A grocery-anchored shopping center on Chicago’s North Side has changed hands for the first time in more than two decades, selling to a Florida-based retail investor for more than $27 million.
Regency Centers this week paid about $27.5 million for Old Town Square, an 87,123-square-foot center with tenants including a Jewel-Osco grocery store, according to people familiar with the deal.
That price is far above the almost $19.8 million that a fund of Principal Life Insurance paid for the 5.4-acre property at 424 W. Division St. in 2001, according to Cook County property records.
The boost in value comes despite a big slowdown in Chicago retail buildings and properties of all types throughout the country after more than a year of increasing interest rates.
In all, there have been just $1.5 billion in retail property sales in the Chicago area to date this year, following $4.7 billion volume for all last year. The picture looks the same nationally, with sales totaling $35 billion in 2023, on pace to fall short of last year’s $98.4 billion volume.
Des Moines, Iowa-based Principal overcame capital markets challenges by boosting occupancy to 97%, with most tenants on long-term leases. When it went on the market for sale in May, Old Town Square had a weighted average lease term of almost nine years, according to materials from brokerage CBRE, which represented the seller.
Jewel recently signed a 10-year lease extension, with six options for five-year extensions, according to CBRE. Principal also recently signed 10-year leases with Wells Fargo Bank and Domino’s Pizza.
Jacksonville-based Regency is a frequent investor in Chicago-area retail, including the Clybourn Commons property it owns just over a mile to the north at 2000 N. Clybourn Ave.
A Principal spokeswoman confirmed in an email to CoStar News that the property has been sold, but she otherwise declined to comment. Regency did not immediately respond to a request Friday.
It is the second-largest retail property sale completed this year in Chicago, trailing only a $35.75 million purchase of the Time Out Market food hall building in the Fulton Market district.
The buyer in that deal was an affiliate of Luxembourg-based Lagfin, which handles the investments of Italy’s Garavoglia family, the owner of a controlling interest in spirits giant Campari Group.
Overall, Chicago-area retail sales have totaled $1.5 billion so far in 2023, on pace to fall well short of last year’s $4.7 billion volume. Nationally, there have been $35 billion in total sales, following $98.4 billion in full-year 2022.
Old Town Square runs along Sedgwick St., Clybourn and Division. Nearby on Division St., the 240-unit Xavier Apartments tower sold for $81 million earlier this year.
For the Record
The seller was represented by CBRE brokers Richard Frolik, George Good and Christian Williams.