Eyesore no more: Sterling Kmart building sold, VA to move outpatient clinic there

STERLING – The Kmart property, vacant for 7 years, is about to rise from the dead.

Highlands Development LLC of Kansas City, Missouri, which bought the building at 2901 E. Lincolnway for $1 million, will redevelop it and the other empty buildings on site into a mix of business and retail space, with one major tenant already lined up:

The Veterans Administration is moving its outpatient clinic at 406 Avenue B into the larger space.

The move will nearly double the clinic’s space, from 10,000 to about 17,600 square feet, said Bryan Clark, with the VA’s Office of Public Affairs in Iowa City, Iowa.

While most of the services offered will remain the same, there will be enough room to add a dedicated physical therapy space with a gym, and to update the radiology department with a lab. A home-based primary care unit also will be added, which means some veterans will be getting house calls, Clark said.

All told, it will be about a $2.5 million project, and plans are to be up and running in the fall, “around September,” he said.

A design for the building, and how much will be remodeled and how much torn down and/or rebuilt, still is being worked out, Highlands developer Chris Williams said, adding that he is working with city officials and expects to have those details in place in the next 2 or 3 months.

“We’re very excited to be a part of the community and to clean up something that’s been an eyesore for many years,” Williams said.

All VA clinic buildings are leased, and Williams, who was awarded the contract in September, has remodeled buildings in other communities for the federal agency before.

The building is nearly 5 decades old: Kmart opened in July 1973 and closed just over 7 years ago, on Jan. 11, 2014.

The clinic building, which opened next door to County Market 10 years ago, in November 2011, will not lie fallow: It will become the Illinois Department of Employment Security’s new Sterling office, IDES spokeswoman Rebecca Cisco confirmed.

Sterling IDES employees were in an office in Lee Wayne Plaza, 2323 E. Lincolnway, but the building needed repairs and when their lease was up, staff began working remotely. The IDES plans to lease temporary space in Rock Falls before moving into the Avenue B office permanently, when it becomes available, probably in early 2022, Cisco said.

Mayor Skip Lee is “thrilled” with the turn of events.

“I am ecstatic. The Kmart in Sterling has been an eyesore for far, far too long,” Lee said.

“That property as a real diamond in the rough,” a great spot for a developer with a little imagination to do great things, like bring in restaurants, shops, maybe a boutique hotel, he said.

“We’re going to do everything we can to help this new developer.”

In fact, the building on Sterling’s traffic- and retail-heavy east end is in an area in which the city plans to create a tax increment financing district. TIF districts provide financial incentives to developers who take on blighted areas. Highlands would be able to take advantage of some of those incentives, such as property and sales tax abatements, should the state OK the TIF.

In addition to the Kmart, the area includes the mostly vacant Northland Mall, built in 1977 in the 29800 block of Lincolnway, and a former Beef-A-Roo restaurant.

“Maybe that will light a fire under the owners of the mall to do something with that property,” Lee said. “It’s been neglected by its ownership way too long.”