Grocery frenzy still alive in Chicago with $70M of sales

Asset class has been among best performers of pandemic

Sumit Roy with1340 Patriot Blvd and 1625 South Clark St
Sumit Roy with1340 Patriot Blvd and 1625 South Clark St (Google Maps, Loopnet, Realty Income)

The humble grocery store market, a mainstay for real estate investors throughout the pandemic, is prospering in Chicago, where two properties just sold for a combined $70 million.

Realty Income, a San Diego REIT, paid New York’s Melohn Properties $52.4 million for a 65,500-square-foot Mariano’s store at 1625 South Clark Street in the Near South Side, public records show. It was at least the sixth time Realty Income has bought a store branded by the upscale grocer since 2017.

In suburban Glenview, Arizona’s Nottinghill Gate Tucson paid Chicago’s Inland Real Estate $18 million for a 64,000-square-foot Jewel-Osco grocery at 1340 Patriot Boulevard.

The deals underscore the relative safety of food stores compared with the challenge of trying to fill storefronts on high-end urban shopping strips such as Chicago’s Magnificent Mile and State Street. It isn’t just Illinois: Two South Florida sales for a combined $57 million this month helped ignite interest in retail from investors seeking a steady cash flow, The Real Deal reported.

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Neither the buyers nor the sellers on the Chicago sales responded to requests for comment. The South Loop deal provided a margin of almost 30 percent above Melohn’s 2014 purchase price, and Jewel sold for 40 percent more than its 2017 price, public record show.

The sales came as about a quarter of the Mag Mile’s retail space stands empty and landlords and city leaders mull how to turn around the pandemic-battered strip.

This spring, Brixmor bought a suburban Whole Foods for $26 million, or $257 a square foot. Since then the firm upped its bet on grocery centers by paying $75 million for Elmhurst Crossing and $60 million for North Riverside Plaza.

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