Charlestowne Mall Redevelopment

As is common with large mall properties, ownership of the Charlestowne Mall site can sometimes be confusing. The property has multiple tenants, spans several parcels, and has experienced ownership changes over time. Below is a description of the various ownership interests within the mall area, accompanied by a map for reference.

• Krausz Companies (or affiliate entities): A majority of Charlestowne Mall is owned by The Krausz Companies, a Las Vegas–based development firm. Their holdings include the central mall building along with the former Sears, Carson Pirie Scott, and Kohl’s department store spaces. They also own the Classic Cinemas theater building, which continues to operate, as well as several outlot properties including Cooper’s Hawk, the Starbucks/Verizon building, and Chipotle. See company website here.

• Von Maur: The only attached structure not owned by The Krausz Companies is the Von Maur, which owns its building independently. Von Maur also owns a section of the main mall structure that is incorporated into the interior of their store.
  
  
• Former Toys “R” Us: The former Toys "R" Us building is privately owned by a development company called Storebuilt.  The building and property is listed for sale.
  
  
• City of St. Charles: The City of St. Charles does not own any portion of the Mall property.

Built in 1991, Charlestowne Mall is a two-level steel structure with approximately 800,000 square feet of Gross Leasable Area on a 72.94-acre site that includes 7,173 parking spaces. Due to the site’s topography, the building has entrances on both the lower and upper levels, allowing access at multiple elevations throughout the structure. The property fronts East Main Street (IL Route 64) and has immediate access to Kirk Road and Smith Road. The mall is located two miles east of downtown St. Charles and 8.5 miles north of I-88 and 10 miles south of I-90. The site is anchored by Von Maur and Classic Cinemas, and the property with outlot tenants including Cooper’s Hawk, Starbucks, Chipotle, and Verizon. The other 3 former anchor tenant buildings and the interior mall are vacant.

Property Engineering Analysis
This includes evaluating existing engineering conditions and identifying future critical infrastructure requirements necessary to support the site’s development. Key improvements required for redevelopment will involve upgrades to internal roadways, water and sewer systems, electrical service, stormwater management, and site grading. A comprehensive understanding of the current utilities and their complexity is essential, as these factors will directly inform the site plan layout, land-use mix, redevelopment costs, and overall financial feasibility.

Project Costs Summary
Multiple developers have concluded that reuse of the main mall structure is not feasible from a market perspective, and that modifications would be equally challenging from a construction standpoint. The project cost summary evaluates the scope, sequencing, and expenses associated with removing existing structures and preparing the site for redevelopment. This includes demolition, building façade replacement (for the Theater and Von Maur walls that connect to the existing mall), earthwork, pavement removal, and retaining wall modifications. It also accounts for the cost of upgrading and relocating utilities such as stormwater systems, sanitary sewer, water mains, gas, and electrical infrastructure.

Housing Market Study
The objective of this study is to compile and evaluate pertinent housing information in order to provide product, pricing and absorption projections for the recommended product type should a developer pursue a portion of the property for residential development. Click here(PDF, 3MB)  to view Housing Study completed by the property owner. 

Any redevelopment proposal for the Charlestowne Mall site will begin with a Concept Plan application. This initial review process provides developers the opportunity to receive informal feedback from City officials and the public before investing in detailed design and engineering work. As part of the Concept Plan application, the developer submits general project information along with a site plan and sample building elevations. These materials are presented to the Plan Commission and the Planning & Development Committee for discussion. The Concept Plan review does not result in a final decision by the City; instead, it provides the developer with valuable input to determine whether to move the project forward. In addition, the School District and Park District receive the information prior to the public presentation, and all property owners within 250 feet of the site are notified of the application. The Concept Plan review process typically takes 60-90 days. Developers may return to the Commission and Committee multiple times if they wish to seek further feedback. 

