sand-mill plaza | northbrook retail center...market overview overview chicago 1...

SAND-MILL PLAZA | NORTHBROOK RETAIL CENTER3375 Milwaukee Ave • Northbrook, IL 60062

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E X C L U S I V E L Y L I S T E D B Y :Mitchell KivenSenior AssociateTel: (312) [email protected]

N O N - E N D O R S E M E N T A N D D I S C L A I M E R N O T I C E

Confidentiality and DisclaimerThe information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap andshould not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverifiedinformation to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough duediligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, thefuture projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB's orasbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or anytenant's plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable;however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these mattersand makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all ofthe information set forth herein. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2018 Marcus & Millichap. All rights reserved.

Non-Endorsement NoticeMarcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation's logo or nameis not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, orcommercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY.PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

SAND-MILL PLAZA | NORTHBROOK RETAIL CENTERNorthbrook, ILACT ID ZAA0370202

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TABLE OF CONTENTS

SECTION

INVESTMENT OVERVIEW 01Offering SummaryRegional Map

Local Map

Aerial Photo

FINANCIAL ANALYSIS 02Tenant Summary

Lease Expiration Chart

Operating Statement

Notes

Pricing Detail

Acquisition Financing

MARKET OVERVIEW 03Market Analysis

Demographic Analysis

SAND-MILL PLAZA | NORTHBROOK RETAIL CENTER

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INVESTMENT

OVERVIEW


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EXECUTIVE SUMMARYOFFERING SUMMARY

MAJOR EMPLOYERS

EMPLOYER # OF EMPLOYEES

ALLSTATE 12,000

Allstate 5,695ADVOCATE LUTHERAN GENERAL HOSP 4,800

Midstates Video Corp 4,320

Pregis LLC 4,000

Walgreens 3,238

Honeywell 3,000

Presence Holy Family Med Ctr 2,200

Takeda Phrmaceuticals Amer Inc 2,137

Oakton Community College 2,013

Discovery Network 2,000

Glenbrook Hospital The 2,000

DEMOGRAPHICS

1-Miles 3-Miles 5-Miles

2018 Estimate Pop 6,659 97,354 294,187

2010 Census Pop 6,688 95,818 289,883

2018 Estimate HH 2,652 37,195 113,124

2010 Census HH 2,663 36,586 111,222

Median HH Income $73,245 $76,476 $78,922

Per Capita Income $43,592 $46,186 $45,951

Average HH Income $108,785 $120,482 $119,059

VITAL DATAYEAR 1 YEAR 2

Price $1,590,000 CAP Rate 8.15% 8.18%

Down Payment 30% / $477,000 Net Operating Income $129,554 $130,010

Loan Amount $1,113,000 Net Cash Flow After Debt Service 10.79% / $51,476 10.89% / $51,932

Loan Type Proposed New Total Return 15.60% / $74,426 15.94% / $76,055

Interest Rate / Amortization 5% / 25 Years

Gross Leasable Area (GLA) 8,980 SF

Price/SF $177.06

Current Occupancy 100%

Year Built / Renovated 1999

Lot Size 0.68 acre(s)

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OFFERING SUMMARY

100% occupied retail center | All service oriented tenants

10.79% cash on cash return at list price

High traffic location | 38,000 vehicles per day

Long-term tenants | Several recently extended leases

Stellar demographics | Strong density with household incomes 2X the national average

Multiple points of ingress and egress | Prominent pylon signage on Milwaukee and Sanders

INVESTMENT HIGHLIGHTS

Marcus & Millichap is pleased to present the fee simple interest in Sand-Mill Plaza, an 8,800 square foot, service-oriented retail center, located near the intersection ofSanders Road and Milwaukee Avenue in Northbrook, IL. This is a busy and high traffic location, with high traffic counts of over 38,000 vehicles per day. The tenants allhave strong, local followings, are committed to the location, and engaged in internet resistant businesses. There are multiple points of ingress and egress to the shoppingcenter, with access from both Milwaukee Avenue and Sanders Road. The center has high visibility from Milwaukee and Sanders, with pylon signs marking all the accesspoints.

The tenants operate on NNN leases, with the exception of one tenant, who is reimbursing for their share of real estate taxes. Several of the tenants have recently extendedtheir lease term significantly. The center has been well maintained by the original developer, and there is no known deferred maintenance. At list price, the cash on cashreturn is over 10%.

