A Chicago investment firm sold five industrial properties across four suburbs for $32.5 million, as demand nears all-time highs in the area, driven by the growth of e-commerce.
The seller, Green Door Capital, recently struck the deal with a joint venture partnership between Oak Brook-based investor Clear Height Properties and Buligo Capital Partners, the Chicago Business Journal reported, citing public records.
The purchase marked the third investment together for the partnership. All five buildings, which total 265,000 square feet and are located in Hoffman Estates, Schaumburg, Aurora and Bloomingdale, are fully leased to four tenants, the outlet reported.
The buyers plan to start improvements to the properties as soon as possible, including to lighting and HVAC systems as well as roofing and other general upgrades.
“Our investors will benefit from strong initial cash yields and future upside through the continued long-term tenancy and appreciation of this portfolio. The properties are strategically located within Chicago’s growing industrial and distribution hub and enjoy access to expressways, rail, shipping, and air cargo,” Gary Rose, COO and president of Clear Height Properties, said in a statement to the Chicago Business Journal.
The deal comes amid soaring demand for light-industrial space in the Chicago area as investors look to jump into a market that saw record growth last year. Demand as measured by net absorption set a new record at 44.9 million square feet in 2021, putting it 69 percent higher than the previous record set in 2016, according to a Colliers International report on the Chicago industrial market released late last month.
“Chicago’s industrial market demolished long-held records in 2021 for development, new leasing activity, net absorption and is approaching an all-time low vacancy rate,” the report said.
New leasing activity totaled 63.4 million square feet in 2021, up from 48.6 million the previous year, while construction completions totaled nearly 30.9 million, it said. Average asking rental rates per square foot rose to $5.09, up from $4.86 in 2020 and $4.80 in 2019. The industrial vacancy rate last year was 5.4 percent, down from 6.73 percent in 2020.
Demand for industrial real estate isn’t expected to be met by oncoming supply, either, which could lead to tenants facing a tighter market, the report said.
“Developers delivered more space than in any previous year, yet tenants’ appetite for new product continued to exceed the pace at which developers could build it. The unprecedented demand witnessed during 2021 will carry 2022, but tenants will face challenges finding space,” the Colliers report said.
[CBJ] – Sam Lounsberry