November December 23 Chicago Industrial Properties by REjournals

CRE MARKETPLACE (pg.22): CONSTRUCTION COMPANIES/GENERAL CONTRACTORS FINANCE & INVESTMENT FIRMS

VOL.33 NO.6

THE LEADING NEWS SOURCE FOR INDUSTRIAL REAL ESTATE PROFESSIONALS & USERS

NOVEMBER/DECEMBER 2023

Subsector Spotlight Cold Storage and manufacturing navigate diverse challenges, with adaptation the common theme

Karis Cold Facility Chicago. Courtesy NAI HIffman.

By Mia Goulart, Senior Staff Writer

n the dynamic realm of industrial real estate, two essential subsectors are experiencing significant transformations to align with the evolving demands of the market: cold storage and manufacturing/ transportation, which, for the sake of this narrative, have been combined into a single category. First, NAI Hiffman Executive Vice President of Industrial Services John Basile provides a glimpse into the metamorphosis of the cold storage industry.

Cold Storage Traditionally regulated to regional hubs on the outskirts, these facilities are migrating to urbanized locations. Why? The shift from business-to-business distribution to direct-to-consumer delivery demands proximity to people. Consumer preferences are steering away from packaged, shelf-stable foods toward fresher, non-processed options, necessitating a renewed focus on

infill locations to cater to the population. At the same time, an overall increase in inventory levels proves the demand for new facilities. However, the driving force behind this demand is the aging inventory of existing facilities. Unlike traditional ambient warehouses that can adapt, cold storage facilities have a shelf life—a reality prompting owners to invest in newer structures rather than upgrading outdated ones.

COLD STORAGE (continued on page 15)

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CONTENTS

PUBLISHER Mark Menzies menzies@rejournals.com 708.622.0074 SENIOR STAFF WRITER Mia Goulart mia.goulart@rejournals.com VICE PRESIDENT OF SALES & MW CONFERENCE SERIES MANAGER Ernie Abood eabood@rejournals.com

VICE PRESIDENT OF SALES Frank E. Biondo Frank.biondo@rejournals.com CLASSIFIED DIRECTOR Susan Mickey smickey@rejournals.com DIRECTOR, NATIONAL EVENTS & MARKETING Alyssa Gawlinski agawlinski@rejournals.com

Chicago Industrial Properties® (ISSN 1546-377X) is published bi-monthly for $59 per year by Real Estate Publishing Corporation, 1010 Lake St Suite 210, Oak Park, IL 60301. Contact the subscription department at 312.933.8559 to subscribe. © 2023 by Real Estate Publishing Corporation. All rights reserved. No part of this publication can be reproduced or transmitted in any form or by any means, electronic or mechanical including photocopying, recording or by any information storage or retrieval system.

2023 EDITORIAL BOARD Corey Chase

1 4 8 10

Subsector Spotlight Cold Storage and manufacturing navigate diverse challenges, with adaptation the common theme. New Development Showcase: Metro Edge Development Partners’ IMD1 Data Center (1951 W. Hastings St., Chicago). New Development Showcase: Dermody Properties’ The Logistics Campus.

Expert Perspectives: Investment Outlook 2023 stood out as a significant year for the sector, and while things are constantly changing, enthusiasm for what's in store remains undiminished.

The fourth quarter push: Close what you can, pave the way for 2024 The march to year end is underway. Regardless of a company’s role in commercial real estate, the focus now is pushing to meet year-end goals.

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News Briefs

Marketplace CONSTRUCTION COMPANIES/ GENERAL CONTRACTORS FINANCE & INVESTMENT FIRMS

It’s all in the numbers: An analysis of the current industrial market, with insights from Savills and JLL Transformation is the current buzzword when discussing the regional industrial market.

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New Development Showcase: Metro Edge Development Partners’ IMD1 Data Center (1951 W. Hastings St., Chicago) By Mia Goulart, Senior Staff Writer

Metro Edge Development Partners’ IMD1 Data Center (1951 W. Hastings St., Chicago) Chicago Industrial Properties: What inspired the decision to build the IMD1 Data Center in the Illinois Medical District, and how does it align with the company’s vision for the community? Metro Edge Development Partners: In 2020, Metro Edge met with Rush University Medical Center, one of the primary hospitals in the Illinois Medical District (IMD), to discuss the mission-critical technology needs of the 40 healthcare organizations within the IMD. The IMD spans 560 acres and is a long-established hub of healthcare, medical research facilities, and biotech incubators in Chicago. As the IMD’s exclusive data center, IMD1 appeals to Chicago’s healthcare institutions

by offering significant cost savings, the highest levels of cyber security, essential technology upgrades, energy efficiency, physical proximity (leading to low latency) and community impact. Metro Edge and local community leaders have a shared vision for improving the community on the West Side of Chicago. In addition to the enormous economic value created by a new $250 million data center development, Metro Edge believes IMD1 will be the first step in transforming the currently vacant corridor into a vibrant neighborhood, as data centers must evolve from being simply located “in the community” to being part “of the community.” To lead this effort, Metro Edge will launch a multifaceted social impact program designed to address the inequities in underserved communities by providing data center employment opportu-

nities and higher-quality Wi-Fi options for employees and visitors to the IMD. Chicago Industrial Properties: Can you explain the unique security challenges faced due to the constrained site and how the design team addressed them while maintaining aesthetics? Metro Edge Development Partners: One of the design team’s unique challenges was designing the data center to fit the IMD’s design guidelines. Security challenges arose from the IMD’s fencing height restrictions and requirements for a glass entrance on the ground level to allow transparency along the public sidewalks. The team addressed these challenges with aesthetic hardscaping in the form of trees and robust sitting walls with reinforced foundations. The sitting/security walls are reinforced concrete barriers that

would have a brick or stone veneer attached to blend in with the landscape/ building. These reinforced concrete barriers are highly-rated crash barricades that protect the building better than traditional fencing. Other security features include: the brick exterior walls on the ground floor are backed with a 12-inch CMU reinforced wall, interior and exterior surveillance panoramic sensor dome cameras with a full 360-degree view of the property, a state-of-the-art security monitoring system, 24/7 security team on-site, with multiple levels of strict access control including entry gates, security checkpoints and biometric or card-based authentication systems. SHOWCASE (continued on page 6)

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SHOWCASE (continued from page 4)

Thanks to Chicago police and the multiple hospital/campus security teams, the IMD has significantly lower property crime rates than the rest of Chicago and the United States. Chicago Industrial Properties: The IMD1 Data Center has a different layout than typical data centers, with the main infrastructure on the first floor and data halls on the upper floors. What led to this design choice, and what benefits does it bring to the project? Metro Edge Development Partners: In Downtown Chicago, where land is at a premium, vertical data centers are necessary to properly serve downtown customers with a reduced building footprint. Metro Edge will be only the second purpose-built data center in Chicago, with the majority of downtown facilities within repurposed buildings. The benefits of a vertical data center design include power density efficiency (“watts per acre”), energy efficiency, improved airflow, and certain end-users prefer the vertical design for artificial intelligence use.

