Next Realty combines its in-depth understanding of the retail real estate sector and its analysis of current business and economic conditions in order to develop and execute creative, property-specific business plans. This has been apparent in how Next has been successful in aligning dynamic trends in the healthcare industry with existing or potential vacancies in retail centers, including big box spaces.
Next’s entry into the conversion of retail to medical space first took place with a redevelopment opportunity at 350 N. Waukegan Road in Deerfield.
Next acquired four nonperforming cross-collateralized loans that were secured by a restaurant property and other collateral assets. Upon taking title of the property, Next sold the non-real estate collateral. The firm’s original business plan involved converting the former restaurant property, in a prime Deerfield trade area, into a multi-tenant retail building. However, at that time, hospitals and healthcare systems increasingly were looking outside their campuses for opportunities to be closer to their patients. Next was successful in capitalizing on the infancy of this trend and entered into a long-term lease with Northwestern Memorial Hospital. After redeveloping the property, it was sold resulting in a Net IRR of 57% and Net Return Multiple of 2.3x during the 22-month hold period.
In 2016 Next Realty and a joint venture partner acquired Lincolnshire Commons, a 133,000-square-foot lifestyle center in Lincolnshire.
At the time of acquisition, one of the anchor tenants was Barnes & Noble, a national retailer that occupied approximately 35,000 square feet. A significant element of the business plan for the property revolved around replacing the poorly performing bookstore. Ultimately, the space was leased on a long-term basis to Northshore University Health System which allowed the healthcare provider to offer greater access in the Northern suburbs. By strategically orchestrating the re-tenanting of the space with Northshore, Next Realty produced a 20% increase in NOI at this Class A retail center.
Also, in 2016 national sporting goods retailer The Sports Authority filed for bankruptcy, an event that had a ripple effect at Next Realty where the retailer leased spaces in several properties, including a 50,000-square-foot location at 3134 N. Clark Street, Chicago, IL.
With hospitals and healthcare systems continuing to focus on access to their targeted communities, Next was able to lease the entire space to Advocate Health Care which converted the space into a new medical office center serving Chicago’s densely populated Lakeview neighborhood.
For Advocate, finding 50,000 square feet of free-standing retail space with parking in Lakeview was like finding the proverbial needle in a haystack. The conversion of the space from retail to medical demonstrated that while it is never easy to lose a significant tenant, the adaptive reuse of the property was a win for the neighborhood and the owners.
