Chicago investor quadrupled $39M technology park investment in 4 years

A Chicago investor is exiting the suburban technology and industrial park it developed down the road from its local headquarters after more than quadrupling the value of its 2018 investment to $180 million.

Brennan Investment Group, based in Rosemont, took three years to close on the $39 million purchase of 85 acres of land farmed by multiple generations of the Busse family in Elk Grove Village, near O’Hare International Airport, Cook County property records show. LBA Realty paid Brennan $99 million for three parcels on Innovation Drive, the last bit of property the Rosemont company owned in the area, save for a small corner of retail that’s being marketed for sale.

That deal shows just how much industrial real estate in Chicago – and across the country – has surged in the past 18 months. At the end of September 2020, Brennan paid $62.5 million for the same three parcels to take full control when its partner was ready to cash out. That means the sale to Irvine, California-based LBA marked a jump in value of more than 50 percent. ​​

“Almost $100 in square foot in profit was achieved,” CBRE’s Jack Brennan said of the deal, which included three fully leased speculative industrial buildings his client developed totaling more than 400,000 square feet. “It was definitely a function of a strengthening market. That real estate that was worth $150 in 2020 a square foot is now worth $245.”

Jack Brennan and his CBRE team was in charge of leasing the warehouses and he is related to Brennan Investment employees.

Brennan’s sale came after the tech park drew Microsoft in 2020, when the software firm paid $52.5 million for 36 acres and built a big data center. Around the same time, T5 Data Centers paid $29 million for property in the park that held a building shell that Brennan developed that was turned into a separate data center, accounting for the full $179.7 million in sales of property in which Brennan held an interest.

Brennan executives didn’t return a request for comment and Jack Brennan was unaware of how much money the company put into developing the warehouses. LBA couldn’t be reached.

In October, LBA’s parent bought industrial property for $16 million on Chicago’s Goose Island, an area where large purchases have recently been made by real estate players such as Hines.

Rising sales prices in the Elk Grove Village tech park reflect a record pace of leasing activity in spec industrial properties in the Chicago area in the first quarter, when 9.3 million square feet in such facilities were absorbed, breaking the last historic high of more than 7 million square feet the previous quarter, according to Collier’s research.

“Although 53 speculative construction projects totaling 18.1 million square feet were under construction at the end of the first quarter, demand continues to outpace the rate of construction, suggesting much of this new speculative development will lease quickly and there remain no signs of overbuilding,” the brokerage’s report said.

The lack of available industrial space has forced brokers and clients in need of a lease to act briskly to score a spot. Average industrial asking rent rates in the fourth quarter were up 3 percent from the previous quarter to $5.77 per square foot and 5 percent year-over-year, according to CBRE.

“A larger percentage of CBRE’s income is generated by the industrial real estate professionals than ever before in our history as a firm,” Jack Brennan said. “There is more allure to focus on that specialty, the industrial specialty. It has also made it more competitive. It’s very hard when representing tenants. There is very little product. Tenants definitely need to move quickly.”

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