"In Downtown Chicago, where land is at a premium, vertical data centers are necessary to properly serve downtown customers with a reduced building footprint. Metro Edge will be only the second purpose-built data center in Chicago, with the majority of downtown facilities within repurposed buildings."

Chicago Industrial Properties: How did Metro Edge and the design team work to ensure that the data center’s design blends seamlessly with the neighborhood and community? What elements were essential in achieving this?

Chicago Industrial Properties: Your website mentions considering glass as a prominent design feature initially. Can you elaborate on why it was ruled out in favor of security, and how the final design balances aesthetics and security?

Metro Edge Development Partners: Most data centers look like concrete bunkers and the IMD was not interested in an industrial facade. Our design team is led by Corgan, the highest-ranked data center architect in the U.S., with over 30 million square feet of data center space completed. We leveraged their expertise and creativity, and Corgan and our engineers studied the IMD’s guidelines. They drew inspiration from other modern vertical data centers (such as Georgia Tech’s Data Center) and various buildings within the IMD (such as Rush Hospital’s new Cancer Center). Essential elements included the tall glass façade lobby on the prominent corner of Hastings and Damen, hiding the equipment yard, truck dock, parking area away from Damen Street, and metal panels, lighting, and brick to achieve a timeless but modern look.

Metro Edge Development Partners: Ultimately, the glass façade for the entire data center would be cost-prohibitive, and we decided to allocate more of the budget to the building’s security. Glass is typically great for natural light, but this was a curtain glass that only covered the more rigid building shell. Floors 2-5 are dedicated to data hall, which can’t have windows due to environmental control and physical security. Our civil engineers at Kimley-Horn did a first-rate job of balancing aesthetics and security with the landscaping and sitting wall we previously mentioned. Chicago Industrial Properties: Could you describe the design development process, including the number of concept iterations and the key factors that influenced the selection of the “Pixel” design option?

Metro Edge Development Partners: We had many creative sessions with Corgan and our construction team before they sent us five design “finalists” (below). From these five, we selected Pixel for its simplicity, timelessness, security, and costs. Pixel’s large front face also resembled a “blank canvas” with many options for lighting, building materials, night effects, etc. Corgan then created variations of Pixel until our team selected the current design. Chicago Industrial Properties: The final design incorporates a mix of building materials, including bricks, metal panels, and glazing. Can you share how these materials were chosen and what role they play in achieving the desired look and feel of the data center? Metro Edge Development Partners: This mix of building materials is the optimal balance of aesthetics, security, and costs. The brick-reinforced concrete and metal paneling portray an image of “strong security,” one of our highest priorities for our customers. As you approach the building's entrance, you're greeted by a welcoming and spacious lobby area, where the use

of glazing allows for natural light into our front desk and customer’s office space. Metro Edge and the IMD wanted an appealing entrance and lobby on the corner of Damen instead of the unpleasant “concrete bunkers” we’re used to seeing for data centers. We believe the metal paneling is visually pleasing, textured, sleek, polished, and durable exterior. The metal panels will be meticulously designed to create an artistic play of light and shadow as the day unfolds. Chicago Industrial Properties: The use of exterior lighting to give the building a pulse and celebrate local events is intriguing. Could you explain more about this lighting concept, its programming, and how it enhances the community-focused design? Metro Edge Development Partners: You have described the purpose of the exterior lighting perfectly—give the building a pulse and enhance the community-focused design. The exterior LED lighting will interact with Chicago culture, like turning green for St. Patrick’s Day and supporting our professional sports teams with orange and blue for Bears’ wins.

A Pioneer in Logistics Real Estate Serving the Midwest Region

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New Development Showcase: Dermody Properties’ The Logistics Campus By Mia Goulart, Senior Staff Writer

The Logistics Campus Building Rendering. Courtesy Dermody Properties.

The Logistics Campus, a planned, 10-building development, is located at the site of the 232-acre former Allstate Corporation headquarters in Glenview, Illinois. Once completed, it is estimated that The Logistics Campus will create jobs for more than 1,900 full time employees and generate millions in additional tax revenue that can go towards supporting schools and other local taxing districts. Answers provided by Neal Driscoll, Midwest Region Partner at Dermody Properties Chicago Industrial Properties: Could you provide more details about the vision and objectives behind The Logistics Campus project, and how it aligns with the continued trends in work from home and e-commerce? Dermody Properties: The Logistics Campus is designed to serve logistics customers seeking to provide immediate access to local consumers, including the high density and affluent communities of the northern and northwest suburbs of Chicago. This redevelopment project stands at the intersection of two significant and durable trends – workfrom-home and e-commerce. Much of this goes back to the broader secular change around consumer behavior. This change, how consumers acquire goods over the last eight of 10 years, was turbo charged during

the pandemic. Our customers, which are e-commerce and omni-channel retailers, are finding that much of that demand experience is holding and anticipate the demand will remain. They are working to optimize their supply chains and warehouse networks. What they really want is to be close to their customers. They want to be able to compete on delivery. These customers, our customers, want to be closer to the end customer. The Logistics Campus allows them to do just that. Chicago Industrial Properties: The campus offers a range of building sizes, clear heights, and other features. How did you determine these specifications, and what benefits do they offer to potential tenants? Dermody Properties: The buildings in Phase 1 are designed to accommodate different end users. We intentionally designed the buildings so they would provide for a diverse tenant roster. Some buildings have off building trailer parking stalls which are beneficial to logistics operations, while others do not. Typically larger tenants require deeper buildings to maximize their operating efficiency, so they will gravitate toward larger building footprints like Buildings 3 and 5, while smaller tenants will gravitate to smaller footprints like Buildings 2 and 4.

Chicago Industrial Properties: A press release detailing the groundbreaking mentions flexibility in accommodating built-to-suits. Can you elaborate on how the campus is designed to meet the diverse needs of users in terms of size and specifications? Dermody Properties: The later phase of The Logistics Campus is essentially a very large rectangle which allows for a great deal of flexibility to build something large, or a series of smaller buildings like Phase 1. Additionally, we have flexibility to build up to 120’ of exterior building height on the balance of the campus which could be highly advantageous to operators utilizing sophisticated racking systems, or mezzanines, as examples. Understanding our customers’ physical requirements is key to our success. Our experience enables us to know what our customers need in a building. That understanding, combined with a willingness to take strategic risks, have led to speculative and build-to-suit success in key markets throughout the U.S., including the Midwest. The project design also incorporates highly attractive exteriors and will benefit from the repurposing of existing mature landscaping and ponds to ensure the new development seamlessly integrates into the community from a visual perspective.

