A North Side retail and medical office building is headed to the auction block, and it could sell for a fraction of what the owner paid for it 20 years ago.
Principal Financial Group has hired CBRE brokers and auction house Ten-X to sell North Avenue Collection, located at 939 West North Avenue in Chicago’s Clybourn Corridor, Crain’s reported. The offering includes a 350-space parking garage.
The auction, scheduled from Feb. 20 to 22, will have an opening bid of $5.5 million. The building is expected to sell for about $20 million, a big discount from the $89 million that the Iowa-based Principal paid for it in 2004.
Despite its prime location in a bustling shopping district, the building’s 95,400-square-foot retail portion is just 15 percent occupied. Conversely, the 104,300 square feet of medical office and fitness space is 88 percent leased.
The bi-level retail space complicates leasing efforts compared to conventional single-level layouts, which are typically easier to fill. Prospective buyers may view the offering as an opportunity to revitalize the property and attract new tenants, especially since it’s likely to be a bargain.
At the end of 2022, the Clybourn Corridor’s vacancy rate stood at nearly 14 percent, the outlet reported, citing data from Stone Real Estate. Clybourn Corridor is outperforming downtown’s Magnificent Mile and State Street corridors, where the vacancy rate is at roughly 30 percent.
High borrowing costs, wary lenders and economic uncertainty have contributed to a sluggish period for commercial property sales in Chicago and much of the country. Nationwide transaction volume plummeted 60 percent year-over-year in November, according to MSCI Real Assets.
Other mixed-use buildings in Chicago have recently sold at a steep discount, including the five-story office and retail property at 100-112 South State Street that traded for $35 million less than what the owner paid in 2015.
—Quinn Donoghue
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