Winter 2022 Retail Space Guide

Wi nt e r 2 0 2 2 • w w w. re j ou r n a l s . c om

OP

PIN

G NEEDS

A

ONE STOP F OR

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CHARLES PLAZA: Lou Malnati’s Pizzeria, Starbucks, Subway, Sport Clips, O U RTiger Koo Martial Arts, Paris Nails, Olmstead Cleaners, Caring Smiles Dental, Y S L L Tutoring Place, Sullivan-Ostoich Eye Center, Elite North Hoffman Vet Clinic, Peppo’s Pets, Mochidou, Orange Theory Fitness, CBD Kratom, May’s Lounge, Sarap Bistro.PALATINE PLAZA: Mutual Ace Hardware, D’Vine Wine & Gifts, In Style Hair Studio, JP Woods Taekwondo, Byhring Jewelers, Sherwin Williams, Home of the Sparrow, Fannie May, Brown’s Chicken and Pasta, The Exercise Coach, Dairy Queen, Hearing Care of Palatine, Citibank, Pete & Mac’s Pet Resort, Dollar Tree, Elderwerks, Alpha Carpet, Modun Japanese Restaurant, Amita Health, Planet Fitness. LEXINGTON SQUARE: Ebel’s Ace Hardware, Great Clips, Yoga By Degrees, Fresh Start Cafe, Domino’s Pizza, Subway, Emperor’s Kitchen, Oberweis Dairy. ELMHURST PLAZA: K.E.Meridian Salon, Elmhurst Shoe Repair, Jewel/Osco, CBD Kratom, Focus Nutrition, Sydney Nails, DiLeo’s Pizza, Old Havana Cigar Shop, Dunkin Donuts, Executive Dry Cleaners, The UPS Store.

RIVER WEST PLAZA: Pitaville, Great Clips, Drippy Smoke Shop, FastSigns of Naperville, Spice Mart, Thorntons, Goodyear/Acorn Tire, Paramount Staffing.

BOONE CREEK PLAZA: I-HOP, Discount Cigarette & Cigar Center, Jewel/Osco.

NAPER RIDGE PLAZA: Office Depot, Fifth Third Bank.COUNTRY CORNERS: Savers, Great Clips, Pho Royal, LT Nails & Spa, Petco, Krystal Thai, Baird & Warner, Presotea, Weight Watchers, Mug’s Pizza & Ribs, Tower Commercial, Dollar Tree, Breaking Bread, Kloud Vapor. NORTH TOWN PLAZA: Jersey Mike’s Subs, US Bank, Smallcakes Cupcakes, Creamery and Novelties, Elite Tutoring Place, Verizon Wireless, Art & Frame, Service Nails, The UPS Store, Athletico Physical Therapy, Pella Products, Batteries + Bulbs, J’s Kitchen, Master Cuts.

PRESTWICKE PLAZA Armanetti’s Liquors, Prestwicke Dental Care, Iron Horse Bar & Grill, China Bistro, Roll N’ Donut Cafe & Douangchay’s Kitchen , Your Best Friend’s Closet, CAMP ChiroTherapy, Gold Liquidators, Leon’s Nails, Your Best Friend’s Home, Domino’s Pizza, Team Rehabilitation, Signature Vape & CBD Plus, Guaranteed Rate.STONY CREEK: Randall’s Pancake House, Miracle Ear, Lacey’s Place, Starship Travel, Victoria Nails, Cross Kicks Fitness, Girl Scouts of Northern Illinois, Dr. Faklaris DDS, Hair Cuttery, Liz Dry Cleaners, HIGHLAND Louie Angelo’s Fast Casual Italian, FootMANAGEMENT Retreat, Anderson Humane, Richard’s ASSOCIATES, Fine Jewelry, Crumbl Cookies, State Farm Janese,INC. Outback Steakhouse.

CHICAGO

WOMEN IN

COMMERCIAL REAL ESTATE march 8, 2022

3 RD annual

3RD

annual

IVY ROOM, CHICAGO, IL HYBRID EVENT 8:30 am to 11:30am 7:45 am breakfast and networking

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Top female leaders explore the next steps for women in commercial real estate

Office

Sierra Health Services

Las Vegas

NV

$67,000,000

$328

7.10%

Industrial

Fleetwood USA

Corona

CA

$65,500,000

$316

3.60%

3

$54,158,500

$1,863

3.44%

16

4.80%

8 10

Retail

W Whole INTE R 2 0 2 2 R E T ASanta I L SMonica P A C E G U CA IDE Foods

4

Industrial

HanesBrands

Kings Mountain

NC

$33,210,948

$71

Retail

Tesla

Fife

WA

$28,500,000

$445

5.75%

Industrial

Memory Experts International

Santa Ana

CA

$13,522,100

$333

4.05%

5

Peoria

AZ

$12,300,000

$111

6.50%

15

Henderson

NV

$11,700,000

$175

4.70%

14

Knoxville

TN

$11,100,000

$146

6.75%

10 15

Industrial Retail

5 Albertsons

OakCraft Elegant Cabinetry

Retail

Academy Sports

7

Retail

Rite Aid

Menifee

CA

$9,000,000

$524

4.72%

Retail

TD Bank

Jamaica

NY

$8,500,000

$2,209

4.50%

9

Retail

7-Eleven

Denver

CO

$8,479,034

$1,794

4.35%

19 14

Retail

7-Eleven

Montgomery

TX

$8,410,000

$2,057

4.25%

Retail

Walgreens

Cottage Grove

OR

$7,665,000

$517

5.25%

12

Retail

Carvana

Warrensville Heights

OH

$6,739,000

$802

7.30%

17

Retail

Crunch Fitness

Melbourne

FL

$6,067,000

$311

6.50%

14

Retail

Raising Cane's

Tucson

AZ

$5,964,000

$1,649

4.14%

14

Retail

Chick-Fil-A

Norridge

IL

$5,350,000

$1,066

4.30%

14

Retail

Wendy's

Ontario

CA

$5,000,000

$1,674

3.75%

15

3

T LEASE CAP RATE TRENDS RETAIL

8

INDUSTRIAL

11

FEATURES

Q1 2006

OFFICE

Q1 2008

Q1 2010

Q1 2012

Q1 2014

Q1 2016

Q1 2018

Q1 2020

TACTICAL RETAIL LEASING KEY TRENDS DEFINING 7 4CHICAGO’S RETAIL MARKET AND MANAGEMENT As the world begins to emergewww.bouldergroup.com from the At the end of 2021, Chicago’s retail pandemic, “location, location, location” sector showed promising signs for an doesn’t matter like it did a year ago. eventual return to pre-COVID-19 levels.