Whenever possible, the majority of the project’s building layouts will be intentionally designed to consolidate truck traffic within the internal section of the campus. In addition, we anticipate project traffic counts at full buildout are likely to be lower than the peak usage of the existing office campus. Chicago Industrial Properties: The planned facilities are described as Class A with energy-efficient designs. Can you discuss the specific energy-efficient features and technologies that will be incorporated into the buildings? Dermody Properties: Environmental, social governance is a strategic priority for Dermody Properties. One of the ways we develop sustainably is to use or recycle material that’s on the existing properties. At The Logistics Campus, we’ve done this by recycling everything we could. From the steel at the site to interior items like sinks, toilets and doors, which were sold to salvage companies— everything is evaluated for possible reuse or recycling. We even reused the concrete gathered during demolition, grinding it up and using it as fill on the site. Minimizing waste is crucial. In Dermody Properties' owned and managed properties, which includes The Logistics Campus, we are committed to encouraging customer energy reduction, in addition to building upgrades and features including:

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Dermody Logistics Campus Allstate Demo. Courtesy MillerMiller Architectural Photography.

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• The buildings are structurally designed to accommodate the additional roof load weight of solar panels, to be ‘solar ready.’ Chicago Industrial Properties: The campus is expected to create jobs for more than 1,900 full-time employees and generate additional tax revenue. How do you plan to engage with the local community and ensure a positive impact on the region? Dermody Properties: The conversion of the office campus–with buildings dating back to the 1960s and 70s–to modern logistics buildings offers benefits to the community, which Dermody Properties has been engaged with since the concept of the campus was first presented. During the public process, which lasted about a year, we encouraged the surrounding communities to come out and meet us—to talk to us and be open-minded about what we were offering their community and to what we were looking to do with this vacant and older office campus. Several discussions were held with the Village of Glenview and with neighboring businesses. The U.S. economy is witnessing a resurgence of what is commonly referred to as on-shoring, and near-shoring of industrial uses. These include light manufacturing, assembly, food and beverage production, and a host of additional, value-add industrial operations which provide great employment opportunities. And in addition to the jobs, they bring workers to the community who spend their money in the local community patronizing restaurants, grocery

Site Plan. Courtesy Dermody Sanders.

shopping, etc, all of which add to the local economy. When fully complete, The Logistics Campus will result in increased tax revenue for the local taxing districts– including school districts–compared to the past campus structures. While it is estimated that The Logistics Campus will create jobs for more than 1,900 full time employees, it is also estimated to generate $134 million in additional tax revenue that can go towards supporting local schools. Chicago Industrial Properties: The preservation of mature plant life and trees on the site is also mentioned as part of the project’s design. Can you explain the significance of this preservation and how it contributes to the overall project? Dermody Properties: When meeting with the local community, Dermody Properties heard from many people how important it was to preserve the atmosphere of the park-like campus. As a result, Dermody Properties will preserve 50 years of mature plant life and ground cover on the periphery of the site. We created and relocated

dozens of trees that surrounded the office buildings to an on-site nursery. Once we landscape the future buildings, those trees will be relocated to their future homes along the parkway and around the buildings. By doing this, we are accelerating decades of tree growth compared to planting new, low caliper trees to maintain the character and views of The Logistics Campus in a similar fashion to the former office park, an important commitment we made at the start of the project. Chicago Industrial Properties: Can you provide more details on the accessibility and benefits of its location, particularly its proximity to O’Hare International Airport and Downtown Chicago? Dermody Properties: The North Suburban O’Hare Industrial market of Chicago extends along I-294 from I-90 to the south to Lake Cook Road to the north. This is the best performing submarket in Chicago in terms of vacancy rate and currently is the lowest in the entire metro market. This market benefits from excellent access to O’Hare International Airport and the CBD of Chicago and is home to some of the area’s largest middle- to upper- income residential

neighborhoods. The Logistics Campus is located in the heart of the market along I-294 and Willow Road between the Wheeling/Northbrook markets, the Niles/Skokie markets, and the Des Plaines/Elk Grove Village markets to the south. Its access to transportation, labor and amenities is unparalleled relative to the entire metro Chicago market. Chicago Industrial Properties: As of this time last year, construction had already begun on several buildings. Could you share an update, including the timeline for the project’s completion and any plans for remaining acreage? Dermody Properties: Currently, we are working through demolition, north to south, clearing all buildings required for development. We are sequencing buildings a bit differently than first anticipated. Building 5 is almost shell complete and panels are going up on Building 3. The balance of Phase 1 slowed a bit due to delays in permitting, however, it is back on track and we feel good about delivering all five buildings, which are part of Phase 1, by early next year. Chicago Industrial Properties: Of course, if there's anything else you want to mention outside of these questions, you are more than welcome. Dermody Properties: Right now, for The Logistics Campus, we are seeing strong interest from specialty light manufacturers including the food and pharmaceutical industries, in addition to logistics companies. Most recently, UPSIDE Foods selected The Logistics Campus as the location for its Midwest headquarters. Demand and absorption has remained positive in the Midwest. While there was peak supply in 2022, less will be delivered in 2023 given interest rates, cost of debt and cost of equity. We think we’ll be delivering when there will be fewer options. When we say there’s been a little tapering—that’s off of very, very high levels of absorption and growth—particularly in the infill markets, which is very hard to replicate.

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Expert Perspectives: Investment Outlook By Mia Goulart, Senior Staff Writer

023 stood out as a significant year for the sector, and while things are constantly changing, enthusiasm for what's in store remains undiminished. Recently, we turned to experts from three leading firms to explore investment trends and discuss the anticipated outlook for the coming year. Chicago Industrial Properties: Looking ahead to 2024, what are your expectations for rental rate trends in the Chicago industrial market? How do these predictions compare to recent years, and what factors are driving these expectations? Robert Smietana, CEO and President, HSA Commercial Real Estate: We’re still seeing healthy increases in rental rates, and we don’t think that’s going to change in 2024. For most renewals, the new rent is minimally 20% higher than the current rent. While a number of speculative projects have delivered this year, increasing vacancy, construction starts have slowed, which will drive

HSA Commercial Real Estate recently completed Delany Commerce Center II, 2451 N. Delany Road, Waukegan, Ill. (Credit: Premier Design + Build Group)

"2021 and 2022 saw record amounts of new supply come to market and even higher net absorption as vacancy plummeted to the lowest levels on record." demand for space in 2024 and 2025. This should shift the market back in landlords’ favor. Tyler Ziebel, Vice President, Colliers: Chicago user markets, along with nearly all industrial markets throughout the U.S., were supercharged in the months following the initial COVID-19 breakout. Consumer and business trends during

that time, (onshoring, work from home, e-commerce, home delivery, etc.) combined with all-time low interest rates, all lent to a frenzied leasing environment from industrial users in virtually every submarket across the Chicago MSA. 2021 and 2022 saw record amounts of new supply come to market and even higher net absorption as vacancy plummeted to the lowest levels on record

and market rents shot upward, particularly in core submarkets. As rates began to rise at an unprecedented pace in 2Q 2022, and continued in 2023, we have seen a notable slowdown from both users and developers. Market wide absorption sits at roughly half of what it was this time last year as tenants contemplate the possibility of a recession and battle increased lending costs. We

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HSA Commercial Real Estate is developing Highland Commerce Center of Somers at 2655 113th Ave. in Kenosha, Wis., which will be one of Wisconsin’s largest-ever speculative industrial buildings. (Credit: Premier Design + Build Group)

generally expect that trend to continue, as it appears rates will remain at elevated levels for the foreseeable future. This will be somewhat offset by the complete disruption of the construction pipeline as construction starts have halted across the market which will have a significant impact on the supply going forward in the next three years.

