CenterSquare buys suburban Chicago retail for $33M from Crow

Restaurant-heavy tenant base doesn’t deter Briddell

CenterSquare's Todd Briddell and Crow Holdings' Michael Levy with 1847 Freedom Drive (CenterSquare, Crow Holdings)
CenterSquare's Todd Briddell and Crow Holdings' Michael Levy with 1847 Freedom Drive (CenterSquare, Crow Holdings)

Todd Briddell doesn’t fear a restaurant-heavy tenant base, normally a risk for retail real estate owners because of its high closure rates.

His Pennsylvania-based company, CenterSquare Investment, dropped almost $33 million to buy the 82,000-square-foot Freedom Commons retail asset in Naperville, one of Chicago’s biggest suburbs, public records show.

The purchase bucks the trend of investors seeking grocery-anchored retail assets in the Chicago market and across the nation since the pandemic pushed consumers away from stores carrying non-essential items and toward businesses that satisfy everyday needs.

“We purposely steer away from grocery-anchored,” CenterSquare’s Rob Holuba said. “They price much more expensively. And the grocer format is going to be changing, with more of an e-commerce model. There’s more embedded risk in that than is being reflected in the pricing.”

Freedom Commons is 96 percent full, with long-term ground lease deals for four restaurants, Old Town Pour House, Maggiano’s Little Italy, White Chocolate Grill and the Chicago steakhouse brand Morton’s. It also includes four multi-tenant buildings leased to Jason’s Deli, Naf Naf Grill, Bombay Wraps and Brick’s Wood Fire Pizza.

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The seller was Dallas-based Crow Holdings, which bought the property for $30.2 million in 2016, according to DuPage County records. Crow didn’t return a call seeking comment.

“Even though it is not a traditional grocery-anchored center, the location, tenancy, and institutional quality construction make this an excellent acquisition,” Quantum Real Estate President Chad Firsel said in a statement. Quantum represented both the buyer and seller.

CenterSquare said there’s been less competition for such properties amid high demand for shopping centers including grocery stores, which have experienced a compression of the spreads between their rent yields and property values as their sales volume surged last year and into this year.

Freedom Commons was CenterSquare’s first Chicago-area purchase, and it’s looking to buy as many as five to 10 more to expand its footprint, Holuba said. The company has 1.2 million square feet of unanchored retail real estate under management across about three dozen properties nationwide, he said.

Earlier this year, another Naperville shopping center, the 115,000-square-foot Naperville Plaza, sold for $52 million to Jacksonville-based REIT Regency Centers, providing a margin of $16 million for the seller Northpond, which bought that property in December 2020.

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