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Thread: Chicago may outlaw 'no compete' deed restrictions

  1. #1
    Cyburbian mgk920's avatar
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    Chicago may outlaw 'no compete' deed restrictions

    http://www.chicagotribune.com/busine...1,788416.story

    Supermarkets sit empty as deeds block new grocers

    By Johnathon E. Briggs
    Tribune staff reporter
    Published May 2, 2005

    When the Dominick's store in West Lawn closed last spring, ending more than two decades in the Southwest Side neighborhood, residents expected another grocer to quickly fill the void.

    A year later, however, the 54,000-square-foot building remains vacant, and neighborhood residents who once walked to the store now take buses or beg rides to full-line grocery stores miles away.

    Pete's Market, a local grocery chain, wanted to take over the space. But Dominick's has blocked Pete's and every other grocer from using the space inside an aging shopping plaza by placing a restriction in the deed that bars grocery stores.
    (see link for rest of article)

    Any thoughts?

    Me, although this proposed ordinance will not void existing deed restrictions, IMHO, it is a very needed first step. This is a growing problem throughout commercial areas.

    Mike

  2. #2
    Cyburbian
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    Quote Originally posted by mgk920
    Any thoughts?
    I can think of two WalMart buildings that have been empty for years. WalMart abandoned them when they built "supercenters"
    I wonder if there are no compete clauses for these buildings.

    Quote Originally posted by from article
    "Retailers don't close stores that are performing well,"
    In addition to the Walmarts, I can think of several other big box stores that have closed well performing stores and built larger store a few miles away. Menards, Target, and Best Buy to name a few. Even though their former buildings are in high traffic, high visible locations, they remain empty while everything else is developed around them.

  3. #3
         
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    The vacant big boxes and other grocery stores have became a major problem in inner city urban areas. I can remember a couple of Saveways leaving the center of town and the structures remained vacant for several years.

    Another issue on vacant spaces is the advent of "Auto Malls" which leave inner city display lots and large buildings empty.

  4. #4
    moderator in moderation Suburb Repairman's avatar
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    This is a great first step. These no-compete restrictions seriously screw-up developers abilities to redo a site or for a city to court a new occupant. There's one in a nearby town that has been vacant for 15 years. It's finally being redeveloped as a Children's Museum, which I feel is a good reuse. Big Boxes can only be used for so many types of uses, most of which compete in some manner.

    I've heard of places that also require big boxes to be designed for adaptive reuse, such as having structural supports in place to convert the building into offices, apartments, etc.

    "Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country."

    - Herman Göring at the Nuremburg trials (thoughts on democracy)

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    Cyburbian michiganplanner's avatar
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    As an economic developer, not a day goes by that I do not field a question about a vacant K-Mart building that has been that way for years now. Not sure if there are deed restrictions or covenants. Since the small areas of grass have turned to weeds and the parking lot deteriorated it has become a hard sell.

  6. #6
    Cyburbian AubieTurtle's avatar
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    Home Depot is using this to keep Lowes off its turf. There was a 1960s era shopping center across the street from one of the more popular Home Depot locations in Atlanta. The shopping center has been torn down to make way for a large mixed used development. Home Depot didn't show any interest until it was announced that Lowes was going to build a store as part of the development. Home Depot was able to bump Lowes out of their slot (not sure how, I guess Lowes hadn't signed on the dotted line with the developer yet) so they can move across the street. The current store will have a deed restriction on it keeping it from being used by anyone who would compete with Home Depot. The Home Depot can't be more than maybe five years old and is not a small store, so there really is no reason to move across the street except to keep Lowes away. Seems like a nasty way of tying the invisible hand behind capitalism's back.

    Luckily the area is so hot that there won't be any problem finding other uses for the property. The building will surely be torn down as the property is worth much more than the building. But if the area hadn't been so hot, the Home Depot big box would have sat their rotting simply because they didn't want to have to compete.
    As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron. - H.L. Mencken

  7. #7
    Cyburbian
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    I am curious as to the wording of a 'no compete' clause. Who decides if the proposed business is in competion with the former? Businesses with such a wide range of services such as Walmart and Miejer don't leave much use for their former building.

    I know of at least one instance where a Home Depot is located in a former K-Mart building. I would not consider Home Depot and K-Mart competitors, but they do sell a lot of the same stuff, so an argument can be made.

    It is more likely that there wasn't a 'no compete' clause for this building since K-Mart closed as part of its bankruptcy restructuring and is no longer in the area.

  8. #8
    Cyburbian
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    Here are:
    • The proposed ordinance
    • The press release
    Last edited by indigo; 21 Feb 2007 at 9:36 AM.

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    This happens more than you think. But on the other hand all a business has to do is to prove that they will not compete with the previous owner. I have seen old Walmart to Mini-Plex theaters, Old Food 4 Less to Ashley Home Furnishings, etx.

    The sad thing is if the building is a single purpose built building,,, then it is more cost effective to build new then the renovate. Change the building code to where new buildings are multi-purpose by design.

  10. #10
    Cyburbian mike gurnee's avatar
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    I have witnessed a convenience store chain buy up potential competition sites, and slap on the covenants. Saw a fast food mogul do it as well: "That lot is available, but you cannot serve fried chicken".

  11. #11
    Cyburbian mgk920's avatar
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    Quote Originally posted by mike gurnee
    I have witnessed a convenience store chain buy up potential competition sites, and slap on the covenants. Saw a fast food mogul do it as well: "That lot is available, but you cannot serve fried chicken".
    I am not as intuned to such legal issues as I should be, but might antics like that be pushing up against Federal 'restraint of trade' and/or anti-trust laws?

    Mike

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