The decline in value doesn’t fit the larger narrative of grocery-anchored malls, a relatively safe bet in the uncertain world of commercial real estate rocked by e-commerce and the pandemic. Investors who own malls with grocery stores — or who simply own the stores themselves — have generally done well with their investments over the past few years.
Some recent examples: In October, Liberty Square, a 107,000 square foot mall anchored by a Jewel-Osco store, sold for $18.7 million, down from a previous sale price of $14.1 million. dollars in January 2018, according to MSCI Real Assets. Also last month, a Mariano’s in Crystal Lake sold for $35.5 million, up from $25.2 million in 2018.
On the other hand, rising interest rates and falling lending this year have depressed real estate values across the board, wiping out paper gains for many investors. An index of strip mall values compiled by California-based research firm Green Street is down 13% from its peak at the start of the year.
Another factor that may have lowered the value of shops in Glen Pointe: rising property taxes. Mall taxes rose to $1.6 million last year, up 90% from 2016, according to the Cook County Treasurer. An increase of this magnitude can reduce the value of a property by millions of dollars.
A loss of tenants does not explain the decline in value. The mall at Willow and Sanders roads is fully occupied by tenants such as Mariano’s, Life Time, Starbucks, Chipotle and Naf Naf.
A spokeswoman for CBRE Investment Management declined to comment.
CBRE Investment Management sold the mall in two transactions. He sold all but Mariano’s store, about 58,700 square feet, for $18.3 million to a company led by Chicago investor Savas Er, according to county records. He sold Mariano’s 90,000 square foot store to ExchangeRight, a Pasadena, Calif.-based investment firm specializing in tax-deferred real estate investments, also known as 1031 exchanges.
A brokerage team led by Michael Marks and Evan Halkias of Cushman & Wakefield arranged the sales.