4

OPINION: THE COVID 19 PANDEMIC SAVED BRICK AND MORTAR RETAIL : WHAT MANY CALLED THE FINAL NAIL IN THE COFFIN FOR BRICK AND MORTAR RETAIL WAS REALLY THE SAVIOR! In the second quarter of 2020, the brick and mortar real estate business was a pretty bleak place.

5

8

Q4 2021

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WINTER 2022 METRO CHICAGO RETAIL SPACE GUIDE

THE BOULDER GROUP NETLEASE MARKET REPORT

The Metro-Chicago Retail Space Guide

is published twice a year by the Real Estate Publishing Corporation, 1010 Lake St Suite 210, Oak Park, IL 60301 • 312.933.8559 • www.rejournals.com Publisher: Mark Menzies • menzies@rejournals.com Senior Account Executives Ernest Abood, Vice President/MW Conf Series Director • eabood@rejournals.com Marianne Grierson, Vice President of Sales • mgrierson@rejournals.com Frank Biondo, Vice President of Sales, fbiondo@rejournals.com Copyright © 2022 by Real Estate Publishing Corporation. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by an information storage and retrieval system.

4

W I N T E R 2 0 2 2 R E TA I L S PA C E G U I D E

Tactical Retail Leasing and Management

By David Strusiner, VP/Owner, Craig/Steven Development Corporation.

The word “retail” is gone.

At least as we know it…for now. Maybe you agree with that statement, maybe you don’t.

The effects of Covid-19 on retail real estate were swift and widespread, causing the highest number of retail bankruptcies in over a decade.

Technology and access to online shopping have driven people away from the in-person shopping experience. It’s hard to miss the evolution that has taken place in retail, specifically the last couple years, and how it has shifted to a more service-oriented tenant, not necessarily a tax generating tenant. If you are in real estate, it’s no surprise that this industry moves quickly. If you aren’t willing to pivot and keep up with the rapid changes, you’ll be left in the dust.

“Take care of the building and take care of the tenants, otherwise they will go elsewhere.”

David Strusiner

Learning and growing through the changes in retail as we know it

As the world begins to emerge from the pandemic, “location, location, location” doesn’t matter like it did a year ago. Service providers don’t need to be at main and main anymore.

Those who are thriving in this current climate have developed a great marketing strategy and have utilized the power of the internet to get their services out there, rather than relying on a sign.

Adjusting to the ever-growing changes in retail real estate will help you to continue thriving in your business. Get to know the people and the different areas of your community so you can see where the world is in regard to retail.

Our company, Craig/Steven Development, has done some triple net properties but we by and large prefer the neighborhood strip center over the single tenant development.

What does the current market offer and where are the opportunities in the future for leasing?

What you get when you invest into the neighborhood strip center developer is a diverse tenancy. You can have a national name, a regional player, and a local business. The true beauty of the neighborhood shopping center, in my opinion, is that it can give a local business owner something they may have never been able to do. You get to put people in business, give them opportunity and be a part of making their dream a reality. That’s harder to do in an office building.

People seem to love the idea of a traditional Main Street full of vibrant, walkable local businesses. But these independent retail storefronts are the ones who have been hit the hardest. The current goldmine for leasing opportunity lies in service retail.

Food is hot right now and there will be opportunity in the near future to expand even more as large fast food chains in other regions of the country eyeball the Chicagoland market.

When they get here, you can expect them to hit the ground running.

There has been a surge in medical, health and fitness, and beauty services. Brokers and owners alike can expect those tenants to continue to grow. In terms of entertainment services, trampoline parks, bungee jumping and go-karting are other avenues of consistent revenue.

Keeping the business that you bring in Great management = Great retention If you’re good at what you do and you take care of your properties and tenants, great management turns into great retention. Tenants will reward you by staying if they like what you do. Take care of the building and take care of the tenants, otherwise they will go elsewhere.

Develop a game plan, especially during this season where some businesses are struggling to stay open and pay the bills. Come up with a

“we’re going to help you now; you help us later” plan. In our portfolio, a 95% tenant retention rate came through that strategy. Take the action to take care of your tenants and the reward will be great.

Networking and expanding your business Conferences and conventions, like those put on by ICSC, are prime opportunities to network and make deals. Attending convention is a great way to say “hey, I’m still in the game” by going and showing face. This year, the December ICSC had a unique feel to it. There were only about 9,600 people present and for those who know how that convention usually turns out, this was much more Navy Pier feeling than in years past. This served many of us well, as we had the opportunity to talk to the people we wanted to talk to, instead of waiting 10 to 12 people deep to have a conversation. A year from now, it will be a lot more difficult to get the face time we were able to get with people this year.

Don’t sit on the connections you make. It’s all about the follow up. Plant one or two seeds and follow up to see where it goes. That’s business in a nutshell.

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W I N T E R 2 0 2 2 R E TA I L S PA C E G U I D E

Opinion: The COVID 19 Pandemic Saved Brick and Mortar Retail : What many called the final nail in the coffin for Brick and Mortar Retail was really the savior!

By Charles S. Margosian III, Managing Principal, Highland Management Associates, Inc.

But why the dramatic turn of events? Below I’ve listed a few of the most important ways the pandemic may have saved our industry.

• Record Government Stimulus: The United States and world governments made quick and decisive moves in the face of the pandemic to stimulate growth. In the United States alone, according to Business Insider, there was over $5 Trillion in stimulus spending. For context, that is more than triple the amount spent by the US government in response to the Great Recession.

• Resultant policy added record liquidity to both consumers and the capital markets.

