Farpoint Drops $20M on North Side Retail, Office Building

Scott Goodman capitalized on a sweet discount for a North Side retail and medical office building.

A venture of Goodman’s firm, Farpoint Development, paid a little over $20 million for the North Avenue Collection, in Chicago’s Clybourn Corridor, at a Feb. 22 auction, Crain’s reported. The sale comes out to roughly $100 per square foot.

That’s a fraction of what the property — at 939 West North Avenue — last traded for in 2004, when Iowa-based Principal Financial Group bought it for $89 million. The staggering drop in value reflects the beleaguered state of Chicago’s retail sector, which is still reeling from challenges set in motion by the pandemic, such as an increase of e-commerce and reduced foot traffic in the downtown area.

Despite its prime location in a bustling shopping district, the North Avenue building’s 95,000-square-foot retail space is just 15 percent occupied. Conversely, the remaining 104,000 square feet of medical office and fitness space is 88 percent leased, according to CBRE, which marketed the property. The offering included a 350-space parking garage.

Farpoint’s purchase follows its $40 million acquisition of an empty 117,400-square-foot building at 830 North Michigan Avenue in December, underscoring a trend of investors capitalizing on distressed and underperforming retail assets.

Other retail properties recently sold at steep discounts include the five-story office and retail building at 100-112 South State Street, which traded for 57 percent less than when it last changed hands.

While high interest rates and a tough lending climate stifled commercial sales in Chicago last year, transactions in January skyrocketed 116 percent year-over-year, the outlet reported, citing MSCI Real Assets.

Farpoint, meanwhile, remains a heavy hitter in Chicago real estate, through acquisition and development. The firm is spearheading a $4 billion redevelopment of the former Michael Reese Hospital site. That 7.8 million-square-foot project, dubbed Bronzeville Lakefront, is slated for nearly 5,000 residential units, retail, office and medical space, open space and a boatload of amenities.

Farpoint was recently selected as the buyer of the 1.1 million-square-foot office building at 161 North Clark Street, more than four months after lender Societe Generale moved to foreclose on it.

—Quinn Donoghue