Daytime traffic drivers in the area include Glenbrook Hospital, a 173 bed teaching hospital operated by North Shore University Health System, a little over one mile east ofSand-Mil. Also about a mile east is Glenbrook South High School, at the corner of Lake and Landwehr. All-State Insurance has a 12,000 employee campus located lessthan one mile north of Sand-Mil, on Sanders Road, and there are a number of large apartment complexes surrounding the retail center that contribute to the customer baseof these businesses.

Please contact your Marcus & Millichap agent for additional information.

INVESTMENT OVERVIEW

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AERIAL PHOTO


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REGIONAL MAP


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9

FINANCIAL

ANALYSIS

FINANCIAL ANALYSIS


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TENANT SUMMARY

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TENANT SUMMARYFINANCIAL ANALYSIS


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FINANCIAL ANALYSIS


OPERATING STATEMENT

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FINANCIAL ANALYSIS


PRICING DETAIL

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MARCUS & MILLICHAP CAPITAL CORPORATION CAPABILITIESMMCC—our fully integrated, dedicated financing arm—is committed to providing superior capital market expertise, precisely managed execution, and unparalleled access to capital sources providing the most competitive rates and terms.

We leverage our prominent capital market relationships with commercial banks, life insurance companies, CMBS, private and public debt/equity funds, Fannie Mae, Freddie Mac and HUD to provide our clients with the greatest range of financing options.

Our dedicated, knowledgeable experts understand the challenges of financingand work tirelessly to resolve all potential issues to the benefit of our clients.

National platform operating

within the firm’s brokerage offices

$6.24 billion billion total

national volume in 2018

Access to more capital sources than any other

firm in the industry

Optimum financing solutions to enhance value

Our ability to enhance buyer pool by expanding finance options

Our ability to enhance seller control

• Through buyer qualification support

• Our ability to manage buyers finance expectations

• Ability to monitor and manage buyer/lender progress, insuring timely, predictable closings

• By relying on a world class set of debt/equity sources and presenting a tightly underwritten credit file

WHY MMCC?

Closed 1,678 debt and equity

financings in 2018

ACQUISITION FINANCING


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MARKET

OVERVIEW

MARKET OVERVIEW

OVERVIEWCHICAGO

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Chicago-Naperville-Elgin is one of the largest metros in the nation. Alsoknown as the Greater Chicagoland area, it is bounded to the east byLake Michigan, expands over a 5,000-square-mile region innortheastern Illinois and extends into Wisconsin and Indiana. The metrohouses 9.6 million people and comprises 14 counties. The city ofChicago contains 2.7 million residents. The greatest growth during thepast 20 years occurred in the western portion of the region. In recentyears, however, businesses are relocating back into the city to attractyoung workers, supporting the development of high-rise residentialtowers in the downtown Chicago.

MARKET OVERVIEW

METRO HIGHLIGHTS

THIRD-LARGEST METROPOLITAN AREAThe metro population trails only New York City and Los Angeles in size. It will expand to nearly 9.9 million residents by 2023.

WEALTH OF INTELLECTUAL CAPITALThe number of corporate headquarters in Chicago is second only to New York City. There are 34 Fortune 500 companies based locally.

LARGE, DIVERSE EMPLOYMENT BASEThe Chicago metro employs nearly 4.8 million workers in an array of industries, including a growing tech sector.


MARKET OVERVIEW

ECONOMY The metro has one of the biggest economies in the nation and

is buoyed by its distribution, finance, manufacturing operations and growing high-tech sectors.

Fortune 500 companies headquartered in the metro include Boeing, Walgreens, Allstate and McDonald’s.

The area is a major global tourist and convention destination. Last year, a record 57.6 million people visited the metro, supporting 150,600 jobs.

Large tech firms such as Amazon, Groupon and Google attract startup companies.

The workforce is considered one of the most diverse and well trained among major U.S. metros.

MAJOR AREA EMPLOYERS

Amazon.com, Inc.

Advocate Aurora Health

Walmart

Northwestern University

United Continental Holdings Inc.

Allstate Corp.

Walgreens Boots Alliance, Inc.

Abbott Labs

JPMorgan Chase

AT&T

SHARE OF 2018 TOTAL EMPLOYMENT

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MANUFACTURING GOVERNMENT

HEALTH SERVICESEDUCATION AND

+

LEISURE AND HOSPITALITY FINANCIAL ACTIVITIES

CONSTRUCTION

PROFESSIONAL ANDBUSINESS SERVICES

OTHER SERVICES AND UTILITIES

TRADE, TRANSPORTATION INFORMATION

* Forecast


9% 18% 7%12% 10%

4%20% 2%4% 15%

MARKET OVERVIEW

Chicago is the third most populous metro in the U.S. and is expected to grow by approximately 259,500 people during the next five years.