I

n the second quarter of 2020, in 2020, with 12,200 U.S. the brick and mortar real stores closed in 2020.

By estate business was a pretty third quarter of 2020, the bleak place. COVID shutdowns mainstream press was making forced the vast majority of brick claims that the Pandemic and and mortar retailers to close resultant shift in consumer their businesses throughout the behaviors would be the end of United States, taking revenues to Brick and Mortar retail. Many $0 in a matter of days. Tenants of my colleagues and I continand Landlords were scrambling ued to say “Not so Fast”, and for cover, with Tenants calling thankfully, it seems we might their Landlord’s asking for rent have been correct. relief and Landlords on the phone to lenders looking for Charles S. Margosian III As we finish 2021 and begin relief. At the same time, the 2022, we are coming off of American consumer, which accounts for 70% one the strongest leasing years ever in our retail of the United States’ $21 billion Gross Domestic portfolio. Demand for retail space across the Product faced uncertainty about their jobs and country is stronger than it has been since before future. The minority of consumers who were the “Great Recession” of 2008 and the National still confident enough to shop for discretionary Retail Federation predicts retail sales (excluding items found their options limited to making pur- car sales and restaurant spending) will be up chases online via e-commerce sites. As a result, 14% year over year in 2021. As I reflect on the the largest threat to Brick and Mortar retailers, events of the past 18 months, I come to a cone-commerce retailers, experienced a 19% boost trarian conclusion: The COVID 19 Pandemic, in sales and revenues in 2020. According to which many thought would kill Brick and MorS&P Market Intelligence 125 consumer goods tar retail, did not. The Pandemic saved Brick and retail firms filed for bankruptcy protection and Mortar retail.

• Fed policy to return liquidity US Equity markets brought availability of capital to publicly traded companies, including retailers • Record US Equity Indices levels resulted in increased wealth amongst consumers • Low interest rates as a fed policy response allowed many property owners to avoid distress in the face of significant revenue and rent disruptions. Those low interest rates also gave landlords breathing room to help their tenants survive the downturn.

• Lower interest rates helped set off a rally in United States housing markets, adding to consumer wealth • Strong Capital Markets meant that all those Retailer Bankruptcies weren’t so bad for the industry after all • Several retailers who entered bankruptcy emerged as stronger companies by restructuring debt at lower interest rates and recapitalizing equity while also closing underperforming stores.

RETAIL (continued on page 11)

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W I N T E R 2 0 2 2 R E TA I L S PA C E G U I D E RETAIL (continued from page 5)

• Other private-equity held retailers, previously saddled by high debt, returned to public ownership through IPOs, fueled by the resurgent equity markets • Low cost of capital allowed retailers to re-evaluate their strategy and begin re-investing in existing successful stores • Record Consumer Strength o The previously mentioned run up in equity markets left consumers feeling wealthier than ever, and willing to spend • Increased equity, driven by an increase in values in homes also resulted in a wealth effect for consumers who had seen flat housing prices in the US for a better part of a decade • Pent up demand for restaurants and experiences that were denied as a result of shutdowns coupled with new government stimulus dollars and wealth spelled strong retail sales for the second half of 2020 which have continued into 2021 • Strong retail sales should fuel continued demand for retail space leasing • CBRE’s recent 2022 U.S. Market outlook indicated mall foot traffic is above pre-pandemic levels, record levels of venture capital are targeting retail investments and that productivity of retail space is at an all-time high when measured in sales per square foot • The Great Resignation is Really The Great Business Start Up! • The mainstream press has made the lack of labor and change in working habits into a negative for the economy, calling the result of the Pandemic “The Great Resignation” • The Great Resignation is really “The Great Start Up”: According the US Census bureau, through September 30, 2021, 409,000 more new businesses filed for incorporation than during the same period in 2019. People aren’t not working, they are starting their own business, and countless numbers will be leasing retail space in coming years for those businesses or franchises

• The X Factor: The Consumer Saw Life Without Brick and Mortar and didn’t like it!

item just isn’t as satisfying as going out and buying it and bringing it home that day.

• The pandemic related shutdowns gave the consumer a preview of life without many Brick and Mortar staples, Department Stores, Soft Good Retailers, movie theaters and dine-in restaurants.

As we begin a new year, there is still much uncertainty about the Pandemic and what new direction things will take. Omicron is spreading rapidly through the world, and we may see a resultant slowdown again in economic activity. However, the events of 2020 and 2021 have proven that Brick and Mortar retailing is resilient and that there is a future for retail properties and retailers in maintaining a Brick and Mortar presence. As an investor in retail properties, I remain very optimistic that 2022 will bring continued success to retailers and retail property owners in the US.

“Instant Gratification is back!: The best part about purchasing an item in the store is taking it home and using it/ wearing it the same day. ” • For all the convenience of ordering items online and having them delivered to your door the next day, consumers also saw the downside to not having Brick and Mortar shopping experiences • E commerce returns remain difficult when compared to the process of trying an item for size or the intangible value of viewing (i.e. touching and feeling) an item in store • The Pandemic highlighted the return of shopping for the consumer as a social experience, whether that’s random interactions with a friend or neighbor at the grocery store of a planned outing to shop with friends and family • The most profound and lasting effect of the pandemic for the consumer may be the forced realization that shopping for many items in a Brick and Mortar environment is a better and more practical way to purchase many items • Instant Gratification is back!: The best part about purchasing an item in the store is taking it home and using it/wearing it the same day.

The pandemic highlighted to the consumer that waiting, even for a day or two, for that coveted

Highland Management Associates, Inc. Founded in 1985 by Charles S. Margosian Sr., Highland Management is a family owned and operated developer and manager of retail and office properties throughout Chicagoland. Highland Management owns and manages fifteen Class A properties totaling approximately 1,000,000 square feet in the western and northwestern suburbs of Chicago. Highland Management is a full service firm providing asset management, property management and leasing services for the portfolio.

