Grocery-Anchored Retail Frenzy Hits Chicago

Grocery stores are having a moment in Chicago and its suburbs, where two recent sales totalling $44 million show an uptick in per-foot prices in just three months.

In the city’s North Mayfair neighborhood, the Sterling Organization paid $18.2 million, or $208 per square feet, March 10 to buy the Jewel Osco-anchored North Mayfair Commons from Canada’s Sun Life Assurance. Brixmor, a New York-based REIT, paid $26 million, or $257 per foot, Feb. 10 to buy a Whole Foods-anchored Ravinia Plaza from Inland Real Estate Group. Those are up from the $30 million, or $180 per square foot, that North American Real Estate Group paid in December for a suburban strip mall anchored by Jewel in suburban Glen Ellyn.

Investors are betting on the drawing power of physical food shops despite inroads from e-commerce during the pandemic. Such shopping strips have proved resilient to economic downturns because tenants tend to be necessity-based, offering a more stable rent income than other retail formats. U.S. census figures show that 97 percent of people get their food from physical stores.

Sterling, based in West Palm Beach, targeted North Mayfair because of its “defensive rent roll coupled with its strong income growth profile,” company principal Jordan Fried said in a statement.

In New York, a joint venture between DRA Advisors and KPR Centers this month bought 33 grocery-anchored stores for $840 million from Long Island’s Cedar Realty Trust, part of a $1.2 billion portfolio sale. Brixmor also paid $85.7 million, about $470 a foot, for a grocery anchored shopping center in Orange County, California earlier this year.

The North Mayfair property’s tenants include H&R Block and FedEx Kinko’s, and five spaces between 1,125 and 1,725 square feet are vacant. George Good and Christian Williams of CBRE represented the seller. Sterling is also in contract to sell a Jewel-anchored, 146,263-square-foot shopping center in suburban Hoffman Estates that it bought for $14.1 million in 2012, according to a CBRE listing.

Inland bought the Rivinia Plaza property for $18.1 million in 2006, Crain’s reported at the time, meaning the sale to Brixmor represented a 43 percent increase in value over the period. Tenants include Office Depot, Orangetheory Fitness, and European Wax Center. Four spaces between 3,400 and 11,000 square feet are available for lease.

Visits per square foot estimates for Rivinia Plaza’s Whole Foods puts the store in the top five for the chain in Illinois and Brixmor says demand is strong for the vacancies.