“As pricing for class A product continues to increase, resulting in record-low cap rates, more investors are turning to older class B buildings they can renovate to create value,” says Karmin. “These properties are not only more affordable for tenants, but in the case of a building like 2000 Bloomingdale Rd., they also offer smaller footprints that are harder to find in today's market.”

“The purchase of class B product has gained momentum, especially when there is value-add opportunity, though there is a substantial gap in purchase price as class A facilities remain favorable among investors and attract the highest premiums,” according to a recent Chicago Industrial Market Monitor by Avison Young.

CHICAGO—The Chicago industrial market continues to attract a flood of investment, and the intense competition is pushing many buyers to look past class A properties. Chicago-based Clear Height Properties LLC has acquired a 105,000-square-foot industrial property at 2000 Bloomingdale Rd. in suburban Glendale Heights, from a private investor for an undisclosed amount. This acquisition adds to its collection of suburban class B properties, which includes a six-building portfolio that recently saw its occupancy jump from 74% to 92%.

Transwestern principal Justin Lerner and director Joe Karmin represented Clear Height in the transaction and were retained to provide leasing services.

“Due to the limited availability of land in central DuPage County, we've seen strong demand from investors looking for well-located, income-producing assets in this submarket,” Lerner says “Our familiarity with the market allowed us to identify this rare value-add opportunity that will benefit from Clear Height's planned renovations while still presenting a relative value compared with similar product in adjacent submarkets like O'Hare.”

Built in 1980, 2000 Bloomingdale Rd. is about 2 miles west of the I-355 interchange at Army Trail Rd. Clear Height plans to upgrade the roof and exterior of the building, as well as the adjacent parking lot.

“As pricing for class A product continues to increase, resulting in record-low cap rates, more investors are turning to older class B buildings they can renovate to create value,” says Karmin. “These properties are not only more affordable for tenants, but in the case of a building like 2000 Bloomingdale Rd., they also offer smaller footprints that are harder to find in today's market.”

“The purchase of class B product has gained momentum, especially when there is value-add opportunity, though there is a substantial gap in purchase price as class A facilities remain favorable among investors and attract the highest premiums,” according to a recent Chicago Industrial Market Monitor by Avison Young.