A Naperville shopping center that lost a Dominick’s supermarket in 2013 has generated a huge gain for a Chicago developer that filled the empty space with a Mariano’s grocery store.
A joint venture led by Bradford Real Estate has sold Fox Run Square, a 148,000-square-foot property at 1212 S. Naper Blvd., for $78 million to First Washington Realty, a Bethesda, Md.-based real estate investment firm, according to DuPage County property records.
That’s more than triple the $25.6 million price that the Bradford venture paid for the shopping center in 2014. The price was so low because Dominick’s had closed its store, leaving the property nearly half empty. It’s so high today because the Mariano’s opened about a year ago and the shopping center is full.
“What a great buy on their part,” Derrick McGavic, managing director of Newport Capital Partners, a Chicago-based developer who wasn’t involved in the transaction, said of Bradford.
Though retail bankruptcies, store closings and the rise of e-commerce have fueled widespread pessimism about the future of retail real estate, that’s not the case of grocery-anchored shopping centers like Fox Run Square.
Investors have been paying up for the properties, which are perceived as a safe haven in the turbulent retail world. The rise of e-commerce is less of a threat to a grocery store than it is to, say, Sports Authority, which went out of business last year.
“There is still a truly large investor appetite for that kind of asset, especially on the institutional side,” McGavic said.
Mariano’s are especially popular, generating big returns for developers and investors that have sold properties leased to the supermarket chain. British investment firm IM Properties recently sold three Mariano’s stores for $116.3 million, 40 percent more than it paid for them a few years earlier. IM Properties was also Bradford’s joint venture partner in Fox Run Square.
May Real Estate, an Oakbrook Terrace-based brokerage, sold Fox Run Square for the venture.
First Washington owns 92 shopping centers encompassing 12.5 million square feet. Fox Run Square is one of five properties the firm owns in the Chicago area, which also includes Roscoe Square, a 140,500-square-foot Mariano’s-anchored shopping center in Chicago’s Roscoe Village neighborhood, and Civic Center Plaza, a 265,000-square-foot shopping center in Niles anchored by a Home Depot.
Source: Crain’s Chicago Business June 6th, 2017 By ALBY GALLUN