Here's a market view with no false optimism


Publication: Chicago Sun-Times (IL)
Date: January 26, 2005
Author: David Roeder    
Section: Financial
Page: 67
Word Count: 778
Column: COMMERCIAL REAL ESTATE


We're in that season when predictions are as common as potholes. Every second real-estate firm has some deep
thinker offering forecasts for 2005. The outlooks reflect a lot of conventional thinking and "cautious optimism"
because originality that doesn't pan out might be bad for a career and make a client mad.



Into this comfortable little ritual comes Keith Lord, president of the Lord Cos. LLC, a commercial brokerage for the city
and the suburbs. He likes to shake things up by offering what he calls his "dead list," retailers who he believes are
declining and shouldn't be looked at as reliable long-term tenants or owners.


In various forums in the past, Lord occasionally has caused discomfort with his list. He correctly foretold the end of the
bagel store fad and the misbegotten strategy of Boston Market. He has questioned the proliferation of storefront
banks that do nothing but take deposits and issue home-equity loans. One of the leading storefront operations,
Washington Mutual, has started retrenching. And Lord's been wrong, too, having fingered McDonald's before it
rediscovered the virtues of consistency, speed and price.


So who's in trouble this year? "It's going to be a year of shakeouts in the restaurant business," Lord said. He thinks
the curtain is falling on operations that are too big for their own good, such as Bob Chinn's Crabhouse at 315 N. La
Salle, or joints that live and die with trendiness. He puts the Michael Jordan-affiliated One Sixtyblue at 160 N. Loomis
and Sushi Samba Rio, 504 N. Wells, in the latter category.


There also are places that overestimate their pricing power with sensible Midwesterners. Lord said Big Bowl Asian
Kitchen will be a tough turn-around for that reason. "People here like their noodles, but they like them cheap," Lord
said. He also cites some of the dining and drinking concepts the hotels are trying. One is the fancy bar at the Hard
Rock Chicago Hotel, 230 N. Michigan, where a mixed drink might set you back $15. "And for what?" Lord said. "The
privilege of drinking in a Hard Rock bar?" He said Hotel 71, 71 E. Wacker, is having similar trouble despite umpteen
makeovers.


Lord said the day of reckoning is near for Blockbuster, which is getting double-teamed by Wal-Mart and Netflix. And
the proliferation of sandwich shops is bound to hit its limit. Lord said the Cosi's chain, which can't figure out if it's
casual or white tablecloth, is the most vulnerable.


"It's bad news for a retailer when it has trouble defining itself," Lord said. Which is why he doesn't have much hope for
the Sears-Kmart combination. He sees other danger signs in the world of larger retail spaces, such as the eventual
disappearance of Toys R Us and more challenges to standard department stores and groceries. Both are losing
customers to chains making either the quality or the low-prices pitch.


And while Lord likes the concept behind Curves, the all-female workout joint, he's down on its all-male version, Cuts.
Why? "Men work out to be seen, and also to pick up women," he said.


DOLTON DREAM: Village officials in Dolton said Tuesday they have a deal in hand to redevelop a vacant former
aluminum plant northeast of 142nd Street and Cottage Grove. Mayor William Shaw and the village economic
development chief, Bert Herzog, promise an indoor water park, hotel, restaurant and movie theater on the 22-acre
site, which passed to village ownership in 2003.


But don't strike up the band yet. They declined to disclose sources of private investment in the site, saying only that a
partnership still being organized has committed $22 million toward the project. Herzog said residents should see
activity at the site starting in June. Although 142nd Street has an interchange at the Bishop Ford Expy., it gets
relatively little traffic. Herzog said big-box retailers are looking at other property along the street and the village hopes
to offer tax incentives to push things along.


OFF-TRACK UPDATE: Last week's item about the growth plans of Inter-Track Partners LLC, the off-track betting
operator, produced word that a group in Morton Grove has organized to oppose its plans to build in that suburb. The
group wants a nonbinding referendum about off-track betting on the ballot for the April 5 municipal election.


DOING THE DEALS: In a sign of life for the East-West suburban office market, Duke Realty Corp. has scored several
new tenants, including a seven-year lease for engineering firm Burns & McDonnell in the Executive Tower West
complex in Downers Grove. The company leased 25,000 square feet in a deal negotiated over only four days. Duke
also signed Follett Corp. for 78,000 square feet at 600 Oakmont Lane, Westmont.

Copyright 2005 Chicago Sun-Times, Inc.