If a developer chooses to proceed, the project enters the formal entitlement process. At this stage, the developer must provide detailed engineering and site plan documents for an in-depth review by City staff. These materials are evaluated as part of the process for formal City approval. A public hearing will be required and all property owners within 250 feet of the site are notified of the time and place. The hearing is held at a Plan Commission meeting where the Commission hears the developer’s presentation, takes public comment and may request that the developer return with additional information. After the public hearing, commissioners review and discuss the proposal. The Commission will deliberate regarding how the project meets review criteria in the City Code and the City’s Comprehensive Plan. The Plan Commission will then issue a formal recommendation to the City Council for approval, approval with conditions, or denial. Once the Plan Commission has acted, the proposal moves to the Planning and Development Committee, where the developer presents again. The Committee considers the recommendations of the Plan Commission and then makes its own recommendation to advance the project for City Council consideration. The City Council has the final authority to approve or deny the project. The Entitlement approval process for a project of this scale typically takes 6 to 10 months.

Any redevelopment proposal for the Charlestowne Mall will be required to go through both the Concept Review process and the formal entitlement process. Given the size and complexity of the site, the approval process is expected to take longer than normal developments and will include several public meetings for discussion and formal action. It is important to note that there will likely be a gap of 4–6 months between the Concept Review and the Entitlement process. This timeframe allows the developer to design and prepare the necessary engineering documents. From the start of the Concept Review to final City Council approval, the entire process could take anywhere from 8-12 months.

The traditional enclosed mall model was built around large department store anchors and a steady stream of national retail tenants. Over the past two decades, however, consumer shopping habits have shifted dramatically toward online retail. This shift has reduced both foot traffic and tenant demand for traditional mall space. Most major department store chains that once anchored malls such as Sears, JCPenney, and Carson’s have closed or downsized significantly. Without these anchors to drive traffic, smaller retailers struggle to remain viable, leaving large portions of mall space vacant. Developers face difficulty attracting new tenants because national retailers increasingly prefer smaller, flexible footprints in walkable, mixed-use settings rather than in large, enclosed malls. Additionally, entertainment, dining, and service-oriented uses which represent growing segments of consumer spending require very different layouts than the mall’s original design. The mismatch between what the market demands today and what traditional malls can offer makes reusing them in their current form economically unfeasible. A partial demolition of Charlestowne Mall has been explored in the past; however, the mall’s construction design makes this option both difficult and costly. Even with selective demolition, a large portion of the building would remain, leaving behind a layout that does not align with today’s business needs. The remaining structure would require highly specialized or unconventional uses, making it challenging to attract financially viable tenants or adapt the space to modern market demands.

The latest estimate for demolishing the Charlestowne Mall structure, excluding Von Maur and Classic Cinemas, is approximately $8.6 million. This figure reflects demolition costs only. However, removing the mall will also require additional work to ensure the site remains safe and functional.

The mall currently has two major tenants, Classic Cinemas and Von Maur, that remain connected to the structure, as well as several outlot tenants including Cooper’s Hawk, Chipotle, and the Starbucks/Verizon building. These ongoing operations make construction and demolition particularly challenging.

1. The developer must ensure that all utility services to these tenants remain functional while being removed and relocated. This may require temporary service shutoffs or the installation of alternative temporary utility connections.

2. Construction activities must be carefully managed to minimize disruption from issues such as parking limitations, noise, and dust, all of which could affect the daily operations of these businesses.

Demolition of the mall would require construction of new facades for both Classic Cinemas and Von Maur. The estimated cost for these improvements is between $2.6 and $3 million. The expense is significant not only because of the large surface areas that must be replaced, but also due to the complexity of Von Maur’s design. Unlike Classic Cinemas, the Von Maur store is structurally integrated into the mall, meaning that its rear façade cannot simply be patched. Instead, it must be fully redesigned from an engineering standpoint to create a functional and visually appealing exterior once the mall structure is removed.

One of the unique characteristics of the Charlestowne Mall site is its varied topography. When the mall was constructed, the grading was designed to allow entrances on both the lower and upper levels of the mall and anchor stores. The result is a property with a wide range of elevations, including both steep drops and gently sloped areas, all of which present challenges for redevelopment. Below is a list of those challenges, along with topographic information and elevation photos. The topographic map shown here has been simplified to more clearly illustrate the elevation changes. For a more detailed version of the topographic map, click here.

