Suburban Value-Add Office Now Getting Looks

CHICAGO—Buyers are setting their sights on value-add office properties in the Chicago suburbs, another sign that the area, at least in some key submarkets, has healed from the recession. Clear Height Properties, a local firm that has specialized in buying and renovating small industrial properties, has just acquired a four-property, $30 million, 522,000 square-foot Chicago suburban portfolio which includes a suburban, multi-story office property, the 201,800-square-foot building at 2625 Butterfield Rd. in Oak Brook, formerly known as Butterfield Office Plaza, and more than 320,000 square feet of flex properties in Elmhurst, Bensenville and Willowbrook.

The company has owned office property in the past, but this is its first multi-story building. And although it’s 81% occupied, the new owners feel it can do even better after a significant renovation, partly because they feel many Chicago residents, especially the young, are now more likely to move out of the city.

“Once you need that second car, or your first child starts going to school, you’re going to start thinking about moving to the suburbs,” Dominic Sergi, chief executive officer, Clear Height Properties, tells GlobeSt.com. And employers and office users will then follow that pattern to attract new talent.

But he also recognizes that not every suburban property will be capable of attracting such notice. It will have to be in a well-located submarket, such as Oak Brook, O’Hare or Northbrook, and provide the sorts of amenities workers have become accustomed to in their downtown offices.

“2625 Butterfield really lends itself to bringing a downtown feel to the suburbs,” he says, and Clear Height Properties has an aggressive value-add strategy. It will use a $5 million renovation budget to make sure the building has modern conference facilities, a fitness center, a new entrance and lobby and expanded technology capabilities.

And this will not be the last value-add office acquisition by Clear Height.

“We see a lot of suburban office assets that have been neglected,” Sergi says, and over the next 12 to 24 months, the firm wants to accumulate a couple of million square feet of office space.

Also included in the $30 million acquisition are three flex/industrial buildings:

• Elmhurst Metro Court, located at 747 North Church Rd. in Elmhurst is a seven-building, approximately 140,800-square-foot flex property on 8.3 acres. Overall, approximately 68% of the property is industrial space. It is 78% leased. Features of the property include 307 parking spaces, 16’ industrial space clear heights, six overhead metal doors and 13 drive-in doors.
• Tower Lane Business Park, located at 1050-1100 Tower Ln. in Bensenville is a two building, 95,905-square-foot flex property in the O’Hare industrial market. Completed in 1980, the property currently is 83.5% leased. Property features include 295 parking spaces, and ceiling clear heights of 14′ 4” in the warehouse spaces.
• Willowbrook Court, located at 625-701 Executive Dr. in Willowbrook, is a three building, 84,330-square-foot flex property in the I-55 industrial market. Completed in the late 1970s, the property is approximately 89.8% leased. Property features at Willowbrook Court include 206 parking spaces, ceiling heights ranging from 14’ – 16’ and 18 exterior docks.