Charles S. Margosian III Managing Principal: Charles S. Margosian Jr. joined Highland Management in 2005 in the capacity of acquisition and development manager. Working together with other team members, Charles S. Margosian Jr. is responsible for lease negotiations, property and asset oversight as well as sourcing and financing new acquisition and development opportunities. Prior to joining Highland Management, Charles S. Margosian Jr. was a Principal with Walton Street Capital in Chicago, IL and an Associate with The Blackstone Group in New York, NY. Charles S. Margosian Jr. has a BS in Real Estate and Finance from the Wharton School of the University of Pennsylvania in Philadelphia, PA. Charles S. Margosian III is an active member of ICSC, a board member of the Chicagoland Association of Shopping Center Owners (CASCO) and an emeritus member of the Next Generation Board of the DuPage Children Museum.

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W I N T E R 2 0 2 2 R E TA I L S PA C E G U I D E

4 Key Trends Defining Chicago’s Retail Market

A

By Peter Caruso

t the end of 2021, Chicago’s retail sector showed promising signs for an eventual return to pre-COVID-19 levels.

New development has undoubtedly been stalled by COVID-19, especially for retail spaces, but brokers are hopeful an overall acceleration in retail could be coming soon.

So where is the market at now?

While real estate development has slowed, the popular categories in Chicago have taken advantage of vacant storefronts. Medical, grocery and fitness retailers are successfully backfilling empty space.

Although the city’s urban area is still lagging, reflecting a 16 percent decrease in national urban foot traffic, the continued growth of suburban areas signals recovery.

Rental Trends Overall, retail markets across the country are expanding, with the previous four quarters recording growth in absorption. In the third quarter of 2021, the national net absorption rate was 60 percent above pre-COVID-19 averages.

Population and employment growth have benefited markets in the Sun Belt most dramatically. Chicago’s 0.9 percent increase in rental rates, compared to the first quarter of 2020, shows its market faring better than cities like San Francisco and Boston, which experienced decreases of 5.5 percent and 4.1 percent, respectively.

Interestingly, Chicago’s suburbs are more alive than ever—recent activity rates have topped those recorded in the past 10 years. Even with the pandemic, the city and its suburbs have remained a popular metropolitan area, deeming Chicago a coveted retail market.

However, a noted lack of increase in suburban rental rates to parallel activity suggests retailers are confident urban activity will eventually return.

Below, take a look at four key trends that define Chicago’s retail market heading into 2022.

Consumer Trends Grocery, medical, and luxury brands are currently the most lucrative categories in Chicago’s retail market.

Fast-casual and drive-through restaurant brands are most notably thriving in the suburbs, but grocery stores ranging from large multinational chains to local and “ghost” grocers are expanding the quickest. With convenience being a huge driver of these markets’ success, especially for grocery, it’s likely this trend is here to stay.

High-end jewelry and other luxury brands are also experiencing growth in Chicago. In direct contrast, however, junior anchor tenants—like discount retailers and dollar stores—have also seen success.

Examples enforcing this trend include a recently opened Aldi in Bolingbrook and a high-end Pistachios Jewelry in River North.

Retail rates in Chicago are low, with recorded drops between 10 and 50 percent. Markets previously recognized for their retail potential—like Chicago’s Loop/Business Districts and River North—have experienced the worst of Chicago’s slowed economy.

And, despite the August return of mask mandates, fitness centers are backing a comeback in Chicago.

We are optimistic individuals will continue to visit gyms and fitness centers despite increased mandates.

Retailers and landlords are still navigating uncharted waters, and as a result, property owners have allowed for flexibility in lease negotiations to mitigate higher vacancy rates. Most commonly, landlords and tenants have negotiated shorter lease terms, typically from 12 to 36 months.

Buying & Selling Trends

What’s coming for 2022?

Three key buying and selling themes currently dominate Chicago’s retail market.

Expansion of luxury brands to the suburbs will likely draw some traffic away from urban areas, but flexible work policies will continue to drive retail downtown.

First, the line between institutional capital and private capital is blurring. Delaware Statutory Trusts (DSTs), entities used especially in 1031 exchanges to hold assets for investors, have become popular. A DST allows each investor a percentage but prevents exclusivity in ownership.

Next, single-tenant, net lease retail is the most in-demand, as investors seek alternatives to fixed-income investments.

Finally, investors are most interested in grocery-anchored retail. Brands in this category are stable in growth, profitable for investors and necessary for consumers.

A full urban recovery relies on the return to the office and resumed travel and tourism, and statistics suggest the market is trending in the right direction.

Employment is just 3 percent below pre-pandemic levels, and while recovery levels vary by industry, many office-based professions have experienced full recovery. Even more encouraging, 14.4 million people traveled by air in the last week of November, spurred by the holidays and recent medical developments against COVID-19.

Pre-COVID-19 statistics likely won’t be seen across the board until 2023, without taking into consideration any of the virus variants that continue to affect the way the business world functions.

Development Trends Like the rest of the nation, Chicago has been impacted by supply chain shortages and lack of access to raw materials.

However, this new year presents exciting opportunities to continue in the recovery and growth of not just the economy, but the rest of the world—from Chicago’s retail market and beyond.

THE NET LEASE MARKET REPORT NATIONAL ASKING CAP RATES

MARKET OVERVIEW

Q3 2021 (Previous)

Q4 2021 (Current)

Basis Point Change

Retail

5.80%

5.88%

+8

Office

6.80%

6.80%

0

Industrial

6.70%

6.77%

+7

Sector

Cap rates in the single tenant net lease sector rose slightly in the fourth quarter of 2021; following historic low levels reached in the third quarter of 2021. Cap rates for retail and industrial increased slightly to 5.88% and 6.77% respectively. Cap rates for net lease office remained unchanged at 6.80%. A limited supply of net lease properties with attributes that command low cap rates (long term leases, primary market locations, investment grade tenants, etc.) was the main contributing factor for the change in cap rates. Low interest rates and substantial amounts of investment capital chasing stable yields created an active net

NUMBER OF PROPERTIES ON THE MARKET Sector

Q3 2021 (Previous)

Q4 2021 (Current)

Percentage Change

Retail

3,550

3,897

9.77%

Office

525

613

16.76%

Industrial

370

414

11.89%

lease market throughout 2021. Net lease transaction volume in 2021 exceeded $90 billion, a new record for the net lease sector, according to CoStar.