1. The dramatic grade changes across the Charlestowne Mall site create significant challenges for redevelopment. From a land planning perspective, the elevation shifts make it difficult to design a cohesive development with strong internal connectivity. Commercial users, in particular, value visibility and accessibility from Route 64, which becomes harder to achieve on a site with such varied topography.
    

2. Maintaining access to the existing businesses requires maintaining some of the grade transitions. Von Maur, at the front of the site, is accessed from both the upper and lower levels, while Classic Cinemas, located behind the mall, is on the lower level.

3. Efforts to regrade the property to create smoother, more uniform development areas would also expose existing utilities. Relocating these utilities would add substantial costs to the project and could negatively impact overall financial feasibility.

4. Redevelopment plans will likely require the construction of retaining walls in areas where the site’s steep elevation changes make grading alone insufficient. These walls are necessary to stabilize the site and create level building pads and roadways. Preliminary estimates suggest that retaining walls could add as much as $700,000 to the overall project cost.

Elevation Photos

The existing utilities on the site, including water, sanitary sewer, electric, and storm water, were originally installed to serve the mall, which was a unique large-scale structure. Many of these lines wrap around the building and are built into the grading. Redevelopment of the property will require relocating many of these utilities to properly serve new buildings and site layouts. Depending on the future land uses, some utilities may also need to be upsized to handle increased demand, adding further complexity and cost. The combined cost of rerouting and upgrading utility infrastructure has been estimated at more than $10 million, representing one of the most significant financial considerations for redevelopment of the site. Previous developers have attempted to reduce the costs of relocating utilities by designing redevelopment plans that positioned some buildings around the existing lines. However, this approach can only achieve so much and often results in a site plan that is less than ideal from a land-planning perspective.

The mall property contains three large and 1 small detention ponds originally constructed to serve the site; these ponds do not serve any of the surrounding residential properties. Since the mall’s construction, Kane County stormwater regulations have been updated, and the existing ponds no longer meet current standards. Any redevelopment would require a thorough assessment and necessary upgrades to bring the detention facilities into compliance. Developers could also mitigate stormwater issues by reducing paved surfaces and incorporating additional green space. While the specific improvements and costs have not yet been determined, this is a significant factor that a prospective developer will need to address early in the planning process.

When malls were originally developed, they often involved multiple property owners and businesses within a single project. To coordinate these separate entities, a Construction, Operation, and Reciprocal Easement Agreement (COREA) was established. A COREA is a legal document that defines the rights and responsibilities of all property owners and businesses on a shared site, typically addressing matters such as construction standards, shared access and parking, utilities, signage, maintenance obligations, operating covenants, use restrictions, and dispute resolution. When a developer purchases a mall property, they inherit the existing COREA and must comply with its terms. In the case of Charlestowne Mall, the COREA includes detailed provisions, which grants the anchor businesses rights to influence the development to protect their business operations. One of the most significant aspects is the requirement to maintain a specific number of parking spaces for existing tenants. As a result, any redevelopment scenario for the site must incorporate sufficient dedicated parking spaces for the businesses to remain in compliance with the COREA.

In recent years, financing the redevelopment of large properties such as malls has become increasingly difficult due to higher interest rates. Commercial real estate loans that once carried favorable rates now often fall in the range of 6 to 12 percent, which significantly increases borrowing costs and reduces potential returns for developers. Lenders have also adopted stricter standards, requiring higher debt service coverage ratios and lower loan-to-value ratios. This makes it harder for developers to qualify for financing on projects that already carry substantial upfront costs, such as demolition, utility relocation, and infrastructure upgrades. In addition, many commercial mortgages across the country are coming due, forcing property owners to refinance at today’s higher rates. This refinancing challenge has created further pressure on lenders and developers, reducing the availability of capital for new projects. Altogether, the combination of elevated borrowing costs, tighter lending requirements, and refinancing risks has made financing a redevelopment of the Charlestowne Mall site especially difficult in the current market. This was a major reason why the previous development group withdrew its proposal, as interest rates were rising while they were still exploring the project.

