Originally Published: Chicago Business
New York investor DRA Advisors continued selling off its Chicago-area retail portfolio with the sale of two suburban shopping centers to a local real estate firm late last year.
In separate transactions, DRA sold Park Center in Tinley Park and Woodfield Plaza in Schaumburg to local real estate investor Core Acquisitions, the buyer announced.
The New York firm hired brokers to sell 18 shopping centers in Chicago and its suburbs in May, putting one of the largest local retail portfolios to hit the market in years up for sale in a challenging environment for commercial properties. High interest rates have pushed down property values and made it harder for lenders to lock in financing for acquisitions.
But shopping centers, particularly those anchored by grocery stores as well as experiential retail tenants, have performed well compared to other commercial property sectors, with demand for shopping center space pushing up occupancies and rents.
“I think the retail property sector has held up pretty well compared to other properties, especially office. We’ve seen a pretty big bounce back from COVID, really. It’s the entertainment category,” Core Acquisitions Managing Principal Adam Firsel said.
Core Acquisitions, which has offices in Chicago and Deerfield, paid $10.6 million in November for the 132,000-square-foot Park Center, which is located at the southwest corner of Harlem Avenue and 159th Street in the southwest suburb, Cook County property records show. The center is 75% occupied, with anchor tenants Chuck E. Cheese, CFX Fitness and American Freight, according to the firm. Mid-America Real Estate Principal Rick Drogosz brokered the sale.
“Both the acquisitions really follow our value-add strategy of buying well-located centers at good intersections that we can improve through leasing and renovations, and that’s really our plan for both of these,” Firsel said.
Separately, the firm bought Woodfield Plaza for $6.25 million, according to Cook County property records. The 71,000-square-foot retail center, which is located on Golf Road near Illinois’ largest mall, was 45% leased when Core Acquisitions bought it in December, according to the firm, due to the departure of anchor tenant Buy Buy Baby from its 32,800-square-foot space after the chain filed for bankruptcy and shuttered its stores.
But Core Acquisitions signed a new tenant to that space before the deal closed — children’s entertainment franchise SkyZone will open there in mid-2024. Other tenants at Woodfield Plaza include David’s Bridal, Blick Art Materials and Phenix Salon Suites.
DRA’s other recent offloads include the $23 million sale of 855 East Belvidere Road in Grayslake, according to industry publication The Real Deal Chicago, and the $13 million sale of Glenbrook Marketplace in Glenview, according to CoStar News.
The investor also sold the Shops at State Place in the South Loop, the Pulaski Promenade shopping center near Midway International Airport and the Randall Square shopping center in Geneva in 2023, Crain’s previously reported.
The Chicago-area shopping centers DRA is selling are part of a larger, 3.7 million-square-foot retail package that also includes properties in Minnesota, Ohio and Alabama and is valued at $540 million, according to previous reports. The offering includes the shopping centers DRA took over in its $2.3 billion acquisition of Oak Brook-based Inland Real Estate in 2016 and has been selling off over the past couple of years.