Chicago Real Estate News from Bisnow

When it comes to retail, Inland vice chair Joe Cosenza says he’s investing lots and leasing lots. Hear more from Joe at Bisnow’s 2nd Annual Retail Summit, Feb. 14 at The Metropolitan Club. Register here!

Inland’s 13M SF of Chicagoland shopping centers are 93% occupied. With so much retail property, he says Inland acts as a one-stop-shop for big companies seeking to expand or establish a presence here. Inland can accomodate them in most major submarkets and offer massive amounts of space. For instance, Joe says they recently leased space to six Ross Dress for Less stores, nearly 200k SF in “one swoop.” As for the office super stores contracting, fine with Joe. He’s leasing up their unneeded space at higher rents.

Joe’s son Mark closed on Inland’s most recent area acquisition in November: the 175k SF, $25.8M Bradley Commons in Bradley, Ill. Joe says it’s just the kind of property Inland likes. It has a Walmart for groceries, a Dollar General store, Bed Bath & Beyond, Dick’s Sporting Goods, Petco, and others. The stores draw customers back every week. (It's a time-honored CRE rule: people always need towels, cleats, and fish.) For this, and every investment these days, Joe says underwriting is tough. Inland bought Bradley Commons at a price that gives them a good return even if Inland can’t lease the vacant 12k SF.

Pam Johansen, Joe, his son Mark, and Janet Cornell reviewing some retail transactions; they're finding rents flat, but Inland is giving fewer tenant concessions. Joe likes Chicago's national retail standing; it’s doing better than 65% of US markets. But, he tells us that Texas leads the pack of states, with cities like New York and DC always “golden.” In the retail realm, Joe says he loves dollar stores, which are here to stay. As for the most enticing asset type (cap rates being equal), Joe says he’d take “apartments in a heartbeat.” Real rents are rising and occupancy is marching up, month after month.

Lopsided Retail Recovery

Heitman’s Jennifer Boss, also a panelist at Bisnow’s upcoming Retail Summit, says Chicago is a good barometer for US retail trends because the big national players want to be here. In this “lopsided” recovery, the high-end retailers and discounters are doing especially well. Target and Walmart are expanding in the city, while Oak Street and the Magnificant Mile are greeting new tenants like All Saints and Topshop, and existing ones like Burberry are expanding. The Walgreens that just opened in the Loop has a nail salon, a brow department, and upscale liquor. (We prefer Johnny Walker Blue... not that we ever touch the stuff.)

Darcie Frankhauser, Emi Adachi, and Alan Dooley are on the Heitman team with Jennifer. (Normally we don't put in two pictures of the same thing, but that coffee mug was just too beautiful to ignore.) She says the small local shops in grocery-anchored centers are still troubled from the downturn. For instance, your neighborhood cleaner, boutique or franchisee may well be struggling to access credit. Also slogging through are metro fringe locations like Geneva and South Elgin. Even in some upscale locations like River Forest, landlords are having trouble filling some of the expensive big box spaces, left vacant by bankruptcies and other problems. Rents are down but taxes are still high, Jennifer tells us.

Eisenopoly's 3rd

Here's The Harold E. Eisenberg Foundation’s Sheila Eisenberg, Amy Eisenberg, Peter Eisenberg, and Katie Wales with JLL’s Guy Ponticello at Friday night’s Eisenopoly fundraiser for colon cancer research and real estate education. The foundation’s 3rd annual fundraiser (based on Monopoly) hosted a sold-out crowd of 400, who showed up for a chance to do good by having fun hopping around a gigantic game board. As for the real business of CRE, Peter, of Clark Street Development, tells us that his company recently sold a shopping center at 30th Street in North Riverside. It purchased it vacant, leased it to an HH Gregg, and sold it last week (no details available).