Direct access to an interstate is a major advantage for shopping centers, since it expands the customer base, increases visibility, and makes the site easier to reach for both local and regional visitors. Many successful malls in the Chicago region benefit from this connectivity—eight have immediate access to one interstate, and four have direct access to two.

Charlestowne Mall, however, does not have immediate interstate access. While it is well positioned along Route 64 with strong traffic counts, the lack of nearby interstate connections limits its regional draw compared to other malls across Chicagoland. This has been a key factor in the mall’s long-term challenges and redevelopment outlook.

Redevelopment of the Charlestowne Mall will require replacing the outdated ring road system with a new internal road network to improve access, circulation, and site connectivity. The cost of constructing the new roadway system is significant.

Many vacant or struggling malls across the region are being redeveloped with denser residential uses, often combining apartments and townhomes. Examples include Fox Valley Mall, Yorktown Center, and Hawthorn Mall. Past proposals for Charlestowne Mall have followed this same pattern, calling for demolition of the existing mall and replacing it with new housing and supporting commercial space.

One of the main reasons developers pursue higher density housing is the financial impact. A dense residential development generates significantly more property tax revenue than a less dense residential project or a purely commercial redevelopment. The City’s goal is to support a project that can financially sustain itself, with the taxes generated on-site helping offset the very high costs of demolition and site preparation. The higher the property tax revenue from redevelopment, the less the City will need to draw on financial resources from other areas.

Below is a real world example of this in St. Charles. The analysis shows a variety of different residential development and commercial properties and how much those developments generate in property taxes per acre. The analysis shows the denser the development the more property tax revenue is generated and to what degree.

Other miscellaneous points to note:

• The size and density of a development are major factors in determining property tax revenue however other important factors include the quality of housing product, design, and location.
• Commercial properties may also generate sales tax, but that depends on the specific uses and their performance.
• Even if a residential project is dense enough to offset redevelopment costs through taxes, it must still align with market demand for that housing type. Without demand, the project will not succeed financially.

When it comes to land use at the Charlestowne Mall site, the challenge is finding a redevelopment plan that generates enough revenue to offset the high costs of site preparation while still meeting sound urban planning and design standards.

Redeveloping the Charlestowne Mall will almost certainly require financial assistance from the City due to the unusually high costs of demolition, infrastructure improvements, and other development expenses. Without support, these extraordinary costs make most redevelopment proposals financially unfeasible. The City is open to considering a variety of incentive tools, but two approaches previously discussed are Tax Increment Financing (TIF) and Sales Tax Rebates.

A TIF District works by freezing the property’s current taxable value. As redevelopment occurs and property values within the district increase, the additional property tax revenue called the “increment” is set aside by the City to reimburse eligible redevelopment costs such as demolition, utility upgrades, or site preparation. In this way, the project helps fund itself over time. Learn more about City TIF Districts here.

Sales Tax Rebates are another tool in which a portion of new sales tax revenue generated by businesses on the redeveloped site is returned to the developer for a set period. These rebates help offset upfront costs while ensuring that the City and community benefit from increased economic activity. Learn more about Sales Tax Rebates here.

Redevelopment of the Charlestowne Mall site must take into account the needs of both School District 303 and the St. Charles Park District. The City partners closely with these taxing bodies on all development projects to ensure that community services and facilities are properly supported. It is anticipated that any redevelopment plan will include the dedication of a public park site, creating new recreational opportunities for residents. In addition, developers are required to pay school impact fees, which help the District accommodate additional students generated by the project. This requirement is not unique to the Charlestowne Mall project and it applies to all developments in St. Charles. The City has ordinances in place that outline the appropriate measures and responsibilities for developers to ensure that school and park district needs are properly addressed.

Community input and support are essential to the future of the Charlestowne Mall site. The City is committed to working with a developer whose plan not only makes financial sense but also enhances the character and vitality of St. Charles. By engaging residents, businesses, and property owners, the City aims to ensure that redevelopment reflects community priorities while remaining economically feasible. A project that balances market realities with community values will build public trust, attract investment, and deliver lasting benefits to the entire St. Charles community.