Developers planning a 340-unit apartment tower on Chicago’s North Side have bought a neighboring shopping center for nearly $20 million, acquiring air rights to support the multifamily project and expanding their investment in the area.
Honore Properties and Peerless Development have bought the Kingsbury Center at 1415-1435 N. Kingsbury St. in the Clybourn Corridor, the buyers and brokerage Greenstone Partners told CoStar News.
The nearly 54,000-square-foot shopping plaza is fully leased to Sky Zone and PetSmart.
Tuesday’s purchase comes a month after plans by Chicago-based Honore and Elmhurst, Illinois-based Peerless to build the 28-story apartment tower at 1415 N. Dayton St. became public.
The price for the Kingsbury Center, which is along the wealthy Lincoln Park and Old Town neighborhoods, was $19.5 million.
That was well below the $27.7 million that seller Westwood Financial paid for the shopping center in a 2017 deal that included a loan assumption.
Honore Properties said the multifamily developers initially approached seller Westwood Financial to acquire some of the property’s air rights to support their proposed project on Dayton Street along the east side of the shopping center.
“We approached the seller just for the air rights, but they wanted to sell the whole thing,” Shenouda said. “We decided it was an opportunity to aggregate property in that area of Lincoln Park.”
Los Angeles-based Westwood did not immediately respond to a request for comment from CoStar News.
About 80,000 square feet of the air rights will be shifted to the Dayton Street project if it wins city zoning approval, Shenouda said. The proposal is on the Chicago Plan Commission agenda for March 19, a key step toward winning City Council approval of a zoning change for the site where a four-story, century-old building now stands.
The shopping center is about 54,000 square feet, a fraction of the 2.33-acre site’s approximately 500,000 square feet of allowed density, Shenouda said.
Long term, that means the developers could potentially add a residential tower on the site.
“We hope the retail tenants stay, but if anyone ever were to leave, there’s a redevelopment play for us,” he said.
The developers already have properties nearby, including the nearly completed conversion of a loft office building at 811 W. Evergreen Ave. into 49 apartments.
Shenouda said the developers want to start demolition at 1415 N. Dayton in May and begin construction in the fall, pending zoning approval.
Westwood had a big hole to fill after Buy Buy Baby closed its store there in early 2023, just before parent company Bed Bath & Beyond filed for bankruptcy protection. But Westwood quickly landed Utah-based Sky Zone to lease that more than 35,000-square-foot space.
Potential buyers were worried about whether PetSmart would remain long term, according to Danny Spitz, one of the Greenstone Partners brokers on the sale. But Shenouda said the new owners have secured a five-year extension for that tenant’s lease.
“There was a lot of interest in the center and a handful of offers, but the buyers had added motivation because of the interest in the air rights,” Spitz said.
For the record
The seller was represented by Greenstone Partners brokers Danny Spitz and AJ Patel.