Prologis purchase of Medical District warehouse shows Chicago industrial market’s strength

The deal for the Hastings Street property was a sharp increase in price from what R2 paid for it in 2014

R2’s Managing Principal Matt Garrison, and 2059-2061 West Hastings Street (Credit: Showcase and Twitter)
R2’s Managing Principal Matt Garrison, and 2059-2061 West Hastings Street (Credit: Showcase and Twitter)

Prologis bought an 85,000-square-foot warehouse in the Illinois Medical District for nearly twice what R2 Companies paid four years ago, highlighting the continued demand for last-mile industrial assets.

Chicago-based R2 bought the property at 2059-2061 West Hastings Street in 2014 for $3.9 million, and sold it to warehouse landlord Prologis on Dec. 27 for $7.1 million. The most recent purchase works out to $84 per square foot.

The building’s major tenant is Rush medical center, which is moving out next year.

The deal illustrates the demand for last-mile delivery assets from institutional buyers, and a recent panel of leaders convened by NAIOP said the dwindling availability of vacant land is slowing mega-scale industrial construction, with developers now shifting to a broader base of smaller infill projects.

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“You’re seeing the market get stronger the smaller you get,” Matt Goode, a principal of the Rosemont-based Venture One Real Estate, said during the event.

Prologis last year made big investments in industrial space, acquiring rival logistics owner DCT Industrial Trust’s 71 million square feet for $8.4 billion in stock and giving the company more exposure to key markets like New York, Southern California and South Florida.

R2, meanwhile, has been active across the Chicago market lately, listing two West Loop buildings it bought with Walton Street Capital for $55 million a couple months after buying a landmark Old Town building with plans to renovate it.

The firm last year announced it was moving its Chicago headquarters from the West Loop to a freshly-renovated 55,000-square-foot building on Goose Island, near where a number of buildings in its portfolio are located.