A California investor has paid almost $35 million for two shopping centers near Chicago’s Midway International Airport in separate deals that stand out amid a slowdown in property sales nationally because of rising interest rates and other economic factors.
NewMark Merrill late last month paid $24 million for the 130,598-square-foot Pulaski Promenade, and earlier this month paid $10.76 million for Midway Square, according to Cook County property records.
The Southwest Side deals stand out in a difficult environment to finance deals after more than a year of interest-rate increases, which has led to just $1.8 billion in Chicago-area retail sales so far in 2023, according to CoStar data. That is down from $4.7 billion last year and $4.1 billion in 2021.
"With the changing dynamics of the retail industry, NewMark Merrill believes that Pulaski Promenade and Midway Square are positioned to thrive in their community," Sandy Sigal, president and CEO of NewMark Merrill, said in a statement. "Despite the current economic climate, we were able to identify, secure financing and close on two properties that we believe are the dominant retail centers in the trade area."
Excluding mixed-use sales, the largest retail transactions of 2023 in Chicago have been the $35.75 million sale of the Time Out Market food hall building in the Fulton Market district and the $27.5 million sale of the Old Town Square shopping center on the city’s North Side.
In another Fulton Market deal expected to top $20 million, the recently opened Guinness Open Gate Brewery recently went on the market for sale.
The 122,710-square-foot Pulaski Promenade is at 4136 S. Pulaski Road, near Interstate 55. It is 100% leased to tenants including Marshalls, Shoe Carnival, Michaels, PetSmart and Ulta, according to the buyer’s statement.
It was sold by New York-based DRA Advisors, which acquired the property as part of a $2.3 billion buyout of Inland Real Estate Group in 2016.
The 55,332-square-foot Midway Square is at Pulaski and South Archer Avenue. It is 92% leased to retailers including Dollar Tree, Chase Bank and T-Mobile.
Midwest Square last sold for $13.4 million to Denver-based Fiesta Real Estate Investment in 2019. That firm is now part of Newport, Beach, California-based TRC Retail.
Sellers of the properties did not immediately respond to requests for comment from CoStar News on Thursday.
With the latest deals, NewMark Merrill now owns and operates a portfolio of Chicago shopping centers with a combined 1.5 million square feet and value above $200 million, according to the statement.
Calabasas, California-based NewMark Merrill financed the latest two deals with about $18.8 million in loans from United of Omaha Life Insurance, according to property records.
For the Record
The buyer was represented by NewMark Merrill’s Sigal, Jim Patton, Brad Pearl, Sandra Kist and Susan Rorison. The Pulaski Promenade seller was represented by Mid-America Real Estate brokers Rick Drogosz and Ben Wineman. The Midway Square seller was represented by Greenstone Partners brokers Danny Spitz and Jason St. John.