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
Naperville retail and office complex sells for $88 million
Retail Properties of America has paid $88 million for a Naperville retail and office complex in downtown Naperville, where it plans to build on.
The Oak Brook-based real estate investment trust today announced the deal for the 182,000-square-foot Main Street Promenade.
The west suburban center, on the east side of Main Street, is 93 percent leased and is zoned for another phase of construction, RPAI said.
“The acquisition of Main Street Promenade includes a vacant parcel that has approval for up to 62,000 square feet of mixed-use space, which will provide us the opportunity to leverage our robust, local operating platform and knowledge to densify the property,” RPAI senior vice president Matthew Beverly said in the statement announcing the acquisition.
Retail tenants include Anthropologie, J Crew, Ann Taylor and Hugo’s Frog Bar & Fish House.
Main Street Promenade was developed by Dwight and Ruth Yackley, owners of Naperville-based development firm BBM. They developed the property in 2003 and a second phase in 2013.
BBM was represented in the sale by Bob Mahoney and Nick Peters of CBRE. The sale was completed on Jan. 13, the Yackleys said.
“We’re semi-retiring, so we decided it would be a good time to sell,” Ruth Yackley said. “We’re ready to travel and work a little less.”
They declined to say how much it cost to develop the first two phases of the Promenade.
The property includes about 103,000 square feet of retail and 79,000 square feet of office space.
Source: Crain’s Chicago Business Ryan Ori January 17th, 2017
Chinese company bringing more than 200 jobs to Naperville
A Chinese maker of power tools plans to bring more than 200 jobs to its new North American headquarters in Naperville over the next three years.
Chervon North America, the U.S. arm of Nanjing, China-based Chervon Holdings, confirmed plans to move workers from Michigan and several suburban Chicago locations when it opens a new headquarters in Naperville sometime in the spring.
Earlier today, Crain’s reported the company was moving its headquarters to the western suburb from Grand Rapids, Mich. At the time, it was unclear how many people would work in the facility at 1203 E. Warrenville Road.
Now, the company said it plans to relocate 75 workers from Grand Rapids and the Chicago suburbs of South Barrington and Geneva, spokesman Joe Turoff said in an email. Also moving there will be 37 employees who were added when Chervon completed its acquisition of Mount Prospect-based Robert Bosch Tool’s Skil and Skilsaw brands on Jan. 1, Turoff said.
The company also plans to hire 25 new workers this year and another 75 over the next three years, Turoff said.
Chervon also considered locations in California, Texas, Georgia, North Carolina and Tennessee, Turoff said. The company is not receiving any incentives from the Illinois or Naperville governments, Turoff said.
“In the end our decision came down to three key factors: proximity to talent, proximity to current and acquired employees (and) Naperville’s pro-business attitude,” Turoff said in the email.
The facility will include research and development, industrial design, sales and marketing jobs, he said.
Chervon is subleasing the entire 124,000-square-foot building from Swedish manufacturer SKF Group, which signed a 15-year deal to use the building for offices and R&D. But SKF decided not to move in as the building’s exterior was completed in 2015, and instead began seeking a company to sublease the building.
Source: Crains Chicago Business Ryan Ori January 11th, 2017
Investor Pays 60 million for Naperville Arbors of Brookdale Apartments
A local landlord sold a Naperville apartment complex for $60 million, nearly twice what it paid for the property when the real estate market was in the dumps.
Prime Property Investors sold the Arbors of Brookdale, a 281-unit property on the suburb’s northwest side, to Friedkin Realty Group, a San Francisco-based investor that has been a busy buyer and seller of apartments in suburban Chicago, according to DuPage County property records.
The deal is the latest of many showing how investors that bought during the bust have been handsomely rewarded for taking the risk. Prime paid $32 million for the Arbors in December 2009, as the market was bottoming out, and cashed out earlier this month for $59.7 million, or $212,000 a unit, county records show.
Prime rode the market higher, but it also spent $2.1 million on new roofs, mechanical systems and other improvements, said Michael Zaransky, the company’s co-founder and co-CEO. In addition, the firm also renovated about 40 apartments in the past couple years, allowing it to raise rents on some units by as much as $200 a month, he said.
The property’s appreciation “wasn’t just a market timing thing,” he said.
The property’s rental revenue rose 140 percent over the nearly seven years Prime owned it, Zaransky said. Friedkin Realty plans to continue the apartment renovation plan, said Morton Friedkin, the firm’s founder and chairman, a move that could further boost the property’s revenue.
