‘Yorktown 2.0′: Lombard mall plans $200 million apartment project

The owner of Yorktown Center in Lombard and a multifamily developer plan to tear down the former Carson's store to clear the way for hundreds of apartments and a public park.

Yorktown Center ushered in the rise of the suburban shopping mall when it opened in 1968.

The Lombard mall originally was anchored by Carson Pirie Scott, Montgomery Ward, Wieboldt’s and JCPenney. All but one of those chains have gone extinct.

The department store closings have turned other enclosed malls into retail ghost towns. But Yorktown has sought to reinvent itself by thinking outside the big box.

“What we’re trying to do is really transform the center into a location where people want to live, they want to shop, they want to dine and they want to be entertained,” said Najla Kayyem, executive vice president of Pacific Retail Capital Partners, the owner of the core mall property.

Pacific is teaming with Chicago-based Synergy Construction on a major overhaul of the west side of the 54-year-old mall. Plans call for replacing the cavernous, three-level Carson’s store and its vast parking lot with an apartment complex and a public park. The residential portion of the development will cost an estimated $201 million over two phases, Lombard officials said.

Regional shopping centers are undertaking similar housing projects to lift their fortunes and breathe new life into hulking retail spaces. Centennial Real Estate, the owner of Fox Valley Mall in Aurora and Hawthorn Mall in Vernon Hills, has torn down shuttered anchor stores to make room for hundreds of apartments and outdoor plazas that offer more of a downtown vibe.

With the rise of online shopping, malls have been scaling back on retail space, reconfiguring their fortresslike footprint and focusing on nontraditional tenants such as fitness centers to boost foot traffic.

“In many ways, the layouts are obsolete with the spine of the mall inside and then the big-box retailers and then the parking lot surrounding it,” Synergy Principal Phil Domenico said.

The two other anchor buildings at Yorktown – Von Maur and JCPenney – are owned separately by their respective department store companies.

The 218,000-square-foot Carson’s space has been vacant since the mall stalwart closed in 2018 after its parent company, Bon-Ton Stores, declared bankruptcy.

“The idea that someone might move into one of those anchor stores and adaptively reuse it for retail is a long shot at best,” Lombard Village Manager Scott Niehaus said.

The development team still needs zoning approvals from the village. Officials also are considering a multimillion-dollar package of economic incentives. But California-based Pacific Retail and Synergy have announced the purchase of the 12-acre Carson’s site.

“We’re over-retailed entirely, so when we have the opportunity to take back the department store box, it allows us to rebalance the asset with a variety of uses,” Kayyem said.

It’s not a new approach for the mall operator.

A ‘critical mass’

Pacific Retail acquired the central mall property in 2012 with private equity firm Kohlberg Kravis Roberts & Co. for $196 million. About three years later, Yorktown ownership and Lombard officials began developing a vision for a peripheral area just north of the mall.

To date, two apartment projects have been built: Elan, a 375-unit complex, and Overture, a 175-unit complex for people 55 and older.

Village trustees are set to vote Thursday on a proposal to redevelop a vacant strip mall into 90 townhouses to be built by DH Horton along Yorktown’s ring road.

“Malls are reinventing themselves over time,” Kayyem said. “And so we have taken a master planning approach to Yorktown Center and are working with various different developers and operators and players to see who’s the best fit for the property.”

Pacific and Synergy have not finalized a unit count, but village memos indicate the latest project could bring about 700 apartments to Yorktown.

“You start having a critical mass of maybe 1,500 or 2,000 new residents,” Niehaus said. “And when you look at the rent rates that the apartments are generating, it typically lends itself to people that have disposable income that will want to shop or eat or participate in activities.”

The mall in recent years has carved out a “wellness” precinct with Orange Theory Fitness, CycleBar and other health-focused tenants.

“We took dead space and we were able to reimagine it with some very creative leasing and marketing efforts, Kayyem said.

Yorktown has about 150 stores. Adding residents closer to the mall eventually could support new restaurants, maybe a small grocer, Niehaus said.

“That’s all been part of the vision in understanding that traditional retail as we knew in 1970 when that mall was built is no more,” Niehaus said.

A ‘template’ for malls

An element of nostalgia also drew Domenico, the Synergy developer, to the project he calls “Yorktown 2.0.” He grew up in Downers Grove.

“I got my first leather coat at Wilsons Leather in Yorktown mall,” he said.

In business terms, housing has become an attractive option for mall operators because of the strong demand for multifamily space, Domenico said.

“We’re hoping to take this template elsewhere,” he said.

The first phase of the project would include demolishing the former Carson’s store, resealing the mall property and constructing an apartment building. About 3 acres between the apartments and the shopping center are being set aside for green space.

“We really think that the creation of the large park area will be a communal outdoor space for events and activities and a place that residents can come and connect to the shopping center and have a great experience,” Kayyem said.

Pacific and Synergy are looking to break ground in spring 2023, subject to village approvals. Officials are discussing a “pay-as-you-go” tax increment financing incentive for the housing component. The village also could use funds generated from an additional 1% sales tax on purchases at the mall to help pay for the demolition work, asbestos removal and park improvements.

“When you tear down that existing anchor store, you’re left with wide open walls into the mall property that actually have to be rebuilt to be more inviting,” Niehaus said.

The village’s plan commission is expected to launch the formal public hearing process this fall.