Sam Zell sells Ford City Mall after 25 years as owner
BY DAVID ROEDER firstname.lastname@example.org March 5, 2013 7:30PM
Ford City Mall
Updated: April 7, 2013 1:34PM
Chicago billionaire Sam Zell has sold a property he’s held for 25 years in his main fund, Equity Group Investments. It’s the Ford City Mall at 7601 S. Cicero, a place that, like Zell, has a unique story to tell.
Zell sold the million-square-foot mall to New York-based iStar Financial Inc. in December. A spokeswoman for Equity Group confirmed the deal, as did John Sarama, the mall’s senior general manager. Terms could not be learned and records of the transaction couldn’t be located in the system of the Cook County recorder.
Sarama said the new owners are getting a mall that has fared well in a difficult climate for retail properties. The vacancy rate is about 10 percent, but almost all of that will be filled with a construction project for an incoming tenant he declined to name. The anchors are Carson Pirie Scott and J.C. Penney.
The shopping center came into being in the 1960s, a project of visionary developer Harry Chaddick, who saw it as a way for the city to keep discretionary dollars people otherwise were spending at suburban malls. Chaddick, who died in 1994, also developed the Brickyard Mall on the Northwest Side.
Ford City was originally a government-built factory for the war effort in the 1940s. Sarama said Chrysler built B-29 jet engines there. Ford later took it over for aircraft engines and the quixotic Preston Tucker used it for the short-lived manufacturing of his namesake automobile in 1948. The place had been mothballed for years before Chaddick came along.
IStar did not respond to requests for comment. The property lender and investor seems to be an odd buyer, as it has been pruning assets and reducing debt in its long recovery from the recession. It reported a 2012 loss of $273 million, vs. a 2011 loss of $62.4 million.
Ford City was in the news last month when teens caused a fracas after the promotional appearance of the band Mindless Behavior. Sarama said the only damage to the property was a broken flower pot.
INDUSTRIAL STRENGTH: In the news business, we say that if you’ve got three of something, it’s a trend. So it may be meaningful that three reports about improvements in the market for industrial space hit the old inbox in recent weeks, and they all paint an optimistic picture.
The national perspective comes from NAIOP, a commercial real estate organization, which said the industrial market in the United States is bound for significant growth. A forecasting model it developed with academics said that in 2013, the market will achieve net absorption, the total amount of leased space after vacancies, of 150 million square feet, 50 percent more than the 2012 figure. In 2014, net absorption should be 175 million square feet.
Randy Anderson, finance professor at the University of Central Florida and an author of the NAIOP report, cited improving consumer and business confidence and an easing of credit markets as among the reasons for pickup.
Meanwhile, CoStar Group Inc. issued a report on investing in warehouse space, which it identified as a market of rare opportunity. It cited resilience in demand, the ability to quickly shut the space in a recession and a likelihood of higher rents and higher property values.
The local view comes from real estate firm Newmark Grubb Knight Frank, which said the market here in 2012 absorbed 12.8 million industrial square feet, the largest total since 2006. The pace increased each quarter of last year, with most of the activity in warehouses.
“Expect the warehouse sector to perform even better in 2013,” said the report by Research Manager Tim Van Noord. “Both Home Depot and FedEx have a combined 1.8 million square feet currently under construction; each represents an expansion.”
COMING ATTRACTION: Friday is opening day for an arts incubator in a building that sat vacant for almost 20 years. The University of Chicago, in cooperation with foundations, will open the operation at 301 E. Garfield. It reports the work cost $1.85 million.
It will include 10,000 square feet for artists-in-residence, a woodshop and space for exhibitions and events. ArtPlace supported the effort with a $400,000 grant.
PEDESTRIAN PLEA: I’ll admit that this item is influenced by my daily commute, but judging from the popularity of the walking route I use to the Sun-Times offices, others probably share my concern.
I’m directing my wrath at the developers of the future office building at the northeast corner of Lake and Canal. It’s a large property with a vast frontage of sidewalk that from my observation no one has cleared of snow all winter.
Wealthy companies own this venture, including one from Montreal. They must know somebody with a shovel.
DOING THE DEALS: Outlet mall developer AWE Talisman and Macerich announced the stores that will occupy its 530,000-square-foot Fashions Outlets of Chicago. It’s due to open Aug. 1 and, despite the name, will be in Rosemont, at 5220 Fashion Outlets Way, near Balmoral and I-294. Bloomingdale’s The Outlet Store, Last Call by Neiman Marcus, Saks Fifth Avenue Off 5th and Forever 21 will be represented. … Following an expansion and renewal negotiated Jones Lang LaSalle Inc., Midland Paper Co. now leases 155,000 square feet at 363 N. Third Ave., Des Plaines.
David Roeder reports on real estate at 6:22 p.m. Thursdays on WBBM-AM (780) and WBBM-FM (105.9). The reports are repeated at 10:22 p.m. Thursday and 7:22 a.m. Sunday.