World-class education institutions including Northwestern University and the University of Chicago help provide a skilled labor pool. Nearly 36 percent of residents age 25 and older hold a bachelor’s degree and of these, 14 percent have also earned a graduate or professional degree, which is well above the national level.

Younger professionals moving to the market for employment provide a skilled workforce and contribute to a median age that is below that of the U.S. and a household income above the national level.

More people are renting as thousands of new apartments are completed. As a result, the local homeownership at 64 percent has declined in recent years and is now on par with the national rate.

QUICK FACTS

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* Forecast

DEMOGRAPHICS


37.22018

MEDIAN AGE:

U.S. Median:38.0

$67,700 2018 MEDIAN

HOUSEHOLD INCOME:

U.S. Median:$58,800

3.5M2018

HOUSEHOLDS:

Growth2018-2023*:4.1%

9.6M2018

POPULATION:

Growth2018-2023*:2.7%

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Retailers targeting Chicago for their flagship stores. Rising household incomessupported by corporate expansions are giving consumers increased discretionaryincome and attracting retailers to the Chicago metro. New York & Co. opened itslargest flagship store on State Street earlier this year. Additionally, Amazon openedone of its convenience stores in the metro at the end of September. Several otherretailers are considering opening flagship stores within the market, including Googleand Funko, a company that manufactures pop culture items. Expansions like these willcontinue to bode well for vacancy improvement. Presently, the rate fell for a fourthconsecutive year during the past 12 months ending in June amid strong netabsorption.

Demand outpaces supply in the suburbs. Construction of retail space is beginningto moderate after several years of elevated development. The bulk of completionsremain in the suburbs. Despite heightened deliveries here, strong net absorptioncontinues to sustain demand for retail space, dropping vacancy at a faster pace thanthe metro average and supporting healthy rent growth. Moving forward, completionswill remain concentrated in outlying areas, though supply additions will likely have aminimal impact on vacancy as much of the space is pre-leased or built-to-suit.

• Buyers in the $1 million to $10 million price tranche are leading transactionvelocity in Chicago, with both out-of-state and local investors bidding foravailable assets. Buyers from California are particularly active targetingproperties upward of 200 basis points higher than their home markets. First-year yields for retail assets overall averaged in the low-7 percent band duringthe past 12 months.

• Demand picked up considerably in the Northwest City submarket with thenumber of sales rising 20 percent in the area during the past 12 months.Heightened demand in the submarket lifted the average price 4 percent to$380 per square foot. Here, cap rates averaged in the low-7 to mid-7 percentrange based on property type and location.

• Buyers remain interested in multi-tenant assets as these buildings changehands with first-year returns in the mid-7 to low-8 percent band.

Retail 2018 OutlookRetailers Increasingly Consider ChicagoFor New Concept Launches

CHICAGO METRO AREA

2.0 million sq. ft.

will be completed

3.4% increase in

asking rents

40 basis point

decrease in vacancy

Construction:

The average asking rent picks up from the0.9 percent increase recorded in the prioryear, reaching $17.60 per square foot in2018.

Net absorption of 3.5 million square feet willtick vacancy down 40 basis points in 2018 to6.2 percent. Last year, the rate also fell 40basis points.

* Cap rates trailing 12 months through 2Q18; 10-Year Treasury up to June 29.Sources: CoStar Group, Inc.; Real Capital Analytics

Development slows moderately from the 2.3million square feet completed in 2017. Morethan half of this year’s deliveries are single-tenant properties.

Vacancy:

Rents:

Investment Trends


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• Approximately 38,800 positions were created during the year ending in June, following a 1.2 percent increase in the prior year. The jobless rate fell 70 basis points during the past 12 months to 4.2 percent.

• Hiring was led by the education and health services sector during the prior four quarters with the creation of more than 10,000 positions.

EMPLOYMENT

• Urban: Since last July, more than 372,000 square feet of retail space was completed, much of which was located in the Northwest City submarket.

• Suburban: The majority of completions were located in the suburbs as 1.4 million square feet of space was delivered. Construction was widespread throughout suburban Chicago with most submarkets receiving retail space.

CONSTRUCTION

• Urban: Net absorption of 59,000 square feet of space did not outpace completions, lifting vacancy 40 basis points to 4.7 percent. In the prior year, vacancy fell 80 basis points.

