Jeremy Sclar’s WS Development bought the nation’s second-oldest outdoor shopping center, in a North Shore suburb of Chicago, for $58.7 million.
The Massachusetts real estate investment firm picked up the 100,000-square-foot Plaza del Lago retail property on the shore of Lake Michigan late last month. The firm initially announced the deal without disclosing its price, which was just recorded in Cook County records.
The purchase raises Sclar’s bet on one of Chicago’s ritziest suburbs, Wilmette, to almost $170 million after it bought the Edens Plaza shopping center for $110 million earlier this year. Sclar’s firm landed online home goods retailer Wayfair in a lease for 152,000 square feet in a previously vacant former two-story Carson’s store on the Edens Plaza property.
Indianapolis-based Kite Realty Group was the seller of the Plaza del Lago. That company took control of the property after absorbing the firm Retail Properties of North America last year, a suburban Chicago company that had bought the shopping center for $48 million in December 2017.
Neither WS Development nor Kite returned requests for comment.
The 22 percent margin achieved by Kite on the property in just more than four years, despite growing threats to brick and mortar stores from e-commerce, shows the strength of suburban Chicago’s retail recovery from the pandemic. The sales volume of retail properties for more than $1 million hit at least a 22-year high in the Chicago area in the year ending in March.
Granted, momentum could be fading as record inflation and rising interest rates dampen the purchasing power of consumers and real estate investors. A first quarter report from CBRE said the prospects of weaker global economic growth is “causing some alarm” in the retail market.
Still, demand is being fueled by excess consumer savings that provides an opportunity for the market to remain healthy potentially through the end of the year, the report said.
“It is possible that these tailwinds will fade quicker than the downside risks and weaker
economic growth should be expected next year,” the report said.
Chicago’s North Shore is among the strongest retail markets. Evanston, immediately north of Chicago and nearby Wilmette, is home to three of the largest nine retail leases by square footage in the metro area in the first quarter, according to the CBRE report, which found the Edens Plaza Wayfair lease was the largest.
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