Brennan plans $100M office-to-industrial conversion on suburban distress
Rolling Meadows property was subject of $30M foreclosure suit
Brennan Investment Group is plotting suburban Chicago’s next office-to-industrial play with a planned teardown of a distressed Rolling Meadows building to replace it with a logistics campus.
Rosemont-based Brennan bought the 485,000-square-foot office building at 3800 Golf Road that’s in the midst of a $30 million foreclosure lawsuit against its former owners, San Francisco-based Spear Street Capital and Switzerland-based Partners Group.
It’s on 40 acres of land, and Brennan plans to demolish the structure and build a Class A industrial complex. The company’s announcement didn’t include a sale price, and a Brennan representative declined to comment.
“This location is unmatched in terms of its logistical advantages via the confluence of interstate systems, its access to a large and diverse workforce and its proximity to best-in-class amenities,” Brennan’s Kevin Brennan said in a written statement.
Spear Street and Partners Group were hit with a foreclosure suit filed by lender Ares Management earlier this year. It alleged the landlords defaulted on a $30 million loan on the property that was inked weeks before the pandemic began and came due in January. Ares declined to comment on the Brennan deal, and Spear Street did not respond to a request for comment. It’s unclear how the sale impacts the litigation.
In 2022, Spear Street and its Swiss partner netted one of the largest office leases in Chicago’s northwest suburbs when the Federal Aviation Administration took 116,000 square feet in the three-story building, but a filing in the foreclosure suit states that the agency terminated its lease in February. Another major tenant in the building, Capital One, put up its entire 165,000-square-foot space in the building for sublease in 2020, even though its lease ran through 2026.
Brennan’s redevelopment plan marks the latest transformation planned for big office campuses in the Chicago suburbs as the asset class faces a record-high office vacancy rate of 29 percent as of last month. Developers have swooped in to transform struggling properties into logistics centers, which have curried favor with real estate investors amid the pandemic as e-commerce expansions drove demand.
Texas-based data center developer Aligned bought a 177,000-square-foot, Class B office property in Elk Grove Village for about $29 million last month, and industrial developer Demody Properties bought Glenview’s Allstate corporate campus for $232 million, with plans to turn the property into a huge campus of warehouses.
Bridge Industrial also has a deal speculated to be worth about $100 million to buy Baxter International’s 10-building, 646,000-square-foot office campus in Deerfield to convert it into a logistics park.
Brennan’s project, dubbed Rolling Meadows Commerce Center, will include about 600,000 square feet of industrial space, with plans to market to potential occupants including manufacturers, distributors and data centers. Brennan’s investment is expected to be more than $100 million, according to a representative for the city.
Spear Street bought the Rolling Meadows office building for $29.5 million in 2010.