(To read more on the industrial market, click here.)
BOLINGBROOK, IL-Pension fund TIAA-CREF has purchased a 750,000-sf warehouse from Boston-based TA Associates. The buyer has spent nearly $45 million or $60 per sf for the asset, which is net leased to Home Depot Inc.
The seller of the 901 Carlow Dr. property was represented by executive director Kenneth Szady, senior director James Carpenter and senior associate Joseph Voet, all with Cushman & Wakefield of Illinois Inc. Szady tells GlobeSt.com that the internal rate of return is about 6% to 6.5% over a 10-year period.
Szady says TA Associates, a private equity investment firm, sold the property because it had owned it for awhile. "The fund is ending and they have determined that the assets in the fund need to be sold," he says.
TIAA-CREF is buying the warehouse building because they are "looking to expand their portfolio here in Chicago and this is probably one of the top three buildings in Bolingbrook," Szady adds.
Home Depot has leased the entire building since it was constructed in 2000 by Northern Builders as part of Carlow Corporate Center. Home Depot currently has less than three years left on the lease. Szady would not disclose the lease rate but said that the asking rate for similar warehouses in the area is $3.25 per sf to $3.50 per sf, net.
The warehouse, which has 210 docks and storage for more than 500 trailers, is at a prime location at the northwest corner of the intersection of Interstate 55 and Weber Road. "It is easiest one of the top locations in all of Chicago for big box industrial," he says.
TIAA-CREF does not have any major renovations planned for the building. "This is a state of the art facility. It is less than seven years old and it needs no work whatsoever," he says. The future plans for the building will be "to hold the asset for a long term," he adds.
The building's sale is representative of a trend of compressing cap rates in the industrial sector in the Chicagoland area. "We are finding pricing similar to assets like this in southern California, which has always been the nation leader in terms of cap rates," Szady says.
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