Property supply in the fourth quarter of 2021 increased by more than 10%. As a result of the low cap rate environment and high demand for net lease properties, net lease owners added lesser quality properties to the market to take advantage of attractive pricing. Many of the assets contributing to the increase in supply are perceived lower quality (shorter term leases, non-investment grade tenants, etc.). In the fourth quarter of 2021, less than 25% of the property supply had leases with more than 15 years remaining

MEDIAN NATIONAL ASKING VS CLOSED CAP RATE SPREAD

on their primary term.

Q3 2021 (Previous)

Q4 2021 (Current)

Basis Point Change

Retail

16

22

+6

Office

32

30

-2

Industrial

18

20

+2

Sector

2021

Q4

The net lease market for all asset classes is expected to remain active in 2022 following a year of record activity. In a recent national survey conducted by The Boulder Group, the vast majority of active net lease participants expect transaction volume in 2022 to surpass 2021. Furthermore, the largest segment of net lease participants expecting cap rates to remain relatively stable throughout 2022. Investors will carefully monitor the capital markets and the effect on pricing as rate hikes are expected from the Federal Reserve in 2022.

www.bouldergroup.com

THE NET LEASE MARKET REPORT

2021

Q4 SELECTED SINGLE TENANT SALES COMPARABLES Sale Date

Sector

Tenant

City

Nov-21

Office

Sierra Health Services

Las Vegas

NV

$67,000,000

$328

7.10%

4

Oct-21

Industrial

Fleetwood USA

Corona

CA

$65,500,000

$316

3.60%

3

State

Price

Price Per SF

Cap Rate

Lease Term Remaining

Nov-21

Retail

Whole Foods

Santa Monica

CA

$54,158,500

$1,863

3.44%

16

Nov-21

Industrial

HanesBrands

Kings Mountain

NC

$33,210,948

$71

4.80%

8

Oct-21

Retail

Tesla

Fife

WA

$28,500,000

$445

5.75%

10

Nov-21

Industrial

Memory Experts International

Santa Ana

CA

$13,522,100

$333

4.05%

5

Nov-21

Industrial

OakCraft Elegant Cabinetry

Peoria

AZ

$12,300,000

$111

6.50%

15

Nov-21

Retail

Albertsons

Henderson

NV

$11,700,000

$175

4.70%

14

Nov-21

Retail

Academy Sports

Knoxville

TN

$11,100,000

$146

6.75%

10

Oct-21

Retail

Rite Aid

Menifee

CA

$9,000,000

$524

4.72%

15

Nov-21

Retail

TD Bank

Jamaica

NY

$8,500,000

$2,209

4.50%

9

Dec-21

Retail

7-Eleven

Denver

CO

$8,479,034

$1,794

4.35%

19

Nov-21

Retail

7-Eleven

Montgomery

TX

$8,410,000

$2,057

4.25%

14

Dec-21

Retail

Walgreens

Cottage Grove

OR

$7,665,000

$517

5.25%

12

Oct-21

Retail

Carvana

Warrensville Heights

OH

$6,739,000

$802

7.30%

17

Nov-21

Retail

Crunch Fitness

Melbourne

FL

$6,067,000

$311

6.50%

14

Oct-21

Retail

Raising Cane's

Tucson

AZ

$5,964,000

$1,649

4.14%

14

Oct-21

Retail

Chick-Fil-A

Norridge

IL

$5,350,000

$1,066

4.30%

14

Nov-21

Retail

Wendy's

Ontario

CA

$5,000,000

$1,674

3.75%

15

NET LEASE CAP RATE TRENDS RETAIL

OFFICE

INDUSTRIAL

8.75%

8.25%

7.75%

7.25%

6.75%

6.25%

5.75% Q1 2004

Q1 2006

Q1 2008

Q1 2010

Q1 2012

Q1 2014

www.bouldergroup.com

Q1 2016

Q1 2018

Q1 2020

Q4 2021

THE NET LEASE MARKET REPORT

2021

Q4 MEDIAN ASKING CAP RATES BY YEAR BUILT Tenant

2017-2021

2011-2016

2005-2010

Pre 2005

7-Eleven

4.25%

5.00%

5.30%

5.70%

Advance Auto Parts

5.85%

6.05%

7.00%

7.55%

AutoZone

4.85%

5.20%

5.65%

6.70%

Bank of America

4.80%

5.05%

6.25%

6.55%

Chase Bank

4.20%

4.45%

5.00%

5.75%

CVS Pharmacy

4.65%

5.00%

6.25%

6.80%

DaVita Dialysis Center

5.25%

6.10%

6.65%

7.25%

Dollar General

5.40%

6.00%

6.75%

7.30%

Family Dollar

6.60%

7.00%

7.30%

8.00%

FedEx

5.15%

5.70%

6.45%

7.00%

Fresenius

5.35%

5.95%

6.80%

7.40%

McDonald's (GL)

3.50%

3.85%

4.25%

4.55%

O'Reilly Auto Parts

5.00%

5.70%

6.00%

6.47%

NA

7.20%

8.00%

8.30%

Starbucks

4.95%

5.45%

5.85%

6.25%

Walgreens

5.05%

5.30%

6.60%

7.25%

Rite Aid

FOR MORE INFORMATION AUTHOR John Feeney Senior Vice President john@bouldergroup.com

CONTRIBUTORS Randy Blankstein

Jimmy Goodman

President

Partner

randy@bouldergroup.com

jimmy@bouldergroup.com

Carter Himley

John Mazur

Senior Analyst

Analyst

carter@bouldergroup.com

mazur@bouldergroup.com

© 2021. The Boulder Group. Information herein has been obtained from databases owned and maintained by The Boulder Group as well as third party sources. We have not verified the information and we make no guarantee, warranty or representation about it. This information is provided for general illustrative purposes and not for any specific recommendation or purpose nor under any circumstances shall any of the above information be deemed legal advice or counsel. Reliance on this information is at the risk of the reader and The Boulder Group expressly disclaims any liability arising from the use of such information. This information is designed exclusively for use by The Boulder Group clients and cannot be reproduced, retransmitted or distributed without the express written consent of The Boulder Group.