Chicago Industrial Properties: In terms of vacancy rates, what trends are you anticipating for industrial properties in the area in 2024, and how might these trends be influenced by market dynamics and economic conditions? Smietana: In the near term, vacancy rates are going to increase and that’s

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showing up right now. Third-quarter vacancy rates were around 5%, according to Colliers’ most recent Chicago Industrial Report. Next year, vacancy may climb to 6.5% or 7%. Historically, that’s not high, but it’s a reversal of the downward trend we’ve seen in recent years. The Fed policy on interest rates not only affected real estate developers, but

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it also has impacted tenants and their suppliers. So, there’s going to be more prudent expansions even by the tenants because their bottom line has been hit by increased labor and borrowing costs.

INVESTMENT (continued on page 11)

SINCE 1973

Park 94, Building IV: In August, HSA Commercial Real Estate completed Park 94, Building IV, 975 Carrington Blvd., Mt. Pleasant, Wis. (Credit: Premier Design + Build Group)

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INVESTMENT (continued from page 11)

"Most completed developments

Ziebel: We expect vacancy to tick up nominally, largely due to new construction deliveries. For the time being, tenant demand seems stable on existing space and virtually all of the core submarkets continue to benefit from near record low vacancy rates. While we don’t expect to see anything near the frenzied leasing activity of the post-COVID period, user fundamentals remain positive across the market. Chicago Industrial Properties: Are there any noteworthy policy changes or regulatory developments on the horizon that could impact industrial investments in the region in the coming year? Ziebel: The most significant policy change across our market is Chicago Mayor Brandon Johnson’s “Mansion Tax” that was recently approved on November 7 and will be voted on this coming March. The proposed bill would quadruple the transfer tax on the sale of real estate over $1 million from .75% to 3%. The increase will have a meaningful impact on the sale of virtually all Chicago commercial properties and have a direct effect on the underwriting of city properties. Chicago Industrial Properties: Given recent economic shifts and potential uncertainties, how do you assess the overall risk and return profile for industrial investments in the coming year, and what strategies should be implemented to manage these risks effectively? Smietana: Most completed developments have locked in low interest rates, but when the term expires, many loans

have locked in low interest rates, but when the term expires, many loans will be going from 3.5% to around 7%." Robert Smietana

will be going from 3.5% to around 7%. That clearly impacts viability for projects that have not yet broken ground and profitability in the case of existing assets. It’s another factor that is increasing rental rates. As interest rates have increased, cap rates have also increased, putting downward pressure on property values for most stabilized assets—at least temporarily. Ziebel: Risk mitigation has largely come in the form of a nationwide pricing reset across the board for industrial (and other) real estate assets. Put simply, the rising rate environment and persistent volatility has had a tremendous impact on investor underwriting in the form of increased lending costs today and the threat of even higher interest rates tomorrow. Investors have responded with more conservative underwriting both on debt and market assumptions. We expect that to continue until the capital markets find stable footing.

Chicago Industrial Properties: What key factors are contributing to the continued enthusiasm for industrial real estate investment in 2024? Are there specific drivers or market conditions that make this sector particularly attractive? Smietana: Enthusiasm for industrial continues for a lot of the same reasons we saw prior to the pandemic. While consumers have returned to brick-andmortar shops, e-commerce is still forecasted to constitute 41% of global retail sales by 2027, a significant increase from its share of just 18% in 2017, according to new research from Boston Consulting Group (BCG). So, despite headwinds, the demand for goods bought online that need to be delivered on increasingly shorter time frames will continue fueling demand for industrial in the years to come. The scars of the pandemic are also driving activity. Because of resulting supply chain disruptions, a

lot of businesses and manufacturers no longer want to source all their raw materials or goods from overseas. The onshoring or nearshoring of supply chains is also increasing the need for modern manufacturing and warehouse space. Ziebel: While today’s investment numbers for 2023 will look somewhat dismal, there are a number of very positive undercurrents persistent throughout the market. COVID put a spotlight on the industrial sector for investors as the user markets exploded upwards across the country. While those fundamentals have slowed from the frenzied pace of 2021 and 2022, the development pipeline and new starts on projects have followed suit (albeit for different reasons). The net effect of this is that Chicago has largely remained in balance from a leasing perspective. Vacancy remains near record lows. Square footage currently under construction continues to drop. Asking rates remain at record highs.

NOV EMBE R/D E CEM BER 2023 CHICAGO I ND USTR I AL P R O P ER TI ES Chicago Industrial Properties: How do you see the overall investment landscape evolving for industrial properties in the Chicago market? Are there any emerging trends or strategies that investors should consider as they plan for the new year? Smietana: The investment market has stalled, and there’s a lot of price discovery underway. No one really knows the current value of an asset because there haven’t been many comparable sales. Most investment brokers I talk to say their business is down 50% or more. It could even go lower as core investors and institutional money stay on the sidelines because they’re afraid of what’s going on in the overall commercial real estate industry. I don’t see conditions changing quickly. It doesn’t mean properties won’t get sold. It just won’t be as common or happen as quickly as in recent years. Ziebel: With construction starts at their lowest level in decades for much of 2022 and all of 2023, it will be interesting to see the whip effect the lack of upcoming supply will have in the next two to three years. Chicago’s construction pipeline is already 30% lower than it was just last year as those buildings started in 2020/2021 are brought to market. That

"While today’s investment numbers for 2023 will look somewhat dismal, there are a number of very positive undercurrents persistent throughout the market." pipeline will continue to drop as space is delivered and new projects stay on hold. The net effect of this, even with modest demand from users, will be a total lack of supply in the next two to three years across the Chicago market and particularly in Chicago’s best, most desirable submarkets. Chicago Industrial Properties: With 2023 being a significant year for the sector, what lessons or insights from the past year do you believe will be most valuable for investors as they

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navigate the opportunities and challenges of 2024? Smietana: We’ve all had a dose of almost zero interest rates for many years. Now we’ve been reminded that rates do go up. Having a low-leveraged investment is always better than a high-leveraged one. Higher-leveraged buyers and owners will have an awakening when their loan comes due. For an 80% loan, it’s shocking, but for a 50% loan, it isn’t as terrible.

