Core Acquisitions has acquired a west suburban retail asset that’s depreciated significantly since it last changed hands 20 years ago.
The local firm bought the Rice Lake Square shopping center in Wheaton for $34.25 million, down from the $44 million that London-based seller Grosvenor paid in 2004, Crain’s reported. The property spans 251,600 square feet; the price comes to $136 per square foot.
Mid-America Real Estate’s Rich Drogosz and Stanley Nitzberg brokered the deal on behalf of Grosvenor.
The shopping center’s considerable drop in value reflects the beleaguered state of suburban Chicago’s retail sector, which was dealt a blow by the acceleration of e-commerce following the pandemic. Struggling shopping centers have prompted landlords across the metro to redevelop their assets into mixed-use destinations.
The property’s depreciation also highlights the broader impact of rising interest rates, which have crushed property values across commercial real estate sectors since last year.
Core Acquisitions secured a nearly $24 million loan from Old National Bank to help fund the purchase, along with a $5 million line of credit aimed at leasing costs. A key priority for the buyer is filling a 40,000-square-foot vacancy left by Stein Mart, which filed for bankruptcy in 2020.
“Our plan is to lease that up quickly and stabilize the property at 95 percent leased or more in short order,” Core Acquisitions managing principal Adam Firsel told CoStar. Prospective tenants are already inquiring about leasing, Firsel said.
Despite challenging market conditions, Firsel is confident in the center’s future due to strong leasing activity in the area, driven by the lack of new supply.
The property is 75 percent leased, with major tenants including Pete’s Fresh Market, Studio Movie Grill and PetSmart. Pete’s Fresh Market is the largest tenant, occupying 67,800 square feet.
The sale of Rice Lake Square coincides with a broader slowdown in commercial sales nationwide. Retail sales volume in the Chicago area has decreased by nearly 40 percent over the past year, CoStar reported.
However, motivated sellers are still finding buyers. DRA Advisors, for instance, continues to offload suburban retail assets as part of an effort to liquidate a $2.3 billion portfolio. Core Acquisitions has acquired three properties from that portfolio.
—Quinn Donoghue
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