the properties being reused is the former K's Merchandise. OSF Saint Francis Inc., part of OSF HealthCare, is remodeling the 90,000-square-foot building.

By the end of the month, nearly 200 employees will be relocated to the building, said Jon McKee, spokesman with OSF Saint Francis Inc. When the entire renovation is completed, sometime by the end of the year, 350 to 400 positions will be relocated to the former retail store.

"We've had several comments from people throughout the city thanking us for having to take on that location," McKee said. "It's been a good fit for us and the city."

City's role

But what happens when an old Burger King, Denny's or Festival Foods building isn't reused? Who takes care of the upkeep? Is the taxpayer footing the bill?

John Kunski, the city's director of inspections, said the responsibility for the maintenance work is on the owner of the building. When that owner isn't located, which sometimes happens, the city will seek a "work order" with a local contractor to have the property maintained. For 2009, the city budgeted $150,000 in taxpayer money to hire someone to clean up abandoned commercial and residential properties, Kunski said.

He said his department writes about 5,000 work orders each year. Of that, about 10 percent, or 500 are for commercial properties.

Kunski said the city has no authority to make alterations to a property in order to spruce up its aesthetics. They can board up windows if glass is broken out because the property would be in violation of city codes. Whenever weeds grow above 10 inches, they have a right to bill the owner for upkeep.

Sometimes when a major corporation leaves a building behind, the city needs to track down its owner to make sure the property is cleaned.

Kunski cited a former Burger King as an example. In 2007, the city had five work orders for the property in which either litter had to be cleaned up or weeds removed; however, the owner could not be found. Eventually, the city was able to track down the owners and bill them.

If the owner doesn't pay, a lien can be placed on the property, Kunski said.

Aside from maintenance, the city's biggest regulation tool on commercial construction is through zoning. The only moratorium the City Council has placed on businesses recently was aimed at new convenience cash stores. That moratorium no longer exists.

"There are communities that put moratoriums on big boxes," Nichting said, referring to stores like Wal-Mart. "I have not seen a successful program implemented by a community in the long run. Those kind of limitations ... they usually get flagged by other developers that the community is not (business) friendly."

Hullinger said it's his department's job to find new users for those empty buildings. Peoria has increased its use of tax incentive benefits to lure commercial users to reuse older buildings.

The most widely expanded program in the past two years is the enterprise zone, which now encompasses areas in north Peoria. Benefits within these zones allow for sales tax exemptions on materials used for new construction, such as drywall, lumber and nails.

"Enterprise zone is our biggest incentive for areas not depressed," Hullinger said. "It's our most powerful tool, and we expanded it a lot. It's effective."

John Sharp can be reached at (309) 686-3282 or jsharp@pjstar.com.


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