Value-Added Retail Space on Block in Chicago
CIM Group is marketing the retail and garage portions of a mixed-use complex in downtown Chicago known as Block 37.
The offering could attract bids of about $200 million from value-added investors. The retail space, encompassing 280,000 square feet, is 63% leased. The tenants include a Disney Store and an 11-screen AMC Theatre. The garage has 276 spaces. Eastdil Secured is advising CIM, a Los Angeles investment manager.
Block 37, bounded by State, Randolph, Dearborn and Washington Streets, also includes a 690-unit luxury apartment tower owned by CIM and a 439,000-sf office building owned by Prudential unit PGIM Real Estate. The retail center, which was completed in 2009, is in a four-story pavilion that extends from the base of the apartment building. The two-story garage is underground.
The apartment building, called Marquee at Block 37, opened in June and is still in its initial leasing phase. CIM’s marketing pitch is that as the units lease up, customer traffic to the stores will increase, in turn bolstering the prospect of leasing retail space. Also, some existing leases carry rents that are well below the prevailing asking rate, so a buyer should be able to lift them as contracts roll over.
The marketing campaign is also emphasizing recent leasing gains. The dine-in AMC theater and Latinicity, a Latin American-themed casual food court, opened last year. Also, clothier Zara nearly doubled its space, to 27,000 sf.
The shopping center, also referred to simply as Block 37, is at 108 North State Street in the State Street retail corridor, where rents increased 16% in 2015. The population within a one-mile radius has doubled since 2000, according to marketing materials. Some 7,000 residential units are under construction in the area. On an average weekday, some 60,000 pedestrians walk by Block 37, which is at a CTA subway stop and two blocks from Millennium Park.
Block 37 was approved for redevelopment in 1989, but the first portion wasn’t finished for two decades. The 17-story office building, at 22 West Washington Street, was completed in 2008. Chicago developer Joseph Freed built the retail portion, but lost it to Bank of America in 2011 after defaulting on a $178 million construction loan. CIM paid $83.9 million for the retail space in 2012. At the time, that space was just 26% occupied. Eastdil also brokered that deal.