After spending more than $160 million on shopping centers in Chicago’s suburbs this year, Brixmor wants Naperville consumers to help fund improvements to two of the landlord’s properties.
Naperville officials this week narrowly moved forward the New York-based firm’s controversial request to create a business district sales tax for its local shopping centers.
The suburb’s city council this week approved a resolution on a 5-4 vote to consider levying a sales tax of up to 1 percent for businesses within the proposed district for as long as 23 years. The goal would be to generate as much as $20 million for improvements to the Westridge Court and Heritage Square shopping centers.
“I think the alternative, folks, is that we don’t have the investment in that area,” Naperville Mayor Steve Chirico said.
Brixmor’s ask comes after it has already made significant investment in suburban Chicago shopping centers this year, including paying $135 million to buy two retail assets in Elmhurst and Riverside. Those deals followed its $26 million purchase earlier this year for the Whole Foods-anchored Ravinia Plaza in Orland Park. The firm owns and operates almost 380 retail centers across the country.
It wants to use the funds to pay for relocating water, sewer, utilities, parking lots and roads within the shopping centers, which are located at 404-405 South Route 59, according to published reports. The property covers almost 66 acres.
While the proposal has the support of the city’s mayor, some elected officials said they were concerned that if they approved the measure, every shopping center would want to be in a business district funded by taxing consumers at the cash register.
“These people need to find a different way to finance their projects” council member Theresa Sullivan said.
The council approved a separate ordinance Tuesday advancing plans for another sales tax business district that would fund the redevelopment of the area at 1256-1290 East Chicago Avenue at the request of upscale grocer Heinen’s, which is considering moving into the space vacated by Butera Market, according to previous reports.
Brixmor’s recent bet on Chicago-area retail comes amid high demand among investors for grocery-anchored shopping centers. Such assets stayed in demand in the second quarter, comprising $3.8 billion in total deal volume, according to JLL. Rising interest rates, however, have cut down the number of buyers in the market, as the average number of bids per deal declined by 25 percent during the quarter, the brokerage found.
In 2021, trades of grocery-anchored assets hit a record high of 735, up 13 from the previous record set in 2014. Companies spent more than $13.3 billion on the properties, the largest share of any retail property type and the second-most in recorded history, JLL said.
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