www.bouldergroup.com

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River Pointe of Algonquin Phase I

David Strusiner Craig/Steven Development Corporation (847) 504.8061

2401-2413 W. Algonquin Road ID# 463

Algonquin

Year Built/Year Renovated: 1993 Type of Center: Neighborhood No. of Stores: 16 Total Space: 83,727 Total Available Space: 0 Available Minimum: 0 Maximum Contiguous: 0 Anchor Tenants: Jewel/Osco, Subway, UPS Store, Rosati’s Pizza Rental Rate: $20.00 Total Passthroughs: $7.19

River Pointe of Algonquin Phase II

David Strusiner Craig/Steven Development Corporation (847) 504.8061

2401-2413 W. Algonquin Road ID# 1222

Year Built/Year Renovated: 2002 Type of Center: Neighborhood No. of Stores: 8 Total Space: 81,700 Total Available Space: 1,600 Available Minimum: 1,600 Maximum Contiguous: 1,600 Anchor Tenants: Guitar Center, Fitness 19, Rental Rate: $20.00 Total Passthroughs: $5.82

Prestwicke Plaza

Charles S. Margosian Highland Management Assoc., Inc. (630) 691.1122

3905-3989 W. Algonquin Road ID# 463 Year Built/Year Renovated: 2003/2016 Type of Center: Neighborhood No. of Stores: 15 Total Space: 37,968 Total Available Space: 1,828 Available Minimum: 1,828 Maximum Contiguous: 1,828 Anchor Tenants: Armanetti’s Liquors, Your Best Friends Closet Rental Rate: $16.00 Total Passthroughs: $6.25

Arlington Heights

Pal-Win

Michael Kolodny zav & Johnson Property Mgmnt.,Ltd. (773) 777.6160

1401-1457 Palatine Road ID# 1229 Year Built/Year Renovated: Type of Center: No. of Stores: Total Space: 37,000 Total Available Space: 8,600 Available Minimum: 1,100 Maximum Contiguous: 7,500 Anchor Tenants: Any Time Fitness Rental Rate: Total Passthroughs: $4.50

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Bloomingdale Town Centre

David Strusiner Craig/Steven Development Corporation (847) 504.8061

NEC Lake St & Bloomingdale Road ID# 769

Bloomingdale Town Centre Phase III NEC Lake St & Bloomingdale Road ID# 133

Bloomingdale

Year Built/Year Renovated: 1996 Type of Center: Neighborhood No. of Stores: 9 Total Space: 32,246 Total Available Space: 0 Available Minimum: 0 Maximum Contiguous: 0 Anchor Tenants: AccuQuest Hearing Center, CVS Pharmacy, Pink Hair Studio Rental Rate: $19.00 Total Passthroughs: $6.88

David Strusiner Craig/Steven Development Corporation (847) 504.8061

Year Built/Year Renovated: 2005 Type of Center: Neighborhood No. of Stores: Total Space: 15,000 Total Available Space: 15,000 Available Minimum: 1,200 Maximum Contiguous: 15,000 Anchor Tenants: Future Development Rental Rate: Total Passthroughs:

The Courtyard at Stratford

David Strusiner Craig/Steven Development Corporation (847) 504.8061

357-369 W. Army Trail Road ID# 487

Year Built/Year Renovated: 1983 Type of Center: Neighborhood No. of Stores: 17 Total Space: 20,890 Total Available Space: 1565 Available Minimum: 1565 Maximum Contiguous: 1565 Anchor Tenants: For Eyes, Men’s Warehouse, FedEx Rental Rate: Total Passthroughs: $6.28

Brink Street Market 30-40 N. Williams Street ID# 676

David Strusiner Craig/Steven Development Corporation (847) 504.8061

Crystal Lake

Year Built/Year Renovated: 1989 Type of Center: Neighborhood No. of Stores: 13 Total Space: 28,042 Total Available Space: 0 Available Minimum: 0 Maximum Contiguous: 0 Anchor Tenants: Starbucks, Benedicts La Strata, The Running Depot Rental Rate: $15.00 Total Passthroughs: $7.69

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Country Corners

Charles S. Margosian Highland Management Assoc., Inc. (630) 691.1122

230 Virginia Street ID# 79

Year Built/Year Renovated: 2008 Type of Center: Community No. of Stores: 15 Total Space: 124,000 Total Available Space: 34,012 Available Minimum: 3,000 Maximum Contiguous: 25,812 Anchor Tenants: Petco, Savers, Dollar Tree Rental Rate: $10.00-18.00 Total Passthroughs: $5.00

Elmhurst Plaza

Charles S. Margosian Highland Management Assoc., Inc. (630) 691.1122

York & Butterfield Road ID# 248

Elmhurst

Year Built/Year Renovated: 2021 Type of Center: Neighborhood No. of Stores: 16 Total Space: 73,000 Total Available Space: 2,464 Available Minimum: 1,200 Maximum Contiguous: 2,464 Anchor Tenants: Jewel/Osco Rental Rate: 35.00 Total Passthroughs: $6.65

Lexington Square

NWC York Road & Lexington Street ID# 117

Charles S. Margosian Highland Management Assoc., Inc. (630) 691.1122 Year Built/Year Renovated: 2004 Type of Center: Neighborhood No. of Stores: 8 Total Space: 33,000 Total Available Space: 6,500 Available Minimum: 6,500 Maximum Contiguous: 6,500 Anchor Tenants: Fresh Start Cafe, Ace Hardware, Yoga by Degrees Rental Rate: $20.00-30.00 Total Passthroughs: $6.40

Southpoint Plaza

Evanston

635 Chicago Avenue ID# 991

David Strusiner Craig/Steven Development Corporation (847) 504.8061 Year Built/Year Renovated: 1985 Type of Center: Neighborhood No. of Stores: 14 Total Space: 29,564 Total Available Space: 0 Available Minimum: 0 Maximum Contiguous: 0 Anchor Tenants: Walgreens, For-Eyes Optical, Super Cuts, Rockstar Nail & Spa Rental Rate: $19.00 Total Passthroughs: $11.46

