Investors put $41M into north suburban retail

A pair of retail property trades in Chicago’s north suburbs are extending the path to recovery for a real estate sector that was put into shambles by the pandemic only to reemerge more quickly than the struggling office market.

In the larger of the two deals, New York-based Nassimi Realty paid nearly $24 million for the Four Flaggs shopping center, a 326,000-square-foot asset in Niles, according to the buyer. And Atlanta-based RCG Ventures paid just under $17 million for the Grand Hunt Shopping Center in Gurnee, Lake County property records show.

The sellers in both deals — New York-based DRA Advisors on the Four Flaggs asset and Des Moines, Iowa-based Principal Life Insurance on the Gurnee property — have been offloading Chicago-area assets as of late, with DRA in particular aiming to make a $540 million selloff of dozens of retail sites in the Midwest, with the portfolio concentrated on the Chicago area.

An $11.5M loan from Landmark Credit Union helped RCG acquire the 134,000-square-foot property at 6517-6549 Grand Avenue from Principal, public records show. While the RCG deal included just a portion of the Grand Hunt mall, the entire shopping spot includes 475,000 square feet with tenants like Target, Jewel-Osco, Best Buy Ulta, Home Depot and T.J. Maxx.

For Principal, the deal prolongs a trend of offloading Chicago-area assets, as it sold the Old Town Square shopping center on the city’s North Side for $27.5 million earlier this year, up from the $19.8 million it paid for the site in 2001. Principal also held the Gurnee asset for many years; it was unclear from public records exactly when and for how much it bought the property. The firm also sold the Union Tower office property in West Loop for $80 million in 2019. 

Neither Principal nor RCG could be reached for comment.

Meanwhile, Nassimi’s newest property in Niles has an occupancy rate of 75 percent, housing tenants including Marshalls, PetSmart, Old Navy, JoAnn, Five Below, and Ashley Furniture.

Mid-America Real Estate’s Ben Wineman and Rick Drogosz brokered the Niles deal on behalf of the seller, which has been an active player in Chicago real estate.

In May, New York-based DRA put a $540 million retail portfolio up for sale, comprising 24 shopping centers, with 17 of them being in the Chicago area. Notable properties include the 54,000-square-foot Nantucket Square in Schaumburg, 123,000-square-foot Pulaski Promenade in Archer Heights and 95,000-square-foot Joffco Square in the South Loop.

The past three years have been doom and gloom for Chicagoland’s retail sector, but brighter days could be on the horizon given the recent display of investor confidence. For instance, North Carolina-based Asana Partners just snagged an assemblage of low-rise buildings in Lincoln Park and Bucktown, totaling 75,000 square feet across 16 retail spaces.

In the River North area, the retail vacancy rate has fallen from 22 to 17 percent since the onset of the pandemic in 2020. However, other parts of downtown aren’t faring as well, such as the once-vibrant Magnificent Mile, where the vacancy rate reached nearly 30 percent earlier this year.

— Quinn Donoghue

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