• Suburban: In the suburbs, vacancy fell 50 basis points during the past four quarters to 6.8 percent as 3.4 million square feet was absorbed. Vacancy in the Schaumburg area plummeted 130 basis points during this time.

VACANCY

• Urban: The average asking rent declined 1 percent during the year to $25.63 per square foot in June, nulling the nearly 1 percent increase recoded in the prior annual period.

• Suburban: The suburbs registered stronger-than-metro-average growth, with the average asking rent climbing 3.2 percent during the past 12 months to $15.68 per square foot. Last year, rent edged up 1.3 percent.

RENTS

CHICAGO METRO AREA

increase in the average asking rent Y-O-Y

1.9%basis point decrease in vacancy Y-O-Y40square feet

completed Y-O-Y

1.8 millionincrease in total employment Y-O-Y

0.8%

* Forecast

2Q18 - 12-Month Trend


PROPERTY NAME

MARKETING TEAM


DEMOGRAPHICS

Source: © 2018 Experian

Created on May 2019

POPULATION 1 Miles 3 Miles 5 Miles 2023 Projection

Total Population 6,788 100,055 298,529 2018 Estimate

Total Population 6,659 97,354 294,187 2010 Census

Total Population 6,688 95,818 289,883 2000 Census

Total Population 6,269 96,464 287,698 Current Daytime Population

2018 Estimate 11,367 106,058 328,249HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2023 Projection

Total Households 2,743 38,558 115,936 2018 Estimate

Total Households 2,652 37,195 113,124Average (Mean) Household Size 2.48 2.58 2.57

2010 CensusTotal Households 2,663 36,586 111,222

2000 CensusTotal Households 2,319 35,993 108,869

Occupied Units2023 Projection 2,743 38,558 115,9362018 Estimate 2,862 39,369 118,786

HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2018 Estimate

$150,000 or More 16.81% 21.60% 21.00%$100,000 - $149,000 16.87% 16.65% 17.61%$75,000 - $99,999 15.16% 12.59% 13.74%$50,000 - $74,999 18.42% 16.46% 16.53%$35,000 - $49,999 12.20% 10.92% 10.27%Under $35,000 20.54% 21.79% 20.84%

Average Household Income $108,785 $120,482 $119,059Median Household Income $73,245 $76,476 $78,922Per Capita Income $43,592 $46,186 $45,951

HOUSEHOLDS BY EXPENDITURE 1 Miles 3 Miles 5 MilesTotal Average Household Retail Expenditure $78,095 $80,146 $81,503 Consumer Expenditure Top 10 Categories

Housing $21,981 $22,285 $22,634Transportation $13,504 $13,795 $14,012Shelter $13,360 $13,563 $13,749Food $8,515 $8,614 $8,812Personal Insurance and Pensions $7,108 $7,249 $7,410Health Care $5,553 $5,661 $5,812Utilities $4,386 $4,434 $4,495Entertainment $4,020 $4,227 $4,380Apparel $2,226 $2,275 $2,333Household Furnishings and Equipment $1,944 $1,976 $2,026

POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age

2018 Estimate Total Population 6,659 97,354 294,187Under 20 20.63% 22.18% 22.25%20 to 34 Years 18.03% 17.31% 16.13%35 to 39 Years 6.41% 6.06% 5.76%40 to 49 Years 13.00% 12.64% 12.84%50 to 64 Years 22.35% 22.19% 22.75%Age 65+ 19.60% 19.62% 20.28%Median Age 43.95 43.62 44.82

Population 25+ by Education Level2018 Estimate Population Age 25+ 4,929 70,933 214,567Elementary (0-8) 1.14% 3.58% 3.50%Some High School (9-11) 2.18% 4.58% 4.39%High School Graduate (12) 21.89% 19.43% 20.22%Some College (13-15) 15.97% 17.42% 17.55%Associate Degree Only 4.38% 5.58% 6.02%Bachelors Degree Only 32.60% 28.50% 28.41%Graduate Degree 21.22% 19.24% 18.60%

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DEMOGRAPHICS

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www.MarcusMillichap.com

Mitchell Kiven

Senior AssociateNational Retail GroupChicago Downtown OfficeTel: (312) 624-7006Fax: (312) [email protected]: IL 475.164486

E X C L U S I V E L Y L I S T E D B Y

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sand-mill plaza | northbrook retail center...market overview overview chicago 1...

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