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Pembrook Corners

David Strusiner Craig/Steven Development Corporation (847) 504.8061

5250 Grand Avenue ID# 749

Port Clinton Square

Gurnee

Year Built/Year Renovated: 1989 Type of Center: Neighborhood No. of Stores: 15 Total Space: 21,462 Total Available Space: 4,343 Available Minimum: 830 Maximum Contiguous: 3,513 Anchor Tenants: Vitalant, Q Nails, Harbor Coin, Jimmy Johns Rental Rate: $18.00 Total Passthroughs: $9.84

David Strusiner Craig/Steven Development Corporation (847) 504.8061

600 Central Avenue ID# 808

Charles Plaza

Highland Park

Year Built/Year Renovated: 1984 Type of Center: Neighborhood No. of Stores: 20 Total Space: 45,188 Total Available Space: 6,922 Available Minimum: 1,297 Maximum Contiguous: 3,340 Anchor Tenants: Walker Bros. Restaurant, Dairy Queen, The Bar Method, New Balance Rental Rate: $18.00 Total Passthroughs: $10.51

Charles S. Margosian Highland Management Assoc., Inc. (630) 691.1122 Year Built/Year Renovated: 2000 Type of Center: Neighborhood No. of Stores: 20 Total Space: 38,980 Total Available Space: 4,590 Available Minimum: 2,300 Maximum Contiguous: 4,590 Anchor Tenants: Jewel/Osco, Starbucks, Orangetheory Fitness, Lou Malnati’s Rental Rate: $32.00 Total Passthroughs: $12.41

The Courtyard of Lake Zurich

Hoffman Estates

1405-1481 Palatine Road ID# 1041

David Strusiner Craig/Steven Development Corporation (847) 504.8061

Cuba & Rand Road ID# 419

Lake Zurich

Year Built/Year Renovated: 1989 Type of Center: Neighborhood No. of Stores: 12 Total Space: 32,849 Total Available Space: 8,744 Available Minimum: 1,206 Maximum Contiguous: 6,331 Anchor Tenants: Walgreens, Lou Malnati Pizzeria, Avalon Spa Rental Rate: $20.00 Total Passthroughs: $8.56

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6700 North Lincoln

Michael Kolodny Hallmark & Johnson Property Mgmnt., Ltd. (773) 777.6160

Lincolnwood

6700 N. Lincoln ID# 1020

Year Built/Year Renovated: Type of Center: No. of Stores: Total Space: 26,000 Total Available Space: 15,000 Available Minimum: 3,500 Maximum Contiguous: 26,000 Anchor Tenants: Rental Rate: Total Passthroughs: $5.00

Boone Creek Plaza

Charles S. Margosian Highland Management Assoc., Inc. (630) 691.1122

Rt 120 & Oak Drive ID# 627

McHenry

Year Built/Year Renovated: 1983/2003 Type of Center: Neighborhood No. of Stores: Total Space: 75,000 Total Available Space: 1,325 Available Minimum: 1,325 Maximum Contiguous: 1,325 Anchor Tenants: Jewel/Osco, iHop Rental Rate: $18.50 Total Passthroughs: $4.48

Naper Ridge Plaza

Charles S. Margosian Highland Management Assoc., Inc. (630) 691.1122

Naper Boulevard & Ridgeland Ave ID# 150

Naperville

Year Built/Year Renovated: 2004 Type of Center: Neighborhood No. of Stores: 2 Total Space: 30,000 Total Available Space: 25,000 Available Minimum: 25,000 Maximum Contiguous: 25,000 Anchor Tenants: Office Depot, Fifth Third Bank Rental Rate: $20.00 Total Passthroughs: NNN

River West Plaza

Charles S. Margosian Highland Management Assoc., Inc. (630) 691.1122

1550 N. Aurora Road ID# 161 Year Built/Year Renovated: 2004 Type of Center: Neighborhood No. of Stores: 10 Total Space: 18,500 Total Available Space: 1,551 Available Minimum: 1,551 Maximum Contiguous: 1,551 Anchor Tenants: Great Clips, Spice Mart Rental Rate: $22.00 Total Passthroughs: $6.20

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North Town Plaza

Charles S. Margosian Highland Management Assoc., Inc. (630) 691.1122

111-115 E. Ogden Avenue ID# 815

Park Hill Plaza

Naperville

Year Built/Year Renovated: 2007 Type of Center: Neighborhood No. of Stores: 14 Total Space: 24,883 Total Available Space: 1,100 Available Minimum: 1,100 Maximum Contiguous: 1,100 Anchor Tenants: Jewel/Osco Rental Rate: $35.00 Total Passthroughs: $7.60

David Strusiner Craig/Steven Development Corporation (847) 504.8061

9156-9240 W. 91st Street ID# 437

Ottawa Centre

Orland Park

Year Built/Year Renovated: 1988 Type of Center: Neighborhood No. of Stores: 30 Total Space: 61,121 Total Available Space: 11,500 Available Minimum: 1,400 Maximum Contiguous: 3,000 Anchor Tenants:Clothes Mentor, Culver’s,Avolve Fitness Rental Rate: $16.00 Total Passthroughs: $8.11

David Strusiner Craig/Steven Development Corporation (847) 504.8061

333-389 W. Stevenson Road ID# 518

Palatine Plaza

Ottawa

Year Built/Year Renovated: Type of Center: Community No. of Stores: Total Space: 63,446 Total Available Space: 18,851 Available Minimum: 2,500 Maximum Contiguous: 12,000 Anchor Tenants: .AT&T Verizon, Rosati’s Pizza, Game Stop Rental Rate: Total Passthroughs:

Charles S. Margosian Highland Management Assoc., Inc. (630) 691.1122

211-333 E. Northwest Highway ID# 162

Palatine

Year Built/Year Renovated: 2010 Type of Center: Neighborhood No. of Stores: 29 Total Space: 137,000 Total Available Space: 20,690 Available Minimum: 1,495 Maximum Contiguous: 15,115 Anchor Tenants: Ace Hardware, Planet Fitness, Dollar Tree Rental Rate: $11.00 - $20.00 Total Passthroughs: $9.10

