A New York investment firm sold a shopping center in Chicago at a discount of about 44 percent in December after scrapping a major development plan for the struggling property.
RPT Realty sold Webster Place, a 135,000-square foot retail center at Webster and Clybourn avenues to local contractor Novak Construction for $29.3 million, Crain’s reported. The investment firm bought the property for $52.7 million in February 2017.
RPT drew up plans to expand the property with two residential buildings in 2018 but ditched the proposal and listed the retail center in July 2021. While the center is in a densely populated, high-income neighborhood, the occupancy rate was 68.6 percent last fall after its largest tenant, Webster Place Athletic Club, closed in 2019.
Consumers have been turning to online sites instead of brick-and-mortar stores amid a shift in shopping patterns, and the pandemic accelerated retail centers’ downturn in 2020. It didn’t help that Webster Place’s major tenants included movie theater Regal Cinemas and bookstore Barnes & Noble, sectors hit hard by the pandemic.
Novak Construction’s development plans for the property are unknown. The contractor planned to build two 20-story apartment buildings south of the shopping center in 2018 but never followed through. Medical offices and distribution space, less vulnerable to competition from e-commerce, could be potential use of the space, according to JLL that was hired by RPT Realty to sell Webster Place.
The local contractor picked up several retail spaces over the past two years. Novak bought two former Sears stores in Portage Park and Galewood in 2020 and is planning apartments and retail space for both sites. A Novak venture also paid $25 million for a 43,000-square-foot storefront in the Loop a year ago.
RPT sold a 167,000-square-foot shopping center in suburban Glen Ellyn to local investor North American Real Estate Group for $30 million last year. California investment firm LBX Investments’ $67 million purchase of the Evergreen Plaza shopping center at 9500 to 9700 South Western Avenue was the city’s largest retail property deal in 2021.
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