A nearly completed shopping center in Chicago’s Lakeview neighborhood with a Mariano’s grocery store is selling for more than $80 million, a successful conclusion to a project that had been stalled for a decade.
DDR Corp., a Beachwood-based real estate investment trust, has agreed to buy the 131,618-square-foot property at 3030 N. Broadway St., according to people familiar with the deal. An exact price could not be determined, but it’s believed to be more than $80 million.
DDR is buying the property from a development venture of Wheaton-based Barrett & Porto Real Estate, Skokie-based Taxman and Newport Capital Partners, of Chicago.
A DDR spokesman declined to comment.
DDR owns several retail properties in the Chicago area, including Woodfield Village Green in Schaumburg, Deer Park Town Center in Deer Park, the Maxwell shopping center in the South Loop and the Kingsbury Center in the Clybourn Corridor. DDR’s CEO, David Oakes, is a native of west suburban La Grange.
The deal underscores the continued strong demand among real estate investors for buildings leased to Mariano’s and other supermarkets, and grocery-anchored shopping centers. In 2014 and 2015, investors plopped down more than $370 million on Mariano’s properties.
“There’s a feeding frenzy for this stuff,” said broker Chad Firsel, president of Chicago-based Quantum Real Estate Advisors, who is not involved in the 3030 N. Broadway deal.
The deals have continued this year, including the $25 million sale of a Mariano’s in Elmhurstlast month.
Investors are particularly interested in centers that have long-term leases with retailers that attract heavy foot traffic, rather than those that do much of their business online, Firsel said.
“For grocery, health and lifestyle, there’s a premium,” Firsel said. “And this location is phenomenal. Even if those (retailers) were to leave, those spaces will get filled.”
The developers are in the late stages of 3030 N. Broadway, taking over the project from a venture led by Allison Davis, a politically connected developer who was unable to get a development going there that would have included a new Dominick’s and condominiums. Davis was working to develop the site on behalf of an investment fund for several Chicago employee pension funds called DV Urban Realty Partners.
The venture of Davis and Robert Vanecko, the nephew of former Mayor Richard Daley, took title to the Broadway site in 2011 but was sued in 2012 by the pension plans, which said the fund was performing poorly under Davis’ leadership. Also in 2012, the Davis venture was hit by aforeclosure suit.
Newport replaced the Davis venture as DV Urban’s general partner in 2013, taking over leadership of the Broadway development and the fund’s other real estate projects.
“We’re very happy to be part of this development,” said Derrick McGavic, Newport’s managing principal. “Our whole objective was to maximize the return for the investors in the fund, and this (sale) is part of that process.”
He declined to say how much the fund expects to earn in the sale. The development venture took out a $46 million construction loan last year.
The Broadway Street site had remained vacant and undeveloped for about a decade after a Dominick’s grocery store on the site burned down in 2005.
DDR’s deal to buy the property between Wellington and Barry avenues comes about two months before stores are scheduled to begin opening in the center.
The development will include a 75,404-square-foot Mariano’s and a 44,500-square-foot XSport Fitness gym, according to a flier from Oakbrook Terrace-based Mid-America Real Estate Group. Mid-America principals Ben Wineman and Joe Girardi are representing the developers in the sale.
Other retailers include Starbucks and PNC Bank. One small retail space has yet to be leased, and the development includes a two-level parking garage with 270 spaces.
Mariano’s, Starbucks and PNC are expected to open in August, with XSport planning an early fall opening, Taxman CEO Seymour “Sy” Taxman said.
He declined to comment on the pending sale. Barrett & Porto Principal Tim Barrett did not return a call.