Stotan Industrial Buys Office Building for Warehouse Conversion

An industrial developer has purchased a small office building in DuPage County with plans to transform the space into a warehouse.

Chicago-based Stotan Industrial has acquired the two-story, 16,550-square-foot Meadows Office Center I, at 2349 West Lake Street in Addison, for almost $8.2 million, or $495 per square foot, a deal that reflects a broader trend of office-to-industrial conversions, CoStar reported. Stotan plans to demolish the building and construct a 135,000-square-foot warehouse on the site.

Sotan founder and president Jim McGill described the purchase as “a covered land play on an A site in DuPage County.”

The building is fully leased to two tenants and sits on a 9.8-acre site in the Meadows Business Park of Addison, across the street from Medinah Country Club.

Option Care Health occupies 55,000 square feet with a lease extending through February 2028 and two five-year extension options. Arjo leases 61,600 square feet through October 2029, with a five-year extension option and a termination option effective in October 2025, which would cost the tenant just over $2.1 million.

The seller, Pennsylvania-based EQT Exeter, was represented by Cushman & Wakefield’s Dan Deuter, Jason West, Sean Henrick, Tom Sitz, Cody Hundertmark and Jeremiah Olsen. EQT Exeter paid $26.1 million for Meadows Office Center I and an adjacent building in 2019, the outlet reported.

Redevelopment is unlikely to happen any time soon, but it will proceed if the tenants exercise their lease termination options, McGill said. It won’t require a zoning change.

The redevelopment would join a growing trend of office-to-industrial conversions spurred by the pandemic. As office space demand plummeted and industrial demand surged, developers have increasingly targeted large suburban office sites for modern warehouses.

Notable projects include Stotan Industrial and PCCP’s 100,400-square-foot industrial building in Mount Prospect, and Dermody Properties’ conversion of Allstate’s 232-acre corporate campus in Glenview.

— Andrew Terrell