Rick Daly President

Ziebel: 2023 largely saw a “back-tobasics” approach to Chicago industrial underwriting. Outrageous market assumptions tempered. Building basis became a focus. Debt underwriting and sources of capital became incredibly important. For all intents and purposes, 2023 felt like a bit of a reset from the frenzied (and frankly, unsustainable) buying environment of the previous two years and a transition back to the stable pricing environment seen in the years immediately preceding the pandemic.

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It’s all in the numbers: An analysis of the current industrial market, with insights from Savills and JLL By Mia Goulart, Senior Staff Writer

Jacques Dillies via unsplash

ransformation is the current buzzword when discussing the regional industrial market as it continues to navigate a delicate balance between rising vacancies, cautious landlords and a surge in speculative development.

JLL’s report presents a parallel narrative with a spotlight on Chicago’s delivery of 12.8 million square feet in Q3, marking the highest volume since Q1 1999. Anticipation of another 12.6 million square feet by year-end, with 75% being speculative, contributes to a surge in supply. This surge, predominantly speculative in nature, has influenced the vacancy rate, with increased by 75 basis points to 3.8%. Net absorption remains positive at two million square feet, driven by significant moves from Target and Amazon rather than new tenant demand.

Yet as the market persists in its cyclical ebb and flow, change is unavoidable. But while navigating this evolution comes with a degree of uncertainty, it doesn’t necessarily imply negativity, as highlighted throughout this issue and supported by reports from leading firms like Savills and JLL. Firstly, Savills’ reported that while vacancy rates rose by 40 basis points to 5.1%, the resilience of landlords in maintaining face rents is notable. That said, despite the five-quarter trend of rising or stable vacancy, landlords appear cautious, opting for a wait-andsee approach rather than aggressive renegotiations. The slowing leasing activity, particularly among large occupiers, has contributed to a landscape where concessions, including tenant improvement allowances and increased flexibility, are becoming more prevalent. Similarly, the development scene also reveals a pronounced slowdown as a response to uncertain demand and heightened interest rates. However, the cold storage segment in the Midwest is poised for growth, with built-to-suit developments expected to rise to meet

Leasing activity in Q3, however, witnessed a substantial drop to 4.7 million square feet, reflecting weaker demand, especially in the big box segment, where no new leases were signed. Despite this, asking rents experienced modest growth, rising from $6.98 per square foot net in Q2 to $7.05 per square foot in the current quarter.

the heightened demand in this sector. Additionally, the sublease market is experiencing an influx, adding over one million net square feet in the Q3 alone, including several listings exceeding 100,000 square feet. Savills also reported that capital markets, affected by high-interest rates, are exhibiting signs of recovery. The

I-55 Corridor submarket witnessed notable improvement in the Q3, with Sarofim Realty Advisors’ acquisition of a 550,000-square-foot portfolio in Hodgkins marking a significant transaction at $44.6 million, suggesting that, despite challenges, the industrial sales market is moving towards revitalization.

The capital markets scene, as highlighted by JLL, showcases three portfolio sales in Q3, with IDI Logistics’ four-building portfolio sale in the I-80 Corridor to EQT Exeter standing out at $98,900,000. Looking ahead, speculative development completion in Q4 is expected to impact both vacancies and rents. The manufacturing sector, driven by the surge in demand from EV battery and car manufacturers, is a bright spot in an otherwise complex landscape.

NOV EMBE R/D E CEM BER 2023 CHICAGO I ND USTR I AL P R O P ER TI ES COLD STORAGE (continued from page 1)

In the same vein, Basile dispels the notion of specialized cold storage facilities for vaccine storage, amplified during the pandemic, noting that advancements in vaccine development and the evolving nature of vaccines render such facilities unnecessary. “During COVID there was a lot of talk about special-purpose, very cold facilities being needed for vaccine storage,” he explains, “but that never materialized due to multiple factors. Vaccines were developed that didn’t need to be held at such low temperatures, and the ability to ‘stockpile’ vaccines isn’t effective because these vaccines are constantly evolving, much like the flue vaccine.” However, Basile’s sentiment does underscore the industry’s continuous pursuit of efficiency and sustainability. With large food manufacturing companies adopting ESG mandates, cold storage facilities are incorporating renewable energy sources like solar and wind. Additionally, there’s a shift towards using new, environmentally-friendly refrigerants, demonstrating a commitment to environmental responsibility. Strategies to enhance flexibility are also being adopted. Multi-temperature storage, while not a new concept, is evolving. Facilities are now designed to be “convertible,” capable of zoning and running as either a freezer or cooler, meeting the varied needs of tenants while aligning with the desire for standardization from landlords. Simply, given the competitive nature of the cold storage industry, companies are strategizing to stay ahead of the curve.

"The industry has seen substantial consolidation at the top, which has opened the door for new operators to enter the market." “The industry has seen substantial consolidation at the top, which has opened the door for new operators to enter the market,” Basile says. “These players, often partnered with private REITs or private equity firms, offer flexibility and healthy competition.” Looking ahead, Basile sees opportunities in developing urban infill projects, but it requires specialized expertise. Urban infill projects involve complex processes like demolition, environmental remediation and zoning approvals, underscoring the importance of experienced partnerships. The same goes for the manufacturing/ transportation subsector, according to JLL Managing Director Keith Stauber.

mate and Equitable Jobs Act (CEJA) and the Reimagining Energy and Vehicles Act (REV). While CEJA offers rebates for electric cars, parking station funding, and clean energy workforce training programs, the latter specifically targets companies that manufacture electricity-powered vehicles; EV component parts; battery lifespan solutions; battery raw materials refining solutions; and charging stations. These incentives have already catalyzed significant deals, such as the $2.2 billion Goshen transaction in Mantino, Illinois, set to create over 2,600 jobs.

Manufacturing/Transportation

But Illinois’ historical legacy in manufacturing, central location and proximity to renowned research universities also contribute to its attractiveness for electric vehicle manufacturers.

Illinois has emerged as a hub for electric vehicle manufacturing and related technologies with the help of legislative catalysts that play a pivotal role in attracting businesses to the state.

“We have a legacy that contributes to the success of the new automobile groups coming into play as we continue to implement clean energy practices,” Stauber says.

Stauber says Illinois’ success in attracting electric vehicle manufacturers and suppliers can be traced back to two essential pieces of legislation— the Cli-

Of course, like the cold storage sector, sustainability is a common thread. Stauber highlights that manufacturers are incorporating eco-friendly prac-

tices into their production processes, aligning with the broader theme of environmental friendliness. Furthermore, Illinois’ abundant clean energy resources, including solar, wind turbines, and nuclear energy further contribute to the state’s appeal, resulting in federal recognition, being named a “regional clean hydrogen hub,” along with Indiana and Michigan, in October 2023. Lastly, Stauber emphasizes the role of public-private partnerships in supporting this innovation and growth. “Seeing Illinois’ utility companies, development authorities, and state and local entities collaborate closely is exciting,” he says, “both as a professional in the industry and a resident of the area.” And so, though the cold storage and manufacturing/transportation subsectors navigate diverse challenges, the common theme is adaptation. As cold storage aligns with changing consumer preferences and embraces sustainability, the manufacturing/transportation sector positions itself as a pioneer in the clean energy transition. The integration of these trends paints a picture of resilience, showcasing how these industries are not just reacting but proactively shaping the future.

