Block 37, a prominent shopping mall in Chicago, is on the market. Owned by Los Angeles-based CIM Group, this vertical retail mainstay of Chicago's Loop business district is being listed during a period of decreasing retail sales nationwide, says CoStar. The five-story building's sale is being facilitated by JLL brokers.
In the backdrop of the industry's hardships, retail property sales have seen a major downturn in Chicago, with figures sliding from $4 billion in 2021 to an estimated $1.9 billion in 2023 according to CoStar. Selling successfully would mean overcoming barriers like the COVID-19 pandemic fallout and rising interest rates, though the sale also provides a unique investment opportunity for those looking towards the revival of city centers.
Located at 108 N. State St., Block 37 offers a sizable 277,654 square feet of retail space. Bought by CIM Group from Bank of America in a foreclosure deal in 2012, the mall changed hands for nearly $84 million as reported by CoStar. A 690-unit apartment tower named the Marquee at Block 37 was later added above the mall by CIM Group, which sold a 51% stake in the property to Canadian investor Morguard for over $135 million in 2019.
Although the sale listing doesn't specify an asking price, CBS Chicago reports that property estimates from 2016 suggested it could reach up to $200 million. Around 70% of the Block 37 mall is currently leased, with notable tenants including AMC Theatres, Five Iron Golf, First Ascent Climbing & Fitness, Zara, Sephora, Anthropologie, Magnolia Bakery, and the Dearborn restaurant.
Block 37's central location gives it direct access to the Pedway, Chicago's underground walkway system. CIM Group has had a long-standing presence in Chicago's real estate market, with projects that include the redevelopment of Tribune Tower in partnership with local firm Golub & Co.
Block 37 is facing significant competition, mainly due to the local retail market's recent struggles, especially in areas like Mag Mile east of State Street, says CoStar. High vacancy rates in this area lead to speculations about the possible downsizing of Water Tower Place, another vertical mall in the precinct.
A potential Block 37 owner will need to confront these market challenges strategically and leverage emerging opportunities. This might include focusing on the changing dynamics of the neighboring Loop area, such as reduced office occupancy and developers shifting towards conversion projects for older structures.
JLL has placed emphasis on recent investments in the Loop region, such as Google's plans to purchase the previous state-owned James R. Thompson Center per CoStar. However, it's been more than a year and a half since any office sale exceeding $50 million was recorded in downtown Chicago.
For the record: Representing CIM Group in the sale, JLL brokers Keely Polczynski, Michael Nieder, Dave Monahan, and Caity Tirakian are leading the operation to find a buyer for the Block 37 retail property.
