Veteran developer Kent Swanson advises committee on strategies used elsewhere to revitalize business districts

By Bob Seidenberg

Evanston has more in common with Chicago than nearby suburbs that are contending with high office vacancy rates and should consider a variety of solutions such as “Live and Work and Play” and partial conversions from office to residential to revitalize its business districts, a veteran real estate executive told members of the Economic Development Committee on July 31.

“I think we’ve got a lot of things we can build on, and it’s a great place to live and people want to live here,” said Kent Swanson, a longtime player on the city’s economic development stage. “But we’re also facing big changes in terms of the capital markets and where real estate values are, [with] higher interest rates, it’s harder to build new products.”

First Ward Council Member Clare Kelly, current chair of the Economic Development Committee, invited Swanson to share his expertise about what the city can do to revitalize downtown and the business districts.

City officials reported in May that the downtown office vacancy rate is up 53% since the first quarter of 2020, which included the start of the pandemic, and 150% since the city’s 10-year low in 2017.

The downtown retail vacancy rate is up, too – 73% since the first quarter of 2020 and 157% since its 10-year low in 2017, officials reported at that meeting.

“As everybody knows, across the nation this is an issue,” Kelly said. “And our city is doing better and worse than some, so it’s really about looking at what we can do to incentivize drawing people back downtown, whether it’s back to their workplace, to their office space or coming in for new experiences [to] just enjoy downtown.”

A longtime Evanston resident and Kellogg School of Management graduate, Swanson was involved in the development of the 24-story, 283-unit Park Evanston/Whole Foods high rise built in 1997 and a 9-story, 112-unit mixed-use building, The Main, built in 2017.

He has been a longtime chair of the executive committee of the Civic Federation. He previously headed the executive committee of Evanston Inventure, a partnership among the city, Northwestern University and other local institutions which started with the creation of the Northwestern University Research Park.

World ‘upside down’ since COVID

He prefaced his remarks by saying that “the world’s kind of gone upside down” from where it was before COVID. The city has a 2-million-square-foot office space market, he said. “We have an urban core [with] 20-story, 25-story buildings and are more like Chicago, and if you count Northwestern’s office space there’s probably four or five million square feet of office workers that are here.”

With the pandemic, and larger companies downsizing their space needs and more employees working remote, “if they’re (the workers) only here a couple of days a week that changes the customer base of who’s in town,’’ he said.

Some other towns and neighborhoods without the inner core of office buildings Evanston has, such as Wilmette and Winnetka and Hinsdale and Naperville, “are making those downtowns and those cities much more vibrant than they were in the past,” he said.

A way around the office ‘monoculture’

The same applies to parts of Chicago, with some neighborhoods like the Southport and Andersonville corridors on the North Side doing very well.

Evanston’s overall office vacancy rate, reported at just under 18% at the May EDC meeting, is “relatively better” than Chicago’s 30%, he continued, “but it’s a lot worse than when we were far the strongest office market in the suburbs, and now we’re significantly weaker.”

What Evanston “has going for it – in a really big way,” he said, is that successes in areas across the country are occurring in mixed-use projects – “live and work and play neighborhoods,” which are doing substantially better than LaSalle Street or the “office monoculture” model.

He pointed to a study by JLL (Jones Lange Lasalle), the real estate services company which advised the city in its own upcoming move away from the Morton Civic Center.

The study found that prime office corridors “are migrating away from core businesses districts in favor of mixed-use environments with a more diverse distribution of property types commercial residential and entertainment type uses rather than commercially dominated” zones.

In Europe, the study noted “there’s a broader effort to deliver entire neighborhoods and places that keep people stimulated beyond the working day. In the U.K., the $634 million redevelopment of the Smithfield district in Birmingham will create public and commercial space alongside 2,000 new homes.”

Swanson mentioned a project he worked on in Charlotte, North Carolina, as an example. The city’s traditional downtown is not doing that well, he said, but an industrial light rail alternative outside the core, with retail shops and eateries alongside, is “killing it.”

“There’s an opportunity to have greater participation of Northwestern employees in the downtown ecosystem,” he said. “I would try to build that partnership to make that stronger.”

Burns: City working on many of these ideas

Afterward, Council Member Bobby Burns (5th), participating remotely in the meeting, said “while I found this discussion productive, it’s pretty straightforward what happened” with regard to development downtown.

“The model downtown heavily relied on people coming to office[s] there, and we lost that. Every business area doesn’t rely on that,” he said, pointing to Central Street. “It’s retail, maybe some residential above retail, but not much, and then a very strong, stable residential core.”

As for downtown, he said, “the simple question for me is what do we to replace it [offices] with. It probably won’t be office. And so the other option to me seems like residential, and that ties perfectly into the discussion we’re having with our zoning and comp [comprehensive] plan,” which are undergoing their first major revisions in nearly a quarter of a century.

He said the other aspect of the issue is bringing people in to shop here, which is covered in the 2023 Evanston Thrives plan recommending strategies to improve the city’s business districts – “that we’ve been doing quite a while.”

“I know there are a lot of headlines that are going to come from this discussion,” Burns said, referring to Swanson’s report. “I just want to make sure that in those stories it says we are working on the things that are going to help us solve the challenges that we are well aware of.”

Kelly, though, didn’t think it so simple. She said that while she agreed with Burns that there are a number of efforts underway, there are other strategies left to explore in order to get the city back on track.