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The fourth quarter push: Close what you can, pave the way for 2024 By Michael Millar

t’s that time of year. Kids are back in school, summer office hours have reverted back to full day Fridays and playoff baseball and football are in full swing. The march to year end is underway. Regardless of a company’s role in commercial real estate, the focus now is pushing to meet year-end goals (or get as close as possible) and/or working to build a pipeline for 2024. It’s an annual ritual that has been made more challenging by economic factors that have seen yearover-year activity levels fall from the recent boom period. “When the year is done, and all transactions have been recorded, the industry datapoints will show a very good year on the heels of several outsized great years,” said Robin Stolberg, managing director of acquisitions, Clear Height Properties. “And, we still have work to be done and opportunities to pursue.”

Tom Barbera

Alfredo Gutierrez

“There is still competition for most every acquisition, but instead of having half a dozen suitors for a deal, there may only be three,” Stolberg said. “It’s a bit of a reality check, especially for smaller, non-institutional private sellers who don’t transact a large volume of deals.” Hugh Williams, managing member, KWILL Merchant Advisors, said, “Whether you represent tenants or landlords it’s important to get m deals done and not have them linger. We live in a market where deals are getting more difficult to uncover. This is a time that is testimony to the old real estate adage that time kills all deals.” Williams also noted that KWILL’s real estate division, a relatively new entity, is in a different situation than many older and established firms. “It’s not just a matter of completing the deals that are out there, it’s also focusing on building

Hugh Williams

“We will get back to normal, but the markets need flushing out.” For companies like Industrial Outdoor Ventures (IOV), laying the foundation for the next year may be as much about creating their own opportunities as anything else.

Pesky inflation and interest rate increases have led to a widespread slowdown in development, lease and sale activity. When viewed through a narrow window of time, as opposed to a 10-year average, one might characterize activity as volatile. Contributing to that, industrial activity in Chicago, and in most markets across the country, can easily be skewed when the volume of substantial portfolio sales and gigantic distribution center leases falls off. Stolberg notes that Clear Height, which focuses on multi-tenant industrial investments, is on track to achieve its leasing and acquisition goals. He also reflected that the company and the industry in general are working harder to close deals.

Robin Stolberg

IOV has been one of the frontrunners in the explosive industrial outdoor storage (IOS) segment of the industrial market. Traditionally the firm has primarily focused on targeted acquisitions of existing product across the country.

Cytonn Photography via unsplash

the business. That requires maintaining something of a chip-on-the-shoulder edge to make things happen whether it's dealmaking or relationship building.” We are building a brand, which means we are forced to be contrarian by necessity and grow, it's a lovely place to be. As companies look at production goals and how the year has taken shape, there has been a lot of talk about the weakness of the market. Although there is a reality to that, Williams says the facts are the facts. “If you are a big developer, investor, or user in the market, you may not have to do anything. Big guys can weather the storm a little differently. But if you are small to md-size, you must slug it out or risk the alternative. The alternative being exiting the business.” Williams said. Stolberg, a veteran of Chicago’s industrial sector, is relatively unfazed by the current factors influencing the market. “There always seems to be something going on,” he said. “The market takes notice and adjusts. It’s all about rolling with the changes.”

The dynamics of the current industrial market are polarizing to some in the industry. Alfredo Gutierrez, the founder and CEO of SparrowHawk, said, “I have never been more excited and at the same time, more concerned, about the industrial market than I am now.” He explained by saying he’s grateful to be an investor in industrial real estate where there is positive cash flow, strong fundamentals, and still plenty of longterm runway for growth. “We’re also seeing the effects of great inflation on tenants and the economy,” he said. “Clearly, we don’t want things to break. It’s not broken yet, but we could be on the brink.” In Chicago SparrowHawk’s portfolio is fully leased. With the cost of funds for acquisitions high and the bid-ask spread still wide, Gutierrez characterizes this as a time when patience is the operative word. “This is not a normal time. For a lot of people, it’s still pencils down,” he said.

Increasingly, however, a significant focus of the firm has been to launch and/or execute several redevelopment and groundup development projects which are setting the table for leasing activity in 2024. Part of that pipeline includes a significant new IOS development in Zion, to serve industrial users at the Illinois-Wisconsin border. Combined, the two projects at IOV’s Trumpet Park, could offer almost 1,200 truck trailer parking spaces, more than 26,000 square feet of maintenance and service buildings and have a total project cost in excess of $35 million. “We’re not necessarily looking to accelerate the close of 2023, but we are really excited about the prospects of 2024,” said Tom Barbera, CEO, Industrial Outdoor Ventures. “We’ll be delivering new projects in Illinois, South Florida and California and aggressively looking at acquisitions. It looks to be an exciting time.” Adding further perspective to “slugging it out” to meet sales goals, lay next year’s foundation and navigate prevailing market conditions, Williams said, “The challenging times are when you see the separation of talent and creativity in the market. When everyone is fat and happy it’s easy to feel good about yourself. We all need to be a little, or more than a little, hungry.”

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NEWS BRIEFS: The latest deals in Chicagoland Fulton Street Companies breaks ground at 919 W. Fulton Street in Chicago

• Architect of Record: FitzGerald Associates Architects; initial design provided by Morris Adjimi Architects • Structural Engineer: Thornton Tomasetti • Civil Engineer: Eriksson • MEP/FP Engineer: Syska Hennessy Group • Landscape Architect: Site Design Group, Ltd.

Entre was successful in identifying a need for fleet maintenance and outside storage capabilities along with flexible unit sizes. Entre’s Cory Kay and Mike DeSerto represented the landlord in this transaction.

