An investor from New York has decided to sell 18 shopping centers located in Chicago and the suburbs. This is one of the largest local retail portfolios that have hit the market for a long time.
Mid-America Principal Joe Girardi confirmed that DRA Advisors had hired brokers from Mid-America Real Estate, Cushman & Wakefield, and Mid-America to sell shopping centers in Orland Park. He refused to comment on the offer, which was first reported by Real Estate Alert.
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DRA is selling the Chicago-area portfolio as part of a larger, 3.7-million-square-foot shopping center package that includes a smattering of properties in Minnesota, Ohio and Alabama. Real Estate Alert estimates the portfolio’s value at $540m.
DRA chose both the right and wrong time to approach investors about these properties. The increase in interest rates and the increased caution of lenders have pushed property values down and made it more difficult for investors to obtain financing.
Shopping centers, in particular those with grocery stores as anchors, perform well, especially when compared to regional malls and office buildings. Some landlords were scared by the recent bankruptcy of Bed Bath & Beyond, but there is still a strong demand for retail space, which has pushed up occupancies, and therefore rents.
In a recent report, Green Street Research wrote that retailers are sticking to their plans and reaffirming them despite an increase in retail bankruptcy rates.
Despite rising interest rates, sales of shopping centers have decreased across the nation in the last year. Green Street estimates the volume of transactions in the sector have dropped 65% over the past year and that shopping centers values have fallen 14% since their peak at the beginning of 2022.
The report states that “the good news is that debt financing appears to be available for retail property, from high quality grocery-anchored neighbourhood centers to good-quality malls.”
DRA is offering the last shopping centers that it acquired in 2016 via its Oak Brook-based Inland Real Estate. DRA has been selling its Inland Portfolio over the last couple of years.
DRA executives have not responded to comments.
The Chicago portfolio, which includes 2.9 million square foot of properties, is comprised of a variety in sizes. From Nantucket Square in Schaumburg (a 54,000-square feet shopping center) to Orland Park Place in Orland Park (599,900-square feet complex). Crystal Point is a 317,000 square-foot property located in Crystal Lake. Randall Square, in Geneva, has a total of 226,000 square feet. And Woodfield Commons in Schaumburg, which is 208,000 square-feet, is also included in the package.
DRA is looking for buyers for three Chicago-area shopping centers. These include Pulaski Promenade in Archer Heights, Joffco Square in South Loop at 95,000 sq. ft., and Point at Clark, in Lakeview at 90,000.
