Q2 2012 Chicago, Illinois Retail Property Sales Analysis

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Q2 2012 Chicago, Illinois Retail Property Sales Analysis

Metro Volume and Pricing

The value of Chicago’s single property retail investment sales soared in the second quarter of 2012, due to three major sales. The 206,000-square-foot retail portion of the John Hancock Center in Chicago was sold by Deutsche Bank, which had foreclosed on the entire tower, to Prudential Real Estate Investors for $141.5 million ($687 psf). In another post-foreclosure sale, Bank of America sold the 275,000-square-foot Block 37 development, also in Chicago, to CIM Group for $83.9 million ($305 psf). And in Schaumberg, Joseph Freed & Associates sold the 630,100-square-foot Streets of Woodfield to Cypress Equities for $118 million ($187 psf). The quarterly total was 19 deals for $435 million at a mean price of $300 psf. It was the largest quarterly dollar total since 2008.

Top Submarkets

Despite the two big second quarter post-foreclosure sales in the city, the leading submarkets for sales over four quarters are in the suburbs. The Far North submarket leads in dollar value sold at $222 million, and mean price at $354 psf. The Far Northwest leads in square footage sold at 671,350.

Cap Rate Comparisons and Forecasts

The mean cap rate was 6.9% for second quarter deals, the lowest since the second quarter of 2010 and the third lowest Reis has recorded here. The rolling 12 month mean cap rate is 9.0%, down 10 basis points from the prior quarter but still the second highest Reis has recorded here, and well above prior readings, due to recent distress sales. The second quarter sales were all high cost propositions.