A North Side shopping center has traded for the first time in more than 20 years, equating to the second-priciest retail transaction in Chicago so far this year amid a dramatic slowdown in large deals.
Jacksonville, Florida-based Regency Centers paid roughly $27.5 million for the 87,100-square-foot Old Town Square at 424 West Division Street, CoStar reported. CBRE brokers Richard Frolik, George Good and Christian Williams represented the seller, a fund of Iowa-based Principal Life Insurance, which paid $19.8 million for the 5.4-acre site in 2001.
The profitable sale price is a sign of pushback, given the slowing demand for retail space and the depreciation of properties citywide amid rising interest rates. This year, there have been $1.5 billion of retail property sales in the Chicago area, on pace to fall well short of last year’s $4.7 billion of retail real estate deals. An increase of e-commerce, triggered by the pandemic, has delivered a blow to Chicago’s retail sector and caused a slew of landlords to pursue shopping center redevelopments.
Regency, however, is taking over a property that’s performing considerably better than other Chicago-area shopping centers plagued by vacant storefronts. Principal managed to boost Old Town Square’s occupancy rate to 97 percent by completing long-term leasing deals with most tenants.
Grocery chain Jewel-Osco, the anchor tenant at the site, recently signed a 10-year lease extension, with six options for five-year extensions, the outlet reported. Wells Fargo Bank and Domino’s Pizza recently signed 10-year leases, as well.
Regency, led by CEO Lisa Palmer, is already a player in Chicago’s retail sector. The firm also owns the Clybourn Commons property at 2000 North Clybourn Avenue, just over a mile north of Old Town Square.
Chicago’s priciest retail transaction this year happened in April, when a European investor bought the 49,000-square-foot building at 914-926 West Fulton Market for $35 million.
— Quinn Donoghue