Willow Festival shopping center sold

Shopping center developer and owner Regency Centers has purchased the Willow Festival retail development at Willow and Waukegan roads in Northbrook.

The company purchased the 405,000-square foot development Wednesday for $64 million, completing the second-most costly real estate transaction this year in the Chicago area, according to the parties involved.

"It was an off-market deal, so it wasn't up for grabs, per se," said Stuart Brackenridge, vice president of acquisitions for Jacksonville, Fla.-based Regency Centers. "We had originally looked at this center about three years ago, before the (market) crash, and were interested in it for obvious reasons."

Willow Festival was developed in 2007 by Hamilton Partners on land that was owned by the Society of the Divine Word, a Roman Catholic ministry. The retail center is anchored by Lowe's, Whole Foods and Best Buy.

The center is nearly full, with 96 percent of the space leased, Brackenridge said.

Regency approached Hamilton Partners about purchasing the center, and the current offer just came along at the right time, said Todd Berlinghoff of Hamilton.

"We're developers - that's our main form of business," Berlinghoff said, adding that the company wants to look for more opportunities to develop rather than own and operate.

He said that in the current economic climate, only two types of real estate transactions take place: Those involving good products, and those involving "bottom of the barrel" properties.

"This, fortunately for us, was a really good product," Berlinghoff said.

Uncertainty about the tax code and long-term capital gains also factored into the decision to sell now, he added.

Development of Willow Festival was completed near the beginning of the economic downturn, and as a result, its economic performance was a little slow, Brackenridge said.

But since it opened, he added, it has only gotten better. New restaurants have moved in, and newer stores like HomeGoods draw a steady stream of customers.

"Our last tour was on a Tuesday during lunch, and the parking lot was full," Brackenridge said.

The purchase only covers the center's 99-year ground lease, meaning the land itself remains owned by the Society of the Divine Word and overseen by the Techny Land Corp., according to a spokeswoman for the Techny Land Corp.

The village of Northbrook won't benefit directly from the sale of Willow Festival, as the village does not collect the real estate transfer tax that some neighboring communities get, said David Schoon, Northbrook's economic development director.

He also said that the village does not track sales tax revenue by shopping center, so it's difficult to say how Willow Festival has impacted the Northbrook's finances.

But Schoon is confident the center has helped ease the pain of dwindling sales tax revenue.

"It benefited the village basically because it came on line during the downturn," he said. "The initial decline in sales tax revenue was not as great as it could have been."

Willow Festival isn't Regency's only asset in the area. Over the summer, the company also purchased the Glen Oaks Plaza for $18 million. It's two miles from Willow Festival, at Waukegan Road and East Lake Avenue in Glenview, and anchored by Trader Joe's, Brackenridge said.

That shopping center had been owned by the family trust of former Glenview Village President James Smirles, who died in November.

"That's a great little center," Brackenridge said. "It performs extremely well. Trader Joe's is just knocking them out of the park."

Only two spaces in Glen Oaks are empty, Brackenridge said: A tailor that moved out, and Smirles' former office.