But when Gendell had the opportunity to pursue developments in his hometown of Skokie, Ill., he chose to found the company with his wife, Lisa. Today, Terraco is a “niche development player” in the Midwest, Wander says.
It is a retail niche that Terraco dominates. “We’re very, very good at doing infill development sites,” he says, noting that Terraco excels at difficult assemblage deals and solving complex problems for municipalities.
Wander notes that the company has worked with many major developers. “We’ve partnered with a lot of other firms to make deals when that’s been appropriate and very effective for us,” he says.
As a developer, Terraco seeks out “good, underlying real estate,” Wander says. “We’re looking for hard corners with traffic lights that we feel are going to have long-term value.”
Terraco’s past projects include the Lincoln Village Shopping Center in Chicago, “the first modern shopping center in the city,” Wander says. The $40 million development opened in 2004 and spans seven acres and now features a Ross Dress for Less and Office Depot.
Another Illinois project was a complex infill development in Skokie, where Terraco redeveloped the former Old Orchard theater property into a seven-acre parcel for condominiums and retail space. When finished, the project featured 110 condo units and 30,000 square feet of retail.
“We did small retail buildings with the Chipotle brand, Jimmy John’s, Sports Clips [and] a Portillo’s restaurant,” Wander recalls, noting that the development also features a car wash and a Fifth Third Bank location.
Terraco is coping with soft demand in its market, Wander says. Although the company has found projects that keep it busy, “They’re episodic,” he admits, but great corners in excellent markets are always in demand.
Terraco also remains attentive during its projects. “We know what goes in each new development,” he says, noting that the company also keeps on top of trends. “We have a pulse on which retailers are still expanding or need relocating.”
Kevin Gazley, senior vice president at Terraco, believes that “one of the pillars of success for Terraco has been our understanding of all constituents to a new real estate development; how the new project will function and be a success for the immediate neighbors, nearby community, and the retailers.”
The Game Plan
Wander has been with Terraco for 14 of its 28 years and has enjoyed his time at the company. “I think the people here are great to work with,” he says. “We have a lot of integrity.”
He is also proud of how Terraco does in building stronger communities through its new developments. “We’re really contributing to society and the community as a whole,” he says.
Looking ahead, Terraco plans to stay on its current path and continue developing retail and medical office projects, Wander says. “The core of our business is going to stay the same,” he says.
However, Wander also predicts that Terraco will remain a modestly sized company and not evolve into a large institution. “That’s not our game plan,” he says.
The format of a larger institution would be riskier in terms of taking on more overhead for Terraco, he asserts.
“We’re willing to stay smaller even if it means we have a lower ceiling in terms of profit on a deal,” he says. “[Larger] deals are more competitive and we would need more infrastructure to execute on these deals to find when you’re not looking for them on an ongoing basis.”
When asked what Terraco means to him, Scott Gendell pointed to the last line of the company’s mission statement; “The buildings we create will provide insight into our civilization and reflect our sensitivity and respect for the society we live in.”