March 20--Marshall Field's is long gone from Chicago but a pair of developers is trying to keep part of the name alive with the redevelopment of a sprawling 1.5 million-square-foot complex and about 22 acres at Diversey Avenue and Pulaski Road.
Built in 1928 as an Olsen Rug factory, the six buildings took on a second life as a warehouse for Marshall Field's and then Macy's, which closed the location in 2008. In January 2014, 4K Diversey Partners bought the site from Macy's for $8 million.
Merit Partners, formed by 4K principals Aaron Paris, whose background is in industrial development, and Paul Fishbein, who was involved in the repurposing of the Montgomery Ward campus at 600 W. Chicago Ave., is undertaking a $60 million-plus project at the site.
So far, about 350,000 square feet of the complex, named The Fields, is spoken for with a mix of uses that includes Newly Weds Foods, Studio41 home design showroom (whose owner Louis Silver is the third partner in 4K Diversey Partners), Deal Genius, Cermak Fresh Market and 84 live-work apartments.
Amid the sounds of construction in the background, the two discussed the project with the Tribune. The following is edited for space and clarity:
Q: How did you decide what you wanted to put in the building?
Aaron Paris: Paul said you've got to have a portion of this residential if you're going to make this work. I was not so positive. In fact, I was quite negative. And then as we worked through it, we came up with the live-work concept. That's what this city needs and this area needs. For small companies, startups that are stuck renting an apartment and renting an office and can't afford both, this solves a lot of the dilemmas.
Q: Why not a strip mall, all retail?
Paul Fishbein: It was under contract by a number of developers, none of which was able to move forward. Everybody who looked at this property, now with hindsight, made the same mistake. 'Oh I'm going to make this 100 percent office or I'm going to try and make this a huge industrial building, which it was from its birth, I'm going to make it a huge retail center, I'm going to make it a huge residential project.' The reality is to make this project successful, the key is a mixed-use project.
The big paradigm shift that we created was moving all the parking for the complex inside the building. We'll have 700 indoor parking spots. Everyone living and working and visiting this project will be parking inside the building.
Q: What does a live-work apartment look like?
Fishbein: In concept, it's a bedroom, closet, bathroom, in-line kitchen and the rest is open. It's really meant to be what I consider old-school loft space. You can have the CEO of the company sleeping there. You can have what started out as a couple of friends with an idea.
Q: Why didn't you go after Mariano's, which is on such a hot development streak?
Fishbein: We talked with (Cermak) very early on. It's family owned and they have the ability to adapt to what's happening in the project and the neighborhood. Mariano's model is a little different. Mariano's is interested in having developers build an entire store for them and charge them a significant rent. It's a very risky development proposition.
Q. Why?
Fishbein: Because you basically own the grocery store and as long as they pay the rent, you've got a good return. If they have financial issues, that creates a whole different challenge for the developer. Cermak is buying their space and they will be putting all their own investment into it. We're not financing a penny of it.
Q: What's the sales pitch to get other companies in here?
Fishbein: We feel that most likely we're going to be attracting tenants that are looking in the suburbs and want to get into the city. I think there is a very good chance that we could have a Fortune 1000 company put in a call center here.
Q: Does this concept work now because the real estate market and the general economy is on more solid footing than in 2010, 2011, 2012?
Fishbein: The economy is going in the right direction. We were able to propose to the city a master plan that instead of dominating one category, created synergy among all of them and was a good contributor to the neighborhood. The other aspect was the financial realities. Macy's in 2008 had the building on the market for $40 million. We purchased it for a fraction of that. By having the lower cost basis, it allowed us to look at the space in a different way.
Q: Do you see similarities between this undertaking and the redevelopment of 600 W. Chicago?
Fishbein: They're similar in many ways. You're talking about a wonderful historic structure that will have 100 percent new mechanical systems, designed for the population and density serving it, and you'll see big beautiful views.
mepodmolik@tribpub.com
