One large retailer exits as another plans an even larger Naperville presence
By Susan Frick Carlman scarlman@stmedianetwork.com February 7, 2013 7:48PM
Store closing signs hang on the facing of the K-mart store on Naperville's Northeast side on Thursday February 7, 2013. | Terence Guider-Shaw~For Sun-Times Media
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Updated: March 9, 2013 6:19AM
Call it a big-box shuffle.
A landscape overhaul is afoot on the battlefield trod locally by two historically powerful commercial titans.
Poised to shutter its sole Naperville location sometime in April, Kmart is packing up and leaving town, even as Walmart prepares to open an even bigger box. The two moves will shift the options available to local consumers who patronize discount retailing venues.
Kmart’s exodus from its East Ogden Avenue site will leave the city without a location for the chain for the first time in several decades. The closure, which will leave Kmart’s closest remaining location in Montgomery, suggests a shift from the corporation’s outlook a dozen years ago. Kmart began construction early in 2002 on a second Naperville location, on the northwest corner of Route 59 and 111th Street — now home to TJ Maxx and PetSmart — only to scrap the project later that year. Its site on West Ogden Avenue, between Jefferson and Aurora Avenues, had been shuttered years earlier.
Meanwhile, Walmart was approaching a point of outgrowing its space northeast of Ogden and Route 59.
Upsizing
The retail giant’s expansion plans call for closing that store and building a new supercenter on an open parcel southeast of 75th Street and Beebe Drive. At 170,000 square feet, the new store will be almost 42 percent larger than the existing one. Initially expected to break ground late in 2012, the project was held up while developers waited for confirmation from the U.S. Army Corps of Engineers that there are no wetland areas on the 18.5-acre site.
Although the makeover will take longer than first expected, the project still has plenty of support from Naperville officials.
City Council members agreed this week to give the developer an extra four months to finalize its purchase of the land and complete the new building. The property purchase now must wrap up before May 1, and Walmart will have a year from that date to open its new doors.
Councilman Joe McElroy cast the only vote against the modified accord, saying he’d had misgivings about his earlier support for the Walmart move.
“It seems like this is one of those rare occasions where we actually get a second crack at a vote, and so I’m going to take advantage of it,” McElroy said.
Councilman Grant Wehrli urged support for the modified time line.
“This was a good idea then, it’s a good idea now. If we don’t do this, Walmart goes literally across the street to Aurora, taking all sales tax dollars with it, leaving us about a million dollar hole in our general fund,” Wehrli said, adding that the extended time line for Walmart’s rebate of $1.75 million in incremental sales taxes over the next decade was reasonable. “This is about business retention, about keeping our budgets intact ... It also grows jobs.”
Big box stores grow municipal revenue, as well. City Manager Doug Krieger estimates Naperville’s share of sales tax receipts from the new Walmart will add $750,000 to city coffers annually.
In big company
Christine Jeffries, president of the Naperville Development Partnership, sees big boxes playing an important role in the city’s commercial makeup.
“Our view is they do serve a great purpose, and they serve a large portion of the demographic. It’s a balance,” said Jeffries, adding that diversity in both office and retail arenas helps the business community thrive.
The new site site will have Walmart rubbing elbows with some other retail powerhouses. Jeffries said the commercial quadrant just southeast of Route 59 and 75th Street, occupied by Costco, Lowe’s and other large businesses, already generates mores sales tax than the entire downtown area.
“It’s pretty substantial,” said Jeffries, who estimated that once Walmart joins the neighborhood, the retail cluster will bring the city “well north of $2 million” in annual sales tax income.
Municipal receipts from sales taxes have been on the rise generally, according to assistant finance director Chris Smith.
“Overall, municipal revenue sources are showing signs of recovery,” Smith said in an email. “For the first 10 months of the 2013 fiscal year (which began May 1, 2012) retail sales tax is up almost 7 percent over the last fiscal year. Staff is projecting that the current fiscal year will end approximately $2 million over budget, or 4.5 percent over the last fiscal year. For next fiscal year (2014, which begins May 1, 2013) staff is projecting an increase in retail sales tax of 3.5 percent.”
The space now occupied by Walmart and its warehouse-style sister store, Sam’s Club, is owned by the retailer. Jeffries said her office hasn’t been approached about Sam’s Club expanding into the store next door, but she expects the company will be motivated to find a new tenant for the 120,000-square-foot space sooner rather than later.
According to development manager Anastasia Urban, no more big boxes are on the immediate horizon for Naperville.
“While we are not aware of any new projects comparable to the new Walmart proposed in the short-term, the city has had great success in maintaining retail occupancy rates in large tenant spaces,” Urban said in an email that provided such examples as h. h. gregg, Gordman’s and Ross Dress For Less.
