The acquisition of most of the historic Market Square development in downtown Lake Forest by Chicago-based L3 Capital LLC marks a significant pivot for the firm, known for its focus on urban retail properties. L3 Capital paid $35.5 million for seven buildings surrounding Market Square’s iconic grassy plaza, located near the Metra stop at Western Avenue and Deerpath Road. The two-story buildings include 50,000 square feet of small-shop retail space leased to a mix of national and local tenants, such as Talbots and Forest Bootery, along with 50,000 square feet of second-floor office space occupied by professional tenants.

L3 Capital’s move into Market Square demonstrates the firm’s confidence in suburban retail assets that offer strong demographics and a stable community setting. While traditionally focused on urban properties, L3 sees Market Square as a “prime retail asset” with significant potential for value appreciation. According to L3 Principal Domenic Lanni, the current rental rates are estimated to be 10 to 20 percent below market, creating an opportunity for gradual rent increases as leases expire. This positioning underscores L3’s strategy to capitalize on market potential and maximize returns on their new acquisition.

The firm also plans to invest several million dollars in upgrades to the property, focusing on mechanical, electrical, and building systems, as well as restoring the millwork and windows of the historic buildings, originally designed by architect Howard Van Doren Shaw in 1916. L3 Principal Michael Schreiber noted that the century-old property needs revitalization to preserve its historical charm and ensure it remains a vibrant retail and professional hub.

For commercial real estate agents in Lake Forest, L3’s investment signals growing interest in suburban retail assets with strong community ties and historical significance. However, challenges remain, particularly given the relatively stagnant North Shore retail market. With a vacancy rate of around 9.3 percent, the North Shore submarket, including Lake Forest, has experienced limited movement over the past decade. This creates a delicate balancing act for L3 Capital and other landlords seeking to boost rents without alienating tenants, many of whom already operate at the higher end of what they can afford.

The historical appeal and established presence of Market Square provide a unique edge. Still, the ability to sustain rent increases may depend on maintaining tenant satisfaction and continuing to attract high-quality retailers and professionals. As commercial real estate agents navigate this evolving market, the success of L3’s investment could set the tone for future suburban retail redevelopments and signal a broader shift in investor focus toward stable, community-centric assets.

The acquisition also includes a separately owned 14,000-square-foot building within the Market Square complex, previously home to a Macy’s and now tenanted by J.Crew and Bluemercury. This property, owned by a venture led by Michael Schreiber, demonstrates the layered complexity and value of the Market Square development, which remains central to Lake Forest’s retail and community identity.

In summary, L3 Capital’s purchase of Market Square highlights the ongoing appeal of well-located, historic retail properties, even in a challenging market. Their commitment to revitalization and strategic rent increases reflects confidence in the long-term viability of Lake Forest’s retail scene. Commercial real estate agents can leverage this momentum by emphasizing the enduring value of community-oriented retail spaces and the potential for growth in high-demand locations like Lake Forest.