A southwest suburban mall that once belonged to Starwood is hitting the market.
Miami-based Rialto, a loan servicer that repossessed the Louis Joliet Mall, has hired JLL brokers Austin Pye and Kevin Cremer to sell 323,000 square feet of the 940,000-square-foot property at 3340 Mall Loop Drive, Crain’s reported.
Like many retailers, the Joliet mall suffered one blow after another throughout the pandemic and even in the years prior. After Carson’s went out of business in 2018, followed by Sears closing its doors in 2019, the site was left with just two department stores: Macy’s and JCPenney.
By October 2020, a venture led by Starwood Capital had missed several payments on its $85 million loan, forcing it to hand the keys over to Rialto to avoid a foreclosure suit. Rialto will attempt to recover as much as possible for bondholders in the debt, which was packaged up with other loans and sold off to investors in commercial mortgage-backed securities.
The mall was appraised at $131.8 million in 2012 when Starwood took out the $85 million loan, but it will likely sell much less than that, as rising interest rates and other economic factors have weighed down commercial property values in recent months. Plus, retail values were already dropping amid the pandemic, which caused a spike in online shopping and lowered demand for retail space.
With the department stores being owned separately, the portion of the mall that JLL is selling has performed relatively well over the past year. It has an occupancy rate of just over 92 percent, and sales year-over-year in February amounted to $458 per square foot, “a healthy productivity level, reflecting the property’s strong competitive positioning in the market,” according to the property listing.
In addition, a buyer could view the site as a redevelopment opportunity, as other investors in Chicago have taken a similar approach with beleaguered shopping malls.
In Lombard, Pacific Retail Capital Partners spent $200 million to build a multifamily complex with 700 units at the Yorktown Center mall, replacing a 12-acre portion of the property where a Carson’s used to operate.
And French developer URW is embarking on a $100 million project at the Westfield Old Orchard shopping mall in Skokie with plans to build 350 apartments.
— Quinn Donoghue
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