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Round Lake Beach

Silver Oaks Shopping Center

David Strusiner Craig/Steven Development Corporation (847) 504.8061

SWC Route 83 & Monaville Road ID# 320

Year Built/Year Renovated: 2004 Type of Center: Neighborhood No. of Stores: 7 Total Space: 19,200 Total Available Space: 6,000 Available Minimum: 1,200 Maximum Contiguous: 3,600 Anchor Tenants: Dunkin Donuts, Forest Dentistry Rental Rate: $21.00 Total Passthroughs: $8.93

The Shoppes at Stony Creek

Charles S. Margosian Highland Management Assoc., Inc. (630) 691.1122

South Elgin

305-365 S. Randall Roada ID# 815

Year Built/Year Renovated: 2000 Type of Center: Community No. of Stores: Total Space: 39,393 Total Available Space: 0 Available Minimum: 0 Maximum Contiguous: 0 Anchor Tenants: Jewel/Osco, Ace Hardware Rental Rate: $24.00 Total Passthroughs: $8.25

Waterstone Place

David Strusiner Craig/Steven Development Corporation (847) 504.8061

34500 N. Highway 45 ID# 667

Third Lake

Year Built/Year Renovated: 2004 Type of Center: Neighborhood No. of Stores: 13 Total Space: 29,748 Total Available Space: 3,730 Available Minimum: 1,169 Maximum Contiguous: 0 Anchor Tenants: Lou Malnati’s, CK Salon, Yuri of Japan, Home of the Sparrow Rental Rate: $12.00-19.00 Total Passthroughs: $5.36

The Villa Center

David Strusiner Craig/Steven Development Corporation (847) 504.8061

Villa Park

321 E. St. Charles Road ID# 530 Year Built/Year Renovated: 1985 Type of Center: Neighborhood No. of Stores: Total Space: 19,553 Total Available Space: 0 Available Minimum: 0 Maximum Contiguous: 0 Anchor Tenants: Dollar General, Supercuts, Stella’s Rental Rate: $16.00 Total Passthroughs: $4.10

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Lynn Plaza

Michael Kolodny Hallmark & Johnson Property Mgmnt., Ltd. (773) 777.6160

522-550 Dundee Road ID# 838

Wheeling

Year Built/Year Renovated: 1970/1987 Type of Center: Neighborhood No. of Stores: Total Space: 100,000 Total Available Space: 13,685 Available Minimum: 1,500 Maximum Contiguous: 10,000 Anchor Tenants: Jimenez Foods, Mark Drug Medical Supply Rental Rate: Total Passthroughs:

Zion Commons

David Strusiner Craig/Steven Development Corporation (847) 504.8061

21st Street & Sheridan Road ID# 536

Zion

Year Built/Year Renovated: 2004 Type of Center: Neighborhood No. of Stores: Total Space: 9,180 Total Available Space: 0 Available Minimum: 9,180 Maximum Contiguous: 0 Anchor Tenants: Single Tenant Building, Family Dollar Rental Rate: Total Passthroughs:

Reach Over 8000 Professionals The Retail Space Guide is the source for semiannual market reports, updates on retail trends, providing the opportunity for Brokers/ Owners to place photolistings or display advertising of retail center properties with updated data throughout Chicago Metro area, NW Indiana, SE Wisconsin.

PROMOTE your retail center in 2022 Spring/Summer issue!

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Ernie Abood

312-933-8559

773-919-8799

menzies@rejournals.com

eabood@rejournals.com

Marianne Grierson

Frank Biondo

312-388-6181

248-670-2691

mgrierson@rejournals.com

fbiondo@rejournals.com

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Marianne Grierson 312-388-6181 mgrierson@rejournals.com

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HIGHLAND MANAGEMENT ASSOCIATES, INC.

1 East 22nd Street, Suite 201, Lombard, Illinois 60148 630-691-1122 Fax: 630-691-8572

Visit us at: www.highlandmanagement.biz

PRIME RETAIL SPACE AVAILABLE COUNTRY CORNERS CRYSTAL LAKE

This 123,600 sq. ft. center is anchored by Petco, Dollar Tree, & Savers located in the heart of retail corridor of the rapidly growing community of Crystal Lake.

ANCHOR AVAILABLE

3000 sq. ft. - 25,812 sq. ft.

5,200 sq. ft. RESTAURANT

PALATINE PLAZA

The central location and visibility of this 137,187 sq. ft. shopping center appeals to Tenants, including: Ace Hardware, Pete & Mac’s Pet Resort, Dollar Tree, Sherwin Williams, Dairy Queen, Brown’s Chicken and Elderwerks.

PALATINE

ANCHOR AVAILABLE 15,115 sq. ft.

1,495- 4,080 sq.ft. INLINE SHOPS

CHARLES PLAZA

Located on Palatine Road join Starbucks, Jewel Osco, Lou Malnati’s, Sport Clips, and Orangetheory Fitness in the premier community of Hoffman Estates. High visibility for both local and commuter traffic.

HOFFMAN ESTATES

AVAILABLE

2,126 sq. ft. - 4,590 sq. ft.

NAPER RIDGE PLAZA NAPERVILLE

AVAILABLE 25,000 Sq. Ft.

Rare opportunity to join area retailers, Costco, Amazon Fresh, CVS, McDonald’s, Starbucks, etc.

ANCHOR AVAILABLE 25,000 sq. ft.

FREE STANDING RETAIL

Established in 1985, Highland Management Associates, Inc. is proud of the high-quality, prime locations, and high-occupancy level of the fourteen properties it developed, owns and manages in Cook, DuPage, Kendal, and McHenry Counties.

Not Shown: LEXINGTON SQUARE ELMHURST 33,050 Sq. Ft. BOONE CREEK PLAZA MCHENRY 80,000 Sq. Ft. NORTH TOWN PLAZA NAPERVILLE 24,883 Sq. Ft. RIVER WEST PLAZA NAPERVILLE 18,500 Sq. Ft. THE SHOPPES OF STONY CREEK SOUTH ELGIN 39,393 Sq. Ft. ELMHURST PLAZA ELMHURST 73,116 Sq. Ft.