Marshalls, Old Navy and Five Below coming to old Kmart in Sterling

STERLING – Three national discount retailers – Marshalls, Old Navy and Five Below – will open in Sterling Crossings, the former Kmart building, this fall, the developer announced Tuesday.

That will leave one 15,000-square-foot space in the main building, and four other outlying buildings, three yet to be built, for restaurants, offices or other retailers, developer Chris Williams said at a short groundbreaking ceremony.

Williams is in negotiations with three or four other national chains and said he also hopes to hear from local and regional businesses that are interested in opening at the Crossings.

“This will be a great addition to Sterling and the surrounding area,” Williams said in an interview late last week.

“The mayor and the council have been excellent to work with, and this is a perfect example of a successful private-public partnership.”

Williams, owner of Highlands Development LLC of Kansas City, Missouri, bought the building at 2901 E. Lincolnway for $1 million about three years ago.

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Investor Chris Williams (left) speaks outside of the former K-Mart building. Williams is redeveloping the site with several big name clients signing leases. Old Navy, Marshalls and Five Below have all signed on to take space at the shopping center. (Alex T. Paschal - apaschal@shawmedia.com/credit)

On Aug. 1, the City Council passed economic incentives for Williams, who plans to spend $14 million to redevelop the 100,000-square-foot-site in the East Lincolnway business corridor.

They included creating a tax increment finance district and a business development district that include Sterling Crossings.

Nearly all revenues derived from the TIF and BDD are to be used to reimburse Highlands for costs incurred to redevelop and improve the site. In addition, Highlands will get a share of the 1% sales tax revenue raised there for 15 years – in most cases, a 50-50 split, but in some cases with some of the retailers, 85-15.

This will be a great addition to Sterling and the surrounding area ...[and] this is a perfect example of a successful private-public partnership.”

—  Highlands Development owner Chris Williams

In addition to creating a new facade, Highlands will re-roof, add energy-efficient upgrades to the lighting and the plumbing, completely redo the parking lot and landscaping, repair and replace damaged concrete and sidewalks, and add the new buildings.

The existing outlying building on the west side of the parking lot is getting an addition; one building will be constructed on the east side, and two on the north side, closest to Lincolnway.

Barring any problems getting materials or other construction-related delays, the new stores are set to open in the fall, although Old Navy may be pushed to early 2024, Williams said.

He does not own the vacant Beef-A-Roo building adjacent to Sterling Crossings, and it is not part of Highlands’ redevelopment project.

That building is owned by Sterling businessman Scott Wolber, owner of Arthur’s Garden Deli in Sterling, Rock Falls and Dixon, and Don Pedro’s restaurant in Sterling.

Wolber said Tueseay afternoon that he has no immediate plans for that site, which the original owners closed 12 years ago Monday, on April 3, 2011, citing poor sales.

Marshalls is a discount department store that gets most of its stock from excess inventories; Old Navy, owned by Gap Inc., along with Gap, Banana Republic and Athleta, sells clothing for children and adults; and Five Below sells toys, games, home decor, beauty products, pet supplies, art and crafts and seasonal items, most for less than for $5 or less.

The Sterling VA Outpatient Clinic, part of the VA Iowa City Healthcare System, opened in 17,600 square feet of leased space in the east end of the building in January 2022. It moved there from a smaller site at 406 Ave. C downtown.

The main building turns 50 this year. Kmart opened in July 1973, and closed on Jan. 11, 2014.

The VA clinic building, which opened next door to County Market in November 2011, is now the Illinois Department of Employment Security office.

Those interested in leasing space in Sterling Crossings can reach Williams at 913-372-7270 or Chris@Highlandskc.com.

Go to highlandsdevelopmentkc.com/ for more information on the company.