Continental Expands into Chicago with $94M Retail Buy

Continental Realty’s Opportunistic Retail Investment Fund is living up to its name—the fund has made its fifth retail acquisition, acquiring a Chicago-area portfolio of five shopping centers encompassing more than 900K SF for $93.6M from DiMucci Companies.

The grocery-anchored, necessity-based properties, located in Cicero, Mount Prospect, Naperville and Palatine, are the first Chicago-area acquisitions for Baltimore-based Continental.

Chicago-based Tucker Development acted as an acquisition and development consultant on the transaction.

The Chicago-area portfolio is 84% occupied, with about 39% leased to grocery or drug stores. The largest shopping center in the portfolio is the Cicero Marketplace, a 392K SF center anchored by Home Depot, Sam’s Club, Target and Food 4 Less.

The acquisition also included the 101K SF Northwest Shopping Center at 425-659 East Dundee Road in Palatine; Golf Plaza II, a 145K SF shopping center at 1000 South Elmhurst Road in Mount Prospect; the 241K SF Fox River Commons at West Ogden Avenue and Route 59 in Naperville; and the 24K SF English Valley Shopping Center at 237 West Dundee Road in Palatine.

Earlier this summer, Continental’s Opportunistic Retail Fund acquired The Shoppes at Webb Gin in Atlanta for $97M and purchased Banks Crossing in Fayetteville, GA for $24.4M.

Continental Realty CEO JM Schapiro said the company is targeting restaurant, entertainment and medical tenants to fill the vacant space in the portfolio, the company also is considering the addition and leasing of outbuildings on the existing properties to increase the rental income they generate, Schapiro said, in a statement.

According to JLL’s 2022 Grocery Tracker report, grocery-anchored retail had the largest share of retail property acquisitions in 2021, totaling $13.3B in sales. Last year saw a record number of grocery-anchored retail property transactions with 735 total trades, 13 more than the previous record set in 2014, the report said.

Public REITs jumped into the market for grocery-anchored retail in a big way in 2021, led by Kimco’s $425M acquisition of Jamestown’s Grocery & Growth Collection. As a result of increased demand for grocery-anchored retail, the market saw a cap-rate compression of nearly 50 bps last year from 2019 levels, JLL said.

Groceries in general were the big winners during the pandemic, with sales topping $800B last year, a 16% increase. According to CBRE, grocery-anchored shopping centers in 4Q 2021 recorded their second-most active quarter in a decade.

Major players in the open-air retail sector raced to acquire portfolios of their competitors, aiming for national hegemony in the red-hot market for shopping centers and strip malls built around neighborhood groceries.

Bethesda, MD-based First Washington Realty, which specializes in convenience and necessity retail properties, on March 31 closed a $3B deal to acquire Donahue Schriber Realty Group (DSRG), a private REIT based in Costa Mesa, CA with a portfolio of 47 grocery-anchored shopping centers along the West Coast.