LNR Partners Lists Healthy Chicago Retail Asset it Seized

LNR Partners listed a Loop retail asset less than a year after seizing it through foreclosure.

The Connecticut-based firm tapped Transwestern to find a buyer for the 171,000-square-foot retail portion of 1 North State Street, Crain’s reported. LNR sued the previous owners, a venture led by New York investors Isaac and Billy Shalom, over a $50 million loan tied to the building in 2023.

The retail portion is nearly fully leased, with anticipated net operating income of $847,000, according to marketing materials from Transwestern.

Among the major tenants are T.J. Maxx, which occupies about 70,000 square feet, and Burlington, which leases 60,000 square feet. Both retailers extended their leases — T.J. Maxx until 2027 and Burlington until 2029 — providing stability for any future investor.

Chicago’s State Street retail corridor has faced decimated foot traffic and the departure of retailers like Old Navy, DSW and Urban Outfitters since the pandemic.

The downturn has contributed to a record-high vacancy rate of about 26 percent in the Loop. Recent leases include Gap’s 10,000 square feet next door to the building.

While the bottom-level retail space is performing well, the building’s 561,000-square-foot office portion has struggled.

Triple Double Real Estate was recently in talks to purchase the building for $13 million, or $23 per square foot. Shorenstein Properties purchased the property for $80 million ($143 per square foot) in 2016, and its value has declined 84 percent since then.

The 16-story building is 41 percent leased, down from 80 percent before the pandemic. Triple Double, known for revitalizing undervalued properties, is expected to invest heavily in upgrades to attract tenants.

— Andrew Terrell