CHICAGO-The leaders of both Canyon Capital Realty Advisors and McCaffery Interests, who recently formed a joint venture to purchase the Roosevelt Collection property on the South Side, both tell GlobeSt.com that they can fill the mostly vacant 400,000-square-foot retail portion. The only tenant in the property, which was owned by Centrum until the $285 million loan couldn’t be paid, is a 16-screen movie theater.
The property also includes 342 apartments, and this portion is doing well at 90% leased. Dan McCaffery, chairman and CEO of his self-named firm, tells GlobeSt.com that there’s no doubt the multifamily portion is solid. “We definitely think that we can bring energy to the property. We’re modestly changing the design, and this is fitting into a time when there’s increased activity by retailers as they’re rolling out new stores. Things are falling in line for this property, and we’re going to maximize on that opportunity,” he says.
The venture, which includes NBA star Earvin Johnson’s Magic Johnson Enterprises, reportedly purchased the 12-acre site for between $160 million to $175 million. The venture said in a statement that it plans to remove the center median and the included small retail buildings, and open up the property to include green landscaped areas, water features children’s play areas and wider sidewalks.
Data shows that McCaffery’s comments on the retail market are correct. According to a statement by the National Retail Federation Tuesday, retail sales rose for the 11th straight month in May, and increased 7.8% year over year. However, only a few retail sectors reported growth, mostly due to high gas prices and a weak jobs market, the federation said.
Rich Holly, managing director at Canyon, tells GlobeSt.com that he isn’t worried about purchasing a mostly vacant retail property. The venture said it believes it can secure a mix of clothing, home furnishings and electronics retailers, as well as enhanced restaurant opportunities. “We see great potential in the South Loop market, and fundamentals continue to improve in Chicago overall,” he says. “Our investors like urban areas like this where there is an opportunity to create vibrant retail. We believe this area is underserved.”
The Canyon-Johnson Urban Funds venture has had similar success with other properties across the country, including the transformation of the mixed-use Thomas Berkley Square in Oakland, CA to Uptown Place and the redevelopment of a former Pan Am rail yard in Cambridge, MA to the mixed-use NorthPoint project.
Canyon had invested in the State Place project in Chicago about eight years ago, but they are no longer involved. McCaffery is a prominent Chicago developer, and is concentrating efforts right now on the massive mixed-use, $4 billion Lakeshore redevelopment project of the former US Steel property along Lake Michigan on the South Side.
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