CHICAGO—Although the economic recovery has resulted in some new industrial projects getting off the drawing board, many submarkets in the metropolitan area still have not seen the start of new construction. And that has provided an opportunity for potential sellers as investors look for deals beyond the most modern class A space.
NelsonHill, for example, was just named the exclusive agent for the disposition of a multi-tenant industrial portfolio consisting of three buildings, two of which were first built in the 1960's, totaling over 653,190-square-feet. Joe Reina owns these suburban Broadview and Melrose Park properties.
“The portfolio offers a unique opportunity for an investor to enter the West Cook submarket which continues to enjoy positive net absorption, coupled with no new construction for the third consecutive year,” says Mark Nelson, a principal at the Chicago-based NelsonHill. Mark and Mike Nelson and Frank Melchert of NelsonHill are the exclusive listing brokers.
The portfolio hits the market at a favorable time. According to Real Capital Analytics, the dollar volume of industrial investment activity in Chicago is nearly 10 percent higher than a year ago—$838 million for the first six months of 2013, compared with $763.4 million for the same time period in 2012. The number of transactions increased by 24 percent, from 102 in 2012 to 126 in the first half of 2013.
Located at 2600 S. 25th Ave. in Broadview, the first building was built in 1966 for General Motors and renovated in 2000 and again in 2010. Twenty-three tenants occupy 99% of its 389,155-square-feet. At 1930 George Street in Melrose Park, the second building has 179,300-square-feet and sits on almost six acres. Built in 1963 and renovated in 2010, seven tenants occupy 99% of the space. And at 5109 W. Lake St. in Melrose Park, the third building in the portfolio has 84,735-square-feet split between a warehouse and office building. Six tenants occupy 82% of the complex, which was built in 2003 and has a 6B Tax Incentive.
Another reason the market looks good for the West Cook portfolio is a lack of available A product for sale has many eyes turning to older and less modern class B buildings, long overlooked by institutional investors. “Buyers are bullish on future rent growth,” in the sector, says Erik Foster, a principal of Avison Young and the national practice leader of the firm's Industrial Capital Markets Group.“The rents really have only one way to go, and that's up.”
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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.
