A fund managed by Newport Capital Partners paid $71.9 million last month for most of Edens Plaza, according to Cook County property records. The deal included 183,000 square feet across three buildings, but not the connected but separately owned 161,000-square-foot former Carson’s, which closed last year after its parent company filed for bankruptcy.
Newport now owns the rest of the plaza, bounded by Lake Street, Skokie Boulevard and the Edens Expressway. The center is 92 percent leased and has a history of strong tenant demand in a highly visible and accessible location, according to Newport Managing Principal Derrick McGavic.
But with an estimated 200,000 people passing by the shopping center per day, surrounding affluent neighborhoods and some retail centers in densely populated locations thriving, Edens Plaza’s upside is high, McGavic said.
“We believe the drama surrounding the death of retail is extraordinarily overrated,” he said. “We do believed that department stores (like) Sears and Carson’s are challenged, however what is not challenged and what is extraordinarily robust are neighborhood and convenience centers.”
Newport bought Edens Plaza from 11 East Partners, a Chicago-based real estate venture controlled by former executives at now-defunct developer Joseph Freed. Freed previously owned the property, which was originally built in the 1950s with the Carson Pirie Scott store.
McGavic wouldn’t get into details about Newport’s plans for Edens Plaza but said the firm will add value to the property “with the right aesthetic adjustments.”
Retail tenants in the shopping center today include Bed Bath & Beyond, Fresh Market, the Great Escape and Starbucks. A former Carson’s Furniture Gallery that shuttered last year at the center was recently leased by NorthShore University Health System and Advocate Health Care, which plan to open a pediatric care center there later this year.
One factor that will shape the plaza’s future is the fate of the Carson’s department store, which is now tied up in Bankruptcy Court as its owner, Carson’s parent company Bon-Ton Stores, liquidates its assets.
McGavic said he has not spoken to the prospective new owner of the Carson’s building, “but clearly that’s something we’ll do in the not-too-distant future,” he said.
Boosting Newport’s confidence in Edens Plaza is the firm’s recent success on a smaller scale across the street. The firm’s first fund acquired the 42,000-square-foot Westlake Plaza shopping center immediately south of Edens Plaza in 2012 and has since increased its net operating income by more than 25 percent through a series of new and renewed leases, according to McGavic.
Now Newport is planning to put Westlake Plaza up for sale in the coming months after having “done the best we can in managing and improving the value of the asset,” McGavic said.
Newport has a track record of investing in shopping centers with big vacancies or in need of updates, improving them and selling them for what they hope is a substantial profit.
That’s what it did with the Danada Square East in west suburban Wheaton, which it bought in 2013 and replaced a shuttered Dominick’s grocery store with a Whole Foods Market before selling the shopping center in 2016 for nearly twice what it paid.
Newport is hoping for a similar result at Lincoln Village, a shopping center in Peterson Park on the North Side that it bought in 2017 for $30.5 million.