CHICAGO—The Chicago metro area's industrial sector continues to attract big investments from the West Coast. LBA Realty, an Irvine, CA-based investment firm, just bought a three-building, 538,236-square-foot portfolio located on 24 acres in Elk Grove Village near the western entrance of the city's O'Hare International Airport, one of the region's most desirable submarkets. According to Cook County property records, the price was $40.1 million.
Clear Lam and D&W Fine Pak occupy 100% of the buildings at 1900 Pratt Blvd., 1950 Pratt Blvd. and 2000-2020 Pratt Blvd. The national food companies have long-term leases for the space, which is vitally important for their operations, an appealing factor to many potential investors.
“We had sustained and deep interest in this portfolio from both US and foreign sources,” Erik Foster, a Chicago-based principal of Avison Young, tells GlobeSt.com. Along with Mike Wilson, also an Avison Young principal, he represented the owner Mirvac, a Sydney, Australia-based company.
“These are older assets,” Foster adds. But the sale “underscores the demand for second-generation industrial buildings.” And the reason for that demand is not hard to understand, especially when it concerns well-located properties in a market as healthy as Chicago. Los Angeles is certainly a vibrant market, but best-in-class assets there typically have cap rates below 4%. By contrast, in Chicago, investors can secure cap rates about 100 bps to 125 bps higher for core properties, and for non-core product like the Pratt buildings, the yields will be even greater.
According to a recent report from Transwestern, the vacancy rate in the O'Hare submarket, which has more than 100 million square feet of inventory, stands at just 4.5%.
The portfolio includes three properties: 1900 Pratt Blvd, a 111,338-square-foot building, 1950 Pratt Blvd., a 165,212-square-foot building, and 2000-2020 Pratt Blvd., a 261,686-square-foot building.
Clear Lam, which leases the 165,212-square-foot 1950 Pratt and the 261,686-square-foot 2000-2020 Pratt, is a privately held plastic packaging firm headquartered at 2020 Pratt. The company develops and manufactures packaging materials for customers such as Mars, Fisher Nuts, Burger King, Wendy's and McDonalds.
D&W Fine Pack, which leases the 111,338-square-foot 1900 Pratt, specializes in developing, manufacturing, and marketing packaging products for a variety of customers including Sam's Club, Costco, Walmart and several other big retailers.
“With long-term corporate tenancy in place, the new owner can expect solid performance from this portfolio for years to come,” says Foster.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