Midwest Industrial Funds breaks ground on 334,229-square-foot business park redevelopment

Delivery is expected in 2025.

eXp Commercial sells net-leased industrial property in Gurnee Fulton Street Companies celebrated the ceremonial groundbreaking of Chicago’s newest office development, 919 W. Fulton Market. The 409,000-square-foot building is the first new office development to break ground in the city in more than a year. Dignitaries joining Fulton Street Companies Founder and CEO Alex Najem at the event were Alderman Walter Burnett (27th Ward), SNK Capital’s Shanna Khan, Skender Vice President Alex Panici, and JDL CEO Jim Letchinger, among others. “Today’s groundbreaking event is a huge win for the city,” said Najem. “We have assembled the very best team to bring the newest building in Fulton Market to life. Without these partners, especially Shanna Khan/ SNK Capital, whose belief in and commitment to the project is unwavering, and Alderman Burnett, who continues to champion growth in the neighborhood, we would not be here today. To each and every one, I say thank you for making this ambitious and remarkable development a reality for our great city.” When complete, the amenity-rich building will capture the essence of the neighborhood with its factory style storefronts, architectural masonry, and large outdoor terraces on each floor. With special attention to health and wellness, and environmental impact, Fulton Street Companies will pursue WELL and LEED Silver certifications. Notable tenants include Gibsons Restaurant Group and Harrison Street Capital. “Fulton Market is an exceptionally special and unique neighborhood,” added Khan, who serves as lead equity investment partner and chief design officer for the project. “The energy is electric the moment you arrive and, once you’ve visited, it becomes a destination. That’s why I’m passionate about 919 W. Fulton. To do something extraordinary, it takes a village. Today, we are no longer talking about what’s possible … together, we are making it happen.” Along with SNK Capital, financing for the project is being provided by Bank of the Ozarks and Manulife, with development services provided by FSC and Chicago-based JDL Development. Additional partners on the project are: • General Contractor: Skender

eXp Commercial, the fastest-growing national commercial real estate brokerage firm, announced the sale of an 18,504-square-foot net-leased industrial property located at 940 Lakeside Drive in Gurnee, Illinois, for $1,275,000. The property, a single-tenant net-leased industrial property occupied by Akhan Semiconductor, was exclusively listed and sold by Randolph Taylor CCIM, senior associate and commercial real estate broker with the eXp Commercial Chicago office.

Entre finalizes lease at new truck maintenance facility in Bartlett

Midwest Industrial Funds hosted a groundbreaking event on Wednesday, November 1, with their project team and local government officials to launch their latest high-profile, Class A spec redevelopment, Libertyville 45 Corporate Center which is located at 1850 US 45, Libertyville, Illinois, adjacent to the Libertyville/ Canlan Sports Complex. Situated on a high-visibility 19-acre site, the two-building redevelopment consists of 169,065-square-foot and 165,234-square-foot buildings which are being constructed on a speculative basis and are suitable for a multitude of uses including corporate headquarters, distribution, assembly, and manufacturing. The high-image pre-cast concrete and glass facilities feature 32-foot clear ceiling height, up to 24 dock positions per building, above-standard 372 car parking and up to 4,000 amps of power per building. The buildings are divisible and will be shell complete in Summer 2024. The site was previously a driving range and miniature golf facility owned and operated by the Village of Libertyville. MIF Construction LLC is the design-build general contractor for the project with Pinnacle Engineering and Partners in Design providing engineering and design services. The Cushman & Wakefield team of Keith Puritz, Brett Kroner, Eric Fischer, and Marc Samuels are marketing the buildings for lease or sale on behalf of Midwest Industrial Funds.

Entre Commercial Realty is pleased to announce that it has successfully completed the lease of half of the new 24,762 square foot multi-tenant facility located on 6.4 acres at 480 Miles Parkway in Bartlett, Illinois. The tenant leased 12,381 square feet along with additional trailer stalls within the facility that was recently completed in September of 2023. It is one of the premier truck maintenance/trailer parking facilities in Kane County. The building is designed specifically for small to midsize transportation tenants and comes equipped with six maintenance bays, two docks, and over 90 trailer positions.

Avison Young arranges new lease of mixeduse industrial property in Hanover Park Avison Young has arranged a new 160,419-square-foot lease in an industrial building at 6450 Muirfield Drive in Hanover Park, Illinois, on behalf of the landlord, LBA Realty, LLC. The lease represents a consolidation of two nearby facilities and will act as the corporate headquarters for the occupier, a top provider of cutting edge engineering, fleet management, and labor optimization services. LBA Realty, LLC was represented by Principals Brian Colson and Brian Pomorski, both located in Avison

NOV EMBE R/D E CEM BER 2023 CHICAGO I ND USTR I AL P R O P ER TI ES

19 tailor its space to its specific requirements, and chart an exciting growth trajectory for 2024.” Relocating its headquarters from Melrose Park, Illinois, to Carol Stream, is in line with Zenger’s Inc. plans to modernize, prioritize business efficiencies, enhance its operational capabilities, ultimately positioning the company for sustained growth.

Young’s Chicago office. The tenant was represented by Corey Chase of Newmark. “While the Chicago-area industrial market remains strong, the Central DuPage industrial submarket affords very few opportunities of this caliber. We are happy that this property was the right fit for the space needs of the occupier,” said Colson. The industrial property sits on 10.62 acres and contains office space, 17 exterior docks and two interior docks, a 125-foot truck court, and 117 parking spaces.

Brown Commercial Group negotiates industrial building acquisition in Carol Stream In a market still characterized by strong demand, Chicago’s small to mid-sized industrial businesses are still forging ahead with plans for growth. Against

this backdrop, Brown Commercial Group negotiated an industrial building acquisition in Chicago’s DuPage submarket. Zenger’s Inc., represented by Broker Pat Crowley, has acquired a 13,369-square-foot industrial facility located at 775 Kimberly Drive in Carol Stream, Illinois. The building is located in the heart of the DuPage County growth corridor. The transaction reflects the growing trend among industrial businesses seeking to expand their operations. Zenger’s Inc. specializes in providing industrial equipment, metalworking tooling, and safety/PPE products. Their clientele includes small to large manufacturers, federal, state, and local municipalities, as well as commercial construction companies. Broker Pat Crowley expressed enthusiasm for this strategic move, stating, “This building offers an excellent opportunity for Zenger’s Inc. to modernize its operational footprint,

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Carol Stream is situated in the North DuPage industrial submarket, known for its expansive industrial infrastructure, connectivity to key transportation routes, and a property tax structure that is among the most favorable in the county. According to recent CoStar research, the North DuPage industrial submarket has a 3.6% vacancy rate, making it a draw for logistics and specialized industrial businesses. Logistics space accounts for 34.4 million square feet in the county as is the dominant subtype, followed by specialized industrial space (7.2 million square feet) and flex space (950,000 square feet). Notably, industrial rents in this submarket have surged by 8.4% over the past 12 months and 26.1% over the past three years. Current rents average approximately $9 per square foot, slightly more cost-effective than the broader Chicago market, where rents average around $9.30 per square foot. The seller in this transaction was effectively represented by Broker Justin Lerner of Transwestern Real Estate Services.

SIORs are the most capable and experienced office and industrial real estate advisors in Chicago. With an SIOR on your side, you are always moving forward.

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20 Lee & Associates of Illinois leases 87,640 square feet at 133 N. Swift Road in Addison

engineering, construction inspection and material testing services. • Unitrol Electronics, Northbrook

Lee & Associates, one of the largest national commercial real estate providers in North America, has fully leased 133 N. Swift Road in Addison, Illinois, in a longterm lease to an undisclosed electrical manufacturing company. Built in 2008, 133 N. Swift Road is a warehouse property set on nearly five acres in Chicago’s Central DuPage submarket. It features 29-foot ceilings, three interior docks and one drive-in door, along with 25,000 square feet of office space. It’s highly accessible location is visible from I-355.

