A recent State Street sale for a loss by a big time retail landlord and a lender’s separate seizure of another property on the corridor further solidify its status as the poster child of Chicago’s retail struggles.
A venture of New York-based DRA Advisors recently sold the Shops at State Place at 1103-1155 South State Street for $11.5 million at an auction, which is about 23 percent less than the last time it traded in 2016, Crain’s reported.
Separately, Los Angeles-based lender Calmwater Capital has hired SVN Chicago Commercial brokers to market the vacant 112,500-square-foot property at 209-227 South State Street. An affiliate of Calmwater seized the building in May, as a venture of Sterling Organization surrendered it via deed-in-lieu of foreclosure.
Hiked interest rates, an increase of online shopping, wary lenders and reduced foot traffic due to the pandemic has wreaked havoc on State Street’s once-vibrant retail corridor. Several household retailers, such as Old Navy and Urban Outfitters, have vacated their State Street storefronts in recent years, contributing to a storefront vacancy rate of nearly 28 percent, up from 15.3 percent before the pandemic.
State Street’s struggles have prompted a team of real estate experts and urban planners to devise a strategy for revitalizing the strip. Their focus is on transforming the southern portion of State Street into a “civic and educational district.”
Current market challenges have made it tough to sell or refinance retail properties in Chicago. But despite these challenges, DRA has found ways to offload area properties in its retail portfolio, many of which were acquired through its 2016 acquisition of Oak Brook-based Inland Real Estate’s retail portfolio.
Inland affiliate IRC Retail Centers was able to land new renters to join long-term anchor tenants in Walgreens and a Fitness Formula Club gym in the 1100 block of South State, bringing its occupancy rate up to a relatively healthy 85 percent. The property was 80 percent leased when IRC bought it for $15 million in 2016.
At 209-227 South State, Calmwater is seeking a buyer for a century-old building that has been vacant since Foot Locker closed in 2020. The property has been marketed as a potential redevelopment opportunity for residential use. While no asking price has been publicly revealed, offers are expected to hover around $10 million, the outlet reported, citing an unidentified person familiar with the listing.
— Quinn Donoghue
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