Derrick Almassy of CBRE
CHICAGO—This year has already had a few economic shocks like Brexit, and the uncertainty of the upcoming presidential election, of course, still hangs over everything. But as landlords and investors in the retail sector get ready for the two-day International Conference of Shopping Centers' Chicago Deal Making conference, which starts this Wednesday at Navy Pier, the demand for these properties looks strong, and many owners might be ready to sell.
“We have a lot of listings coming out,” Derrick Almassy, Oak Brook, IL-based first vice president with CBRE's national retail investment group, tells GlobeSt.com. “The sheer number of deals is high,” and that's after a summer when the investment market was in the doldrums. “Our hope is that we are through a temporary pause.”
Less product has been available for most of the year, he adds, as many owners seemed reluctant to sell properties in high-performing markets. And that reluctance then stopped still others from putting their own properties on the market, as they knew they would have few opportunities to put the proceeds from a sale back into real estate.
The most desirable retail properties are high-quality core product, especially ones anchored by grocery stores, according to Almassy. And now that many owners have filled the empty spaces left by the closure of the region's Dominick's grocery stores, investors may have several opportunities to buy top properties that are performing better than ever.
Almassy points out that Danada Square East shopping center in Wheaton, an affluent suburb west of Chicago, has hit the market. It was anchored by an underperforming Dominick's in 2013 when it sold for $32 million, but he expects that with Whole Foods now filling that space, it should go for significantly more this time out.
The potential for properties occupied by high-performing, trendy grocers such as Whole Foods and Mariano's Fresh Market has already been shown several times this year. Inland Private Capital Corp., for example, recently sold the Mariano's in Vernon Hills, IL, for a gross sale price of $36.4 million. IPCC facilitated the sale of the property on behalf of one of its 1031 investment programs. The property was constructed in 2011, and coupled with cash flow generated during the holding period, the sale resulted in a total return to the investors of 148.48%.
“I think the rest of the year will be similar to what we saw in 2015 and activity will be back on pace,” Almassy says. “Of course, it is an election year, so how November goes will also determine how the fourth quarter and first quarter of next year plays out.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
