Sterling Organization Lists Suburban Chicago Mall Set for $440M Makeover

The Sterling Organization is trying to cash in on its $440 million plan to redevelop one of Chicago’s largest suburban malls, listing the 1.1 million-square-foot Golf Mill Town Center in Niles for sale after securing public support and zoning approvals for the overhaul.

The West Palm Beach, Florida-based firm hired JLL to market the nearly 80-acre property, positioning it as a rare opportunity for a mixed-use transformation already backed by up to $96 million in tax increment financing from the village of Niles, CoStar reported. Sterling acquired the mall, at 239 Golf Mill Center, for $60 million in 2014.

The approved redevelopment plan includes replacing the enclosed mall layout with an open-air design, adding 300 apartments, medical office space, a hotel, retail space and entertainment offerings. Target, LA Fitness, Burlington and Ross Dress for Less are anchor tenants, but the center is about 40 percent vacant.

JLL is promoting it as a chance to capitalize on below-market rents and reposition the struggling asset. Danny Finkle, Jorge Portela, Michael Nieder and Brian Page are handling the listing.

Sterling’s decision to sell comes amid high construction and financing costs and growing macroeconomic uncertainty, including fears of a global trade war. The firm did not respond to the outlet’s request for comment.

The Golf Mill plan is part of a wave of major mall redevelopments across the Chicago area. Elsewhere on the North Shore, Unibail-Rodamco-Westfield has kicked off its revamp of Westfield Old Orchard in Skokie, starting with demolition of a vacant Bloomingdale’s to make room for 400-plus apartments and new retail.

And in the western suburb of Lombard, Pacific Retail Capital Partners is replacing a former Carson’s at Yorktown Center with about 600 apartments, a park and retail.

Two regional malls, however, have maintained massive valuations and scored big new debt packages without contemplating major projects to add residential uses to reduce reliance on brick-and-mortar retail.

Both the Woodfield Mall in Schaumburg and the Oakbrook Center mall scored nine-figure CMBS loans in the last two years, with Brookfield’s Oakbrook property raking in a $700 million debt package to retire a previous $475 million loan on the 2.6 million-square-foot property.

On the other hand, the venture of Simon Property Group and Institutional Mall Investors that owns Woodfield Mall had to chip in $88 million in cash to secure a new $294 million loan and retire a previous $374 million debt, with the cost of covering gap likely representing a less expensive alternative to redevelopment.

—Rachel Stone