Namdar to Buy Distressed State Street Retail at Big Discount

Namdar Realty Group is set to add another distressed Chicago asset to its swelling portfolio.

The New York-based firm agreed to pay $8.3 million for the 170,000-square-foot retail space at One North State Street, according to people familiar with the pending sale, Crain’s reported. That breaks down to almost $49 per square foot. The auction deal, expected to close next month, marks a steep drop from the property’s mid-2000s value — and a sign of how far State Street’s fortunes have fallen.

The property, located at the corner of State and Madison streets, last traded for $54.5 million in 2004, when a venture led by New York investor Isaac Shalom bought the four-level space. That equates to $320 per square foot. LNR Partners took control last fall after filing a $50 million foreclosure suit against the ownership group over missed loan payments, Cook County records show.

Despite the corridor’s broader challenges, One North State remains 93 percent leased. T.J. Maxx rents the property with 45,000 square feet through early 2027, while Burlington occupies about 53,000 square feet through 2029. Smaller tenants — including Rocky Mountain Chocolate Factory, Tropical Smoothie Cafe and Raygun — have recently signed leases, offering some stability amid downtown’s retail turbulence.

Transwestern’s Paul Barile, who marketed the property, declined to name the buyer but noted increased interest from New York investors in financially troubled Chicago real estate.

“I think there’s a rush of New York buyers coming into Chicago because they think there’s a lot of upside,” he told the outlet. “In time, it should be a moneymaker.”

That timeline remains uncertain. More than five years after the onset of the pandemic, retail vacancy still hovers around 26 percent downtown, according to Stone Real Estate. Persistent foot traffic issues, retailer exits and higher interest rates have all contributed to plunging property values along what was once Chicago’s signature shopping corridor.

Namdar, based in Great Neck, New York, has built a national reputation buying struggling malls and retail centers at bargain prices. In Chicago, the firm has been especially active, scooping up distressed office towers at 1 North LaSalle Street and 70 West Madison Street, as well as retail space at the base of the Warwick Allerton Hotel on the Magnificent Mile of North Michigan Avenue.

— Eric Weilbacher