“There’s additional income to be realized,” he said. “I think the property has lasting value. It’s got great architecture and great location.”
How much further Friedkin Realty will be able to raise rents will depend on the market, which has been on a roll for the past several years. The median suburban rent per square foot has risen nearly 32 percent—about 4 percent annually—since Northbrook-based Prime bought the Arbors in 2009, according to a report from Appraisal Research Counselors, a Chicago-based consulting firm.
Wagering that rents will keep rising, investors continue to bid up prices of apartment buildings, tempting many landlords to cash out. By mid-year, major suburban Chicago apartment sales totaled $750 million and, taking into account what’s currently on the market, they could top the full-year record of $1.2 billion set in 2007, according to Appraisal Research.
The Arbors is considered a mid-tier, or Class B, multifamily property, with monthly rents ranging from $1,225 for a one-bedroom unit to $2,100 for a three-bedroom, the report shows. The property at 1373 Ivy Lane was 100 percent occupied at the time of the sale, Zaransky said.
With the Naperville sale, Prime no longer owns any apartment buildings in suburban Chicago, leaving it with properties in Texas and Denver. Yet that doesn’t mean it’s leaving the Chicago market, Zaransky said.
“We’re still active in looking and would love to own other assets here,” he said. “I still think the suburban Chicago apartment market is strong and vibrant.”
Friedkin Realty, meanwhile, owns more than 2,700 apartments in the Chicago suburbs and is looking for more. It is in the final stages of buying another suburban apartment complex, Friedkin said, declining to provide more details because of a confidentiality agreement.
Source: Chicago Real Estate Daily, Crains Chicago Business August 31st, 2016 By Alby Gallun
A California real estate investment firm bought a Naperville office complex for $18 million, 29 percent less than the property’s pre-recession price in 2007.
Irvine, Calif.-based Sperry Equities bought Washington Commons, an approximately 200,000-square-foot office complex on Diehl Road, according to DuPage County records.
The deal comes nine years after the complex sold for $25.2 million, before the recession hammered suburban values. In many cases values have never fully recovered.
Although the property’s value remains below pre-crash levels, Sperry believes it can cash in on the lowest suburban office vacancy in 14 years, allowing it to charge higher rents than those in deals signed in the past few years.
Suburban vacancy was 18.5 percent to end 2015 and 18.6 percent in the western part of the east-west corridor, according to Chicago-based Jones Lang LaSalle.
“They bought it in 2007 at the peak,” said Burton Young, a Sperry Equities principal. “Rents haven’t recovered to where they were in 2007, but we believe we can capitalize on market timing. There are some rents there that are low relative to the market, and there’s room to increase the occupancy. We think it’s a market-timing play.”
The seller was a Denver-based venture of real estate investment firm EverWest Real Estate Partners and real estate investment trust Dividend Capital Diversified Property Fund.
EverWest was known as Alliance Commercial Partners at the time of the deal. Alliance lost a few other suburban buildings to foreclosure during the downturn.
The Alliance venture that bought Washington Commons faced a potential loan default on the complex in 2011 because of rising vacancy, according to a Bloomberg loan report. But the owners later that year negotiated a maturity extension of four years, to February 2016, on the $21.3 million securitized loan, according to Bloomberg.
The Alliance venture also made a $4 million equity contribution and split the loans into A and B notes as part of the 2011 modification, according to the loan report.
EverWest, which changed its name in 2014, and Dividend Capital representatives did not return calls requesting comment.
Washington Commons, at 450-500, 550-700 and 750-900 E. Diehl Road, consists of 10 single-story buildings connected by foyers and hallways, on 21 acres, Young said. The complex was 77 percent leased when Sperry Equities struck the deal to buy it, and several small new leases have boosted occupancy to about 85 percent, he said.
The largest tenants are a regional headquarters of Toyota’s Lexus division, with 31,000 square feet, and a 17,000-square-foot Bright Horizons daycare, Young said.
Sperry Equities, once affiliated with brokerage Sperry Van Ness but now independently owned, plans upgrades including building out move-in-ready suites, he said.
“We love Naperville and the surrounding area,” Young said. “It’s a good long-term hold right off the I-88 tollway and Diehl Road.”
Sperry Equities owns about 6 million square feet of commercial real estate, including office and industrial space in Bolingbrook, Hoffman Estates and Tinley Park, Young said.
