Next Realty tests demand for vacancy-plagued suburban retail asset 

Next Realty is looking to offload a north suburban retail complex that’s been plagued by diminished foot traffic since the pandemic, compounding broader challenges facing commercial real estate.

The Skokie-based firm has hired JLL brokers to sell the 133,000-square-foot Lincolnshire Commons, at 970 Milwaukee Avenue, in Lincolnshire, Crain’s reported. Next Realty bought the property for $57.8 million, or about $435 per square foot, in 2017. 

A $43.5 million loan on the property was watchlisted last summer, after occupancy fell below 70 percent. The loan, issued upon purchase, was packaged with other loans and sold off to commercial mortgage-backed securities investors. It’s set to mature in 2027.

Now the complex is about 76 percent leased, and its net operating income stands at $3.3 million. It is anchored by University HealthSystem clinic, with other tenants including the Cheesecake Factory, Chipotle, Naf Naf Middle Eastern Grill and Fleming’s Prime Steakhouse & Wine Bar.

While an asking price was not disclosed, the complex will likely sell for less than its last trade, due vacancies and the impact of high interest rates, which have crushed property values across the metro since last year. 

Struggles in the suburban office market have dealt a blow to Lincolnshire Commons. Tech company Alight Solutions recently ditched its 200,000-square-foot headquarters at a nearby office complex, reducing foot traffic that once bolstered the retail center. Alight shrunk its Chicago footprint by 90 percent in a move to downtown Chicago, aligning with a yearslong trend that drove suburban office vacancies past 30 percent at the end of last year. 

Apart from Alight’s departure, suburban shopping centers were already struggling after the pandemic accelerated an increase of e-commerce, igniting a wave of mall redevelopments across the region. 

Village officials are cultivating a comprehensive plan to revitalize key areas of the suburb, potentially benefiting the retail complex. 

—Quinn Donoghue

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