Originally posted at TheRealDeal

Chicago Core Acquisitions

Chicago retail property investor Core Acquisitions picked up a Skokie shopping center for $13.5 million, placing a bet on the continued strength of suburban retail.

An LLC tied to Northbrook-based Pine Tree was the seller of Skokie Fashion Square, Cook County public records show. The 85,000-square-foot property was built in 1985 and sits on a 6.4-acre lot, according to an online listing.

With this latest acquisition, Core’s Chicago-area real estate portfolio totals about 1.4 million square feet. The firm’s holdings include large retail and office properties including the 321,000-square-foot, grocery-anchored Westview Center in Hanover Park and the 206,000-square-foot Chatham Centre in Schaumburg.

In 2019, the firm bought 11 contiguous properties featuring a mix of vacant tracts, fastfood retailers and health services along Barrington Road in Hanover Park and Streamwood, according to property records.

Since then, the value of assets referred to as daily needs retail has only gone up thanks to the pandemic. Fashion Square’s tenants include Sally Beauty, Dollar Tree, and women’s clothing stores Fox’s of Skokie and Discovery.

Investors have dropped more than $250 million into such real estate in the Chicago-area over the past several months, and trades of grocery-anchored assets hit a record high in 2021, according to JLL. The trailing 12 months leading up to March this year experienced more sales of retail properties for $1 million or more in the Chicago area than any year since at least 2000, according to brokerage Marcus & Millichap.

Pricier deals have become more common this year. The first half of 2022 notched 45 sales in the Chicago suburbs of $10 million or more, more than twice as many as in the same period last year, Cushman & Wakefield found. The dollar volume of those deals this year reached $1.5 billion, a threefold increase over 2021.

That pace isn’t expected to hold up through the rest of the year, due to rising interest rates, Cushman said, calling the increase in the cost of capital faced by retail investors “dramatic.”

In the inner north suburban submarket that includes Skokie, 7.5 percent of the market’s total 79 million square feet was vacant, slightly more than the 7.3 percent rate for the entire suburban market, Cushman found.

Coming out of the pandemic, the suburbs have led Chicago’s retail recovery, with prominent downtown shopping strips lagging behind the performance of some collar county assets. Suburbs in the Central Northwest submarket led the surge, recording the strongest net absorption and posting vacancy 200 basis points below the Chicago suburban average in the first quarter of 2022. Pine Tree sold off another suburban Chicago shopping center, the 193,000-square-foot Thatcher Woods Center in River Grove, for $30.5 million in August to Florida’s East Coast Acquisitions. The firm also cashed in on a 40,000-square-foot retail strip on Chicago’s busy and redeveloping Six Corners intersection, pulling in $12.6 million from a sale to San Diego’s Realty Income.