Source: Chicago Real Estate Daily Ryan Ori April 7th, 2016
CNN Ranks Naperville in Top 100 Best Places to Live
Top 100 rank: 54 Population: 152,600
In its list of America’s best small cities, CNN Money ranks Naperville at No. 54
Community is king in Naperville, which adds a local 1% tax on food and beverages to fund events and heritage celebrations. Come summer, residents converge on Centennial Beach, a huge quarry purchased by the city during its 1931 centennial celebration, or stroll along the 1.75 miles of brick paths on the DuPage Riverwalk in the heart of town. Top schools and lots of jobs at firms like OfficeMax and Alcatel-Lucent round out this picture of near perfection — marred only by some congestion on nearby highways and a lengthy commute for those who work in downtown Chicago.
Medical Services Cure For Struggling Shopping Centers
Health-care facilities may just be the cure for what ails many a struggling shopping center. The medical services industry is undergoing a paradigm change with regard to the way services are delivered and health-care providers are more eager than ever to get in front of shoppers. At the same time, more consumers than ever are receiving healthcare coverage, providing a strong source of traffic for shopping centers with medical tenants.
But it’s not always an easy fit. Medical centers are not the perfect solution for all shopping centers and, for a landlord, negotiating with health-care tenants presents special challenges. For example, build-out costs for a medical space are significantly higher than for the typical retail tenant. And most deals, particularly for larger clinics, require a long-term commitment to offset the higher costs. Parking for patients, especially during peak holiday shopping, has to be considered too. This SCTLive webinar will allow you to hear from shopping center landlords and health-care system executives about the benefits of this tenant category and the best ways to bring them into your properties.
39,000 SF Office Lease Tellabs Building Naperville
A health care software firm founded by a member of Marquette University’s national championship basketball team is expanding to about 39,000 square feet, the latest company to lease space in Tellabs Inc.’s headquarters in the western suburbs.
JDA eHealth Systems Inc. signed a long-term lease for 39,215 square feet in the Tellabs building, 1415 W. Diehl Road in Naperville, said Los Angeles-based CBRE Inc., which represented the tenant.
The company was founded in the early 1990s by James Dudley, a backup forward on Marquette’s colorful 1977 team, which was coached by Al McGuire and included Chicago-area prep stars Bo Ellis and Jerome Whitehead.
Mr. Dudley was a principal in a trading firm on the Chicago Board of Options Exchange before starting JDA in the early 1990s, according to the company’s website.
JDA is nearly doubling its space as part of a move from 1717 Park Street, a Class B building less than 3 miles east in Naperville, said Corby Bell, JDA’s chief operating officer.
Telecom equipment maker Tellabs completed the 800,000-square-foot structure with high-end finishes in 2001 but in recent years has leased space to outside tenants. Recent transactions include deals with accounting and consulting firm Sikich LLC and cable and internet provider Comcast Corp. for 80,000 square feet each.
JDA nearly tripled its revenue and employee count in the past six to seven years, said Mr. Bell, who declined to specify annual revenue. JDA and an affiliated company, Next Recovery Source LLC, have about 150 employees combined in their current location, he added.
The new office can accommodate up to 200 employees and can be reconfigured for as many as 400, he said.
‘INCREDIBLE GROWTH’ “Despite the economy, we’ve experienced incredible growth over the last few years,” Mr. Bell said. “We need more space, and the building we’re going to gives us really nice space for our employees, and for clients we bring in.”
JDA provides software called revenue cycle middleware, technology that allows hospitals to efficiently track registration, billing and payment of patient accounts, while Next Recovery Source is a collection vendor. JDA’s clients include about 40 hospital systems throughout the U.S., he said.
The move, made possible by executing a termination option in its current lease, is expected by April, he said. The firm has small satellite offices in Dallas and near Fort Myers, Fla., Mr. Bell said.
In addition to Class A space that comes mostly furnished and built out, one major selling point in the Tellabs building was the onsite data center. JDA currently must keep data both on and off site, he said.
“We were able to get unbelievable economics compared with doing a data center somewhere else,” said CBRE Senior Vice President Jon Springer, who represented JDA along with CBRE Vice Chairman Gary Fazzio.
Tellabs occupies about half of the office space in the five-story building, with several tenants using most of the remaining half, a Tellabs spokesman said. “With this lease, the building will be pretty full,” the spokesman said.
Source: CommercialRealEstateDaily, Ryan Ori October 04, 2013