Industrial development giant Michael Brennan and New York-based equity partner in a large business park near O’Hare International Airport took some chips off the table as a data center operator eyes its next play in Chicagoland’s cloud storage capital.
Virginia-based EdgeConneX bought two buildings in suburban Elk Grove Village totaling about 182,000 square feet for $36.6 million, or $201 per square foot, helping a venture of Rosemont-based Brennan Investment Group and its partner Investcorp line up a profitable exit from a big bet they made during the pandemic, Cook County property records show.
The purchase includes 821-891 Busse Road, a 96,000-square-foot light manufacturing building completed in 1984, and the adjacent 901-985 Busse Road, an 86,000-square-foot office and industrial building completed in 1987.
They were part of an eight-building, 956,000-square-foot industrial portfolio that comprised the Regent O’Hare business park, which Brennan and Investcorp purchased in 2020 for $74 million, or $77 per square foot.
The sellers moved to make the deal with EdgeConneX as demand for data centers across the nation is booming, in part due to speculation based on the growing need for cloud storage required by advances in artificial intelligence, in addition to the perpetual rise of wireless consumer computing usage.
EdgeConneX has previously developed data centers in Elk Grove Village, known as a center of cloud storage activity in the Chicago area.
The data center boom has propped up real estate in markets with strong connectivity to power sources, boosting places like Elk Grove, which has long had an industrial market benefitting from its proximity to the O’Hare airport. Major players, such as Blackstone, and local developers alike — the most recent being Mike Reschke and Quintin Primo planning to convert the former downtown Chicago Cboe headquarters into a data center — have pivoted hard into developing cloud storage facilities amid downturns for the office sector and other commercial asset classes due to interest rate hikes.
With the EdgeConneX deal, the investors have sold three of the buildings, as they previously offloaded 1500 East Higgins Road to the Elk Grove Village local government for $7.5 million. The village ended up selling that property in a package with three additional parcels for $21 million to an affiliate of Prime Data Centers, which has also developed cloud storage facilities within the suburb.
Neither EdgeConneX nor Brennan immediately returned requests for comment, and Invescorp declined to comment.
The rest of the buildings within the Regent O’Hare portfolio are fully leased, according to a person familiar with the properties. Whether the Brennan-Investcorp venture plans to hold or sell those assets in the near-term is unclear.
Elsewhere in Chicagoland, Brennan is planning to take on an office-to-industrial conversion itself with a $100 million pitch to tear down a 485,000-square-foot Rolling Meadows office building, which fell into a $30 million foreclosure lawsuit, in order to construct a logistics campus.
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