Arlington 425 Moves Toward Approval With Weakened Confidence in Commercial Real Estate

Arlington 425 Moves Toward Approval With Weakened Confidence in Residential and Commercial Real Estate

Following a Design Commission meeting on Tuesday, March 30, 2021 and a Plan Commission meeting on Wednesday, March 31, 2021, the revised version of the Arlington 425 development project was given the go-ahead for vote by the Village Board of Arlington Heights.

The proposed residential and commercial mixed-use development if approved by the Village Board would approve the construction project by CCH LLC/Norwood Builders at the vacant parcel on the southwest side of downtown Arlington Heights bounded by Highland Avenue, Campbell Street and Chestnut Avenue.

The revised project indicates less confidence in the viability of retail and commercial space and residential demand due to the COVID-19 pandemic. A Harris Poll survey conducted in April 2020 revealed that nearly one-third of Americans are considering moving to a less densely populated area because of the COVID-19 pandemic, according to a Harris Poll survey conducted late April 2020. The report stated: “Space now means something more than square feet. Already beset by high rents and clogged streets, the virus is now forcing urbanites to consider social distancing as a lifestyle,” according to Harris Poll CEO John Gerzema.

“39% of urban dwellers said the COVID-19 crisis has prompted them to consider leaving for a less crowded place, according to the survey of 2,050 U.S. adults from April 25-27.”

— Coronavirus may Prompt Migration out of American Cities, Harris Poll, April 2020

The Harris Poll report pointed to the following trends that were already underway before the COVID-19 pandemic …

City growth slows: After people flocked to big cities in the early 2010s, major metro areas with populations of more than 1 million have seen growth slowdowns and even losses over the past four years, according to an analysis of Census Bureau data by the Brookings Institution’s William Frey.

Remote work normalized: Remote work is likely to become a more permanent reality, allowing staff more flexibility to live further away from their company’s headquarters — hence, further away from major cities.

Spreading out: Suburbs had already become more attractive to millennials before the pandemic. Demographers and realtors tell HousingWire that the crisis is a “tipping point” for people already wanting more space or a different quality of life outside urban cores.

A HousingWire report by Angelea de Gale published April 28, 2020 entitled Will COVID-19 spur a migration from dense cities? indicated there is an acceleration of migration from dense areas.

Populations in the Northeast migrated to Florida while germ-wary residents concerned about spread of COVID-19 in high-rise building elevators and dense city life, chose single-family homes in the suburbs for rental. Young single adults moved back to their parents’ homes. HousingWire reported that demographers and realtors predict the COVID-19 pandemic “is a tipping point for people who’ve already been dreaming of backyards, private pools and more space.”

In an August 2020 Multi-Housing News article, COVID-19’s Impact on Multifamily and Affordable Housing, FHA underwriter Lee Oller reported that “COVID-19 has heightened the inequality of the housing market, a crisis that this country will continue to experience even after the pandemic is over.” Oller supports the concept that outwardly “progressive” communities may support the concept of increased density and affordable housing to help support the record-breaking numbers of people with job loss caused by the Coronavirus pandemic.

In 2019 during the review process, proponents of the Arlington 425 project pointed out that residents assisted by affordable housing at the site would be young professionals with good jobs, not Section 8 residents. Some activists outside of Arlington Heights attended the local review meetings, pressuring Arlington Heights decisionmakers to support a progressive approach to affordable housing while demanding a higher number of affordable housing units than the developer thought was feasible financially. Decisionmakers and the developer worked toward a compromise.

“This project is so important to this neighborhood. That piece of land has been sitting vacant for way too long. This development is going to have such a huge impact and benefit to the village.”

— Arlington Heights Planning Chairman Terry Ennes

Physically, revisions to the Arlington 425 project have a more direct impact on neighborhood residents on the west side of Chestnut Avenue where the two buildings directly across the street to the east will each be one floor taller than originally planned, and will further diminish morning sunlight and affect landscaping foliage and flowering specifications on the existing west side properties.

The revised project also exposes the proposed new parking garage, which combined with the existing village parking garage on Vail Avenue, creates a mammoth twin parking garage that is about 425 feet by 240 feet — a square foot surface area that is almost the size of two football fields.

Revisions to the Arlington 425 project announced in November 2020 by the developer, CCH LLC/Norwood Builders, include the following:

1) Eliminating the proposed 7-story Highland residential building above six stories of parking (13 stories) and replacing it with a four- or five-story parking garage with no residential units above.

2) Changing the Campbell Street building from a nine-story building with 182 residential units and commercial space on the first and second floor, to a 10-story building with 26 more residential units proposed in place of the second-floor commercial space and 7,900 square feet of commercial space on the first floor.

3) Adding one floor to the 54-unit, four-story building facing Chestnut Avenue to a new plan of a five-story building with 85 residential units.

These proposed revisions to the Arlington 425 development change the total number of residential units from 361 to 319 under the newest proposal and reducing commercial space from 43,800 square feet to 7,500 square feet.

In November 2020, Attorney Mike Firsel said opportunities in retail that would generate sales taxes beyond the building’s east side “are extremely limited, or may be nonexistent altogether.”

The $150 million development was approved by the Village Board in May 2019 after extensive review. In August 2020 the developer was granted an extension to zoning approvals on the site until June 2021.

NORTHEAST VIEW 2021/2020

SOUTHEAST VIEW 2021/2020

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Sign announcing public hearing for a virtual public hearing for design commission review and a hearing for consideration of a special use permit for a parking garage in a B-5 zoning district. There was a ‘typo’ on the sign for the year of the meeting.

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