A California investment firm has paid $67 million for the Evergreen Plaza shopping center in Evergreen Park, the biggest local retail property sale of the year.
LBX Investments acquired the 255,000-square-foot shopping center at 9500 to 9700 S. Western Ave. from a joint venture of New York-based Fortress Investment Group and Bloomfield Hills, Mich.-based Lormax Stern, according to Jones Lang LaSalle, which brokered the sale. The deal offers another sign that the investment market for retail real estate is picking up after a major sales slump last year due to the COVID-19 pandemic.
The property also serves as a case study illustrating the evolution of the retail property market over the past several decades. Opening in 1952, Evergreen Plaza was the first regional mall in the country and became the second U.S. indoor mall after a renovation in the 1960s.
But it started to decline in the 1980s and was largely vacant by 2013 after losing a bunch of tenants. Lormax Stern demolished the mall in 2015 and redeveloped the property with its current, and smaller, iteration, leasing space in the new shopping center to tenants including Whole Foods Market, Burlington, T.J. Maxx, Planet Fitness and Ulta Beauty.
Evergreen Plaza is 94 percent occupied, but that does not include an empty 120,000-square-foot Carson’s store at its south end that was not included in the sale to LBX. The Carson’s department store chain closed the store when it liquidated in bankruptcy in 2018. The firm that bought the chain out of Chapter 11 reopened the store later that year only to close it again in 2020.
Lormax Stern and Fortress retained ownership of the Carson’s store, according to a JLL spokeswoman. But CBRE is marketing the space for lease or sale, confirmed Joe Parrott, senior vice president in the Chicago office of CBRE.
Representatives of LBX and Lormax Stern did not return calls. JLL Managing Directors Amy Sands and Clinton Mitchell and JLL Director Michael Nieder arranged the sale to LBX.
Studio City, Calif.-based LBX paid $67.3 million, or $263 per square foot, for Evergreen Plaza, its first acquisition in the Chicago market. It financed the deal with a $45.4 million loan from Angel Oak Commercial Lending, according to JLL.
Lormax Stern and Fortress put the property up for sale at what seemed like a bad time last year: just as the pandemic was pushing the economy, and the commercial real estate market, over a cliff. Retail landlords suffered as tenants closed stores and many stopped paying rent, and consumers did more of their shopping online. Amid an uncertain future, investment activity all but stopped.
Though the pandemic remains a threat, shoppers have returned to stores this year, and the retail real estate market has rebounded. U.S. shopping center values have risen 6% from pre-COVID levels and are just shy of their peak in late 2016, according to recent report from Green Street Advisors, a California-based research firm.
Shopping centers anchored by grocery stores, like Evergreen Plaza, also remain popular with investors. Because most consumers still buy their groceries in brick-and-mortar stores, investors consider them less vulnerable to online competition and are willing to pay up for the properties. In the biggest local retail real estate sale since the arrival of the pandemic, a Boston investor paid nearly $71 million in May 2020 for a Whole Foods store in Lakeview.