Construction work on the old Hy-Vee building kicked off this week as plans to repurpose the building for retail use are going into effect.

The Austin Port Authority sold the building to Slaby and Associates, a commercial real estate brokerage company based in Verona, Wisconsin. The deal, which also includes the Farmer’s Market lot, closed in July 2018 for a price of $400,000. The contract states Slaby and Associates would have to either successfully market the 52,000-square-foot building for five tenants – including an anchor store – or withdraw from the agreement.

Earlier this year, it was announced that Marshalls, Five Below and Pet Supplies Plus had all written letters of intent. According to Victor Baeten, vice president and sales agent for Slaby and Associates, all three signed leases on Nov. 27.

“Everybody’s leases were signed on the same day because they’re contingent upon each other opening up,” Baeten said. “It took a little longer than we anticipated, but that’s part of the process we have to go through.”

Marshalls will serve as the anchor store, though Baeten said they originally thought another store would serve in that capacity.

“Originally we had TJ Maxx, owned by TJX Companies, the same company that owns Marshalls,” he said. “We went to committee with a TJ Maxx deal; we came out with a lease for Marshalls. We didn’t know it got changed; the brokers group didn’t even know it got changed. At the point of time we were in discussion, Yonkers was still open. Shopko is here and you have Walmart, but besides that, there is little fashion in this entire area. There was the mall that had a couple of other options, but those didn’t succeed, so there was that demand.”

The final factor that convinced TJX Companies to open a store in Austin was the cost, which Baeten said the city and Slaby and Associates had to be “much more aggressive than surrounding areas” to attract the business.

“In the end, we made the deal work,” he said. “With Yonkers closing it may be a better thing for (Marshalls) because it will drive more business, but I think it will also attract other fashion companies to look at the market now that Marshalls is coming to the market.”

Baeten said when speaking to other potential tenants, whether or not they would be a right fit with the city and Slaby and Associates’ plan was a determining factor.

“We have talked to a lot of tenants for this project,” he said. “There were several times when (the city and Slaby and Associates) may not have seen eye to eye, but we had to work out something that made sense to get the project off the ground and I think by going with the three that we have made sense to get the rest of the development full and eventually bring on other businesses that are going to gravitate towards Austin. There are opportunities to fill the box up and call it a day, but we both agreed it wouldn’t be the right fit for Austin and what the city is looking for. Could we make money on it? Sure, but it wasn’t the right fit for what we’re trying to do for it.”

Baeten said other prospective tenants were looking at the remaining two spots, but would not name them since nothing has been finalized. He did, however, indicate they would be a good fit for the other tenants.

Although construction work is underway, the first phase is primarily indoors and will not be visible to the general public. Baeten said the contractors are gutting the inside of the building, removing electrical and plumbing as well as the HVAC system running under the floor where Hy-Vee had their freezers and coolers, The empty space will  be filled with concrete and the floor smoothed down.

Workers will also take out the vestibule area, remove a few columns to fit tenant designs and re-support some of the building. They will also split the electrical output in the back so that each tenant has their own electricity, get water and gas to their spaces and split the rooftop units so the tenants have separate meters.

“We’re essentially delivering a fully built building for them to set up the store,” Baeten said.

Work on the façade is scheduled to begin as early as January, though Baeten said it could also begin in February and run through March.

“We don’t have that final timeline yet,” he said. “We’re working on the final structural engineering of that façade. We have a rendering of what it’s going to be, but we have to make sure it can support what the new look is going to be.”

“The tenant spaces will be delivered to them by Aug. 1 and I think it’s safe to say they will be opening between the first day of September and mid-September,” he added.

The project is the culmination of an effort that began two and a half years ago.

“We’re ecstatic learning about the outcome and that all of the leases came through as we’d hoped and we’ll see some new retail opportunities,” said City Administrator Craig Clark. “This demonstrates the importance of the position that the city and the Port Authority took on the Oak Park Mall, to be able to see that turn a page and eliminate that blight in the community and move us forward. When we take those leaps of faith, other good things can come about and this is just another component of that. Getting those leases finalized, the momentum that’s created from that, is exciting.”

Clark and Baeten emphasized the importance of utilizing the old Hy-Vee building as opposed to demolishing it.

“Instead of demolishing the building, we’re able to keep that tax base and those retail options open,” Clark said. “We hear that repeatedly from folks with the desire to add retail outlets and shop locally and keep those dollars within our community. It’s vitally important and we couldn’t be happier to hear of the news of this construction starting from Slaby and Associates.”

“When this project is said and done, it is something that we are going to feel proud that we were a part of, and I know the city can speak to this,” Baeten said. “Not only did it save the building, we were able to reutilize it and keep it from being cost prohibitive for us.”

Per the purchase agreement, Slaby and Associates is also responsible for establishing a new building at the Farmer’s Market lot, located between O’Reilly Auto Parts and the Hy-Vee gas station, which will have a “fast casual” or “sit-down” restaurant along with three other tenants. Baeten said discussions on that space are going well.

“We do have a couple at proposed terms; nothing at lease yet,” he said. “Our focus was to lease up the big box stores; we know we’re going to get the right users to look at the outparcel land.

“Our goal is to talk to everybody and make sure it’s a right fit,” he added. “We have users that would like to be here now and would pay a good amount, but it’s not the right fit for what we want to see and what the city would like to see. We’re going to hold off on those discussions and wait until we exhaust the other ones before we have to make any decisions. The good thing is we have time and we’re going to get this project up and going. Hopefully by 2019, most likely 2020, we can see something happening on those outparcels.”

Both Baeten and Clark said the partnership between the city and Slaby and Associates was critical for making the project work.

“You have to find the right partners you trust in all of this,” Baeten said. “The Port Authority has been nothing but transparent and honorable through it all.”

“Victor and Slaby and Associates have been tireless in trying to find retail opportunities for our community,” Clark said. “There are so many moving parts to this that if any one partner didn’t transpire we wouldn’t have seen this kind of project go forward, so we’re grateful to Slaby and Associates for their efforts.”

Baeten said he is optimistic about the project, having received positive feedback from those businesses that are considering a location in Austin.

“We see Austin growing,” he said. “It’s one of those towns that people take for granted until they come and see what’s happening here. Hormel being a great partner to the city and the investment Hormel has made, from the community college to the YMCA, you don’t find that in cities that are the size of Austin. My partners and I were sold on day one; it’s about getting everyone else sold on it.”