A suburban turnaround led by a California-based retail redevelopment specialist paid off recently.
Red Mountain Group and investment partner F&F Capital sold the Algonquin Commons shopping center to Nuveen for $100 million just four years after buying the site for $33 million. The prior owners, Inland Real Estate, gave it up via a deed-in-lieu of foreclosure.
But Nuveen hasn’t necessarily overpaid either. Inland bought the property for $154 million in 2006 before the Great Recession led to several store closings and ultimately Inland’s default.
The Red Mountain venture spent the last few years on a $30 million plan to bring the once struggling shopping center back to life.
The California-based company quickly attracted new tenants including The Fresh Market, Bob’s Discount Furniture and a Twin Peaks restaurant. Over the past four years, the shopping center has gone from 60 to 94 percent occupied, according to Red Mountain. The firm put the property on the market late last year.
Newmark’s Bill Bauman, Kyle Miller, Keely Polczynski and Conor Lalor represented Red Mountain and F&F in the sale.
The suburban commercial real estate market is facing distinct highs and lows.
Chicago’s suburban multifamily market is one of the strongest in the country with investment sales jumping 65 percent at the start of the year, according to Interra Realty.
The multifamily sector’s success is in stark contrast to the suburban office market which is still struggling to recover from the pandemic. The broader suburban market had a direct vacancy rate of 20 percent in the second quarter (up from 15 percent in 2019) and overall vacancy rate of 26 percent, according to Transwestern.
The farther flung suburbs are also emerging as hubs for data centers and other industrial developments.
Meanwhile, retail sales have been more of a mixed bag.
Several indoor shopping malls have seen massive declines in value over the past decade, but a series of revitalization efforts, including transformations into mixed use developments, have taken hold across the region.
At least five malls across Chicagoland are undergoing large-scale redevelopments.
Editor’s note: this post was updated to correct the shopping center’s former occupancy.