Weber 55 Logistics Park is a 60-acre campus consisting of a 627,840-square-foot cross docked single-tenant building leased to RJW Logistics and a 270,000-square-foot rear-loaded building that was vacant at the time of sale. Centrally located along the I-55 Corridor, it provides users with convenient access to local, regional and national distribution points along I-80, I-355 and I-294 and is surrounded by a variety of distribution, manufacturing and ecommerce companies that are attracted to the location due to the interstate highway connectivity and Will County’s low taxes.

Jeffrey Janda, SIOR, principal, and Jeffrey Galante, SIOR, principal at Lee & Associates’ Illinois office represented the landlord. Noel Liston and Nick Krejci of Core Industrial Realty represented the tenant.

The I-55 Corridor continues to be one of the most active submarkets in the Chicago industrial market. Despite significant construction deliveries in the past few years, the vacancy rate remains among the lowest in the Chicago industrial market due to its strategic logistical location and ability to service the Chicago MSA.

Brown Commercial Group negotiates industrial building sale in Elk Grove Village

Clear Height Properties increases square footage leased by 80% year over year

An 11,000-square-foot renewal was completed with Unitrol who has been located in this building since 1989.

Unitrol is a manufacturer specializing in welding controls and process water chillers.

• Steve Maxwell Vintage Drums, Glendale Heights o

11,000-square-foot expansion and extension has been signed with Steve Maxwell Drums.

Steve Maxwell is expanding upon their drum studio, showroom and store which has consistently offered some of the rarest drums in the world.

Entre Commercial Realty leases 50,000-square-foot building in Wauconda

Entre Commercial is pleased to announce it has leased a 50,000-square-foot building at 1225 Karl Court in Wauconda, Illinois, to Cherokee Manufacturing. Entre was able to procure a tenant quickly after listing it. The free-standing building features 30-foot clear, six exterior docks, and one drive-in door. Brown Commercial Group negotiated a 20,000-squarefoot industrial building sale in Chicago’s O’Hare submarket. Vice President of Sales Mason Hezner represented Clear Height Properties, an industrial investment and management firm, in the purchase of an off-market property Hezner identified through his extensive network of industry connections. The building was purchased as a joint venture partnership between Clear Height Properties and Harbert US Real Estate, an entity sponsored by Harbert Management Corporation. The two-unit building at 500-502 Crossen Ave. in Elk Grove Village, Illinois, sold for $1.6 million. The building includes two, 10,000-square-foot units that are each fully leased. Unit 500 is leased to Polaris Worldwide Logistics and Unit 502 is leased to Cleaver Brooks Sales and Service, Inc. A five-year lease extension for Cleaver Brooks was negotiated as part of the transaction.

Colliers represents Molto Properties in sale of two new logistics facilities in Romeoville Colliers’ Jeff Devine and Steve Disse represented Molto Properties in the sale of two recently constructed, Class A industrial buildings totaling 897,840 square feet. The buildings are located in the Weber 55 Logistics Park at the corner of Weber and Taylor Roads in Romeoville, Illinois. The buyer was an institutional investor advised by Principal Asset Management.

Clear Height Properties completed 37 new and renewal leases totaling 205,000 square feet in Q3 2023 bringing the total to 767,000 square feet leased in 2023 compared to 425,000 square feet leased during the same period in 2022.

Brian Bocci, SIOR, of Entre Commercial Realty represented the landlord and Joe Karmin, SIOR, of Transwestern represented the tenant.

Lee & Associates of Illinois sells Class A office building for $3.52 million in Schaumburg

“There was a higher volume of tenant consolidations, subleases and relocations in the third quarter as higher interest rates have led to businesses making consequential real estate decisions,” said Clear Height Director of Leasing Max Hoye. “Our portfolio has delivered elevated absorption and retention metrics for 2023. We forecast that these positive results will persist as competing properties are frequently being removed from the market supply to make way for larger industrial developments.” Significant transactions in the third quarter of 2023 included: • J. Blanton Plumbing, Northbrook o

11,000-square-foot lease with a top-rated plumbing company that has been serving the Chicagoland area for three decades.

J. Blanton was represented by Steven Goldstein with Jameson Commercial and Brian Silverman with JBS Commercial Real Estate represented Clear Height.

• Wang Testing Services, Lombard o

10,000-square-foot renewal completed with Wang who specializes in geotechnical

Lee & Associates, one of the largest national commercial real estate providers, successfully negotiated the $3.52 million sale of a 106,380-square-foot, five-story office building at 930 National Parkway in Northwest Suburban Schaumburg, Illinois. The Class A office property is located adjacent to Woodfield Mall and was originally built in 1989 for Cellular One and subsequently occupied by Cingular and AT&T. Lee & Associates Senior Vice President Tony Russo and Vice President Ryan Freed represented the seller, Somoha, LLC. The buyer, National India Hub Foundation (a national Indian-American organization focused on local community outreach and volunteering), was self-represented. National India Hub Foundation is planning to convert the property to a multi-purpose

NOV EMBE R/D E CEM BER 2023 CHICAGO I ND USTR I AL P R O P ER TI ES community center to help unite and celebrate its culture. The facility will include a charity clinic, conference rooms, indoor sports center, auditorium, donation center, event space and more.

Entre Commercial Realty & DarwinPW Realty represent buyer in Melrose Park acquisition Entre Commercial Realty is pleased to announce that it

has recently completed the sale of a 28,123-square-foot industrial building and a separate 52,189-square-foot parking lot in Melrose Park, Illinois, at 1539 N. 25th Ave. to Interlake Mecalux, Inc. This is an expansion for Interlake Mecalux, Inc. who is one of the leading intralogistics technology companies worldwide. With locations in over 18 countries, the company designs and manufactures metal shelves, creates warehouse management software and provide many other storage solutions for businesses. Entre’s Denise Chaimovitz, SIOR, MA, and DarwinPW Realty/CORFAC International Vice President Terry Lynch, SIOR, were the brokers for the buyer. Paddy Dwyer and Joe Bronson of NAI Hiffman represented the seller, CDC Group LLC.

Entre Commercial Realty completes lease in Round Lake Beach

“This project is a great example of re-purposing a non-performing site. We demolished the former Comcast office facility which had been vacant for quite some time and worked closely with Stotan to address a myriad of planning and zoning matters as well as civil engineering issues. The stormwater management for the new industrial building is comprised of a complex combination of underground stormwater retention vaults and wet ponds” says Principle Senior Project Manager Jim Greco, who is the principal on the project. “The building’s attractive front elevation will give it maximum visibility from Wolf Road and have a great deal of flexibility to adapt to any tenants needs.” The industrial facility will boast 32-foot clear height, and two drive-in doors. To accommodate a variety of tenants the facility will include 2,000 amps of power and a roof-mounted MUA heating and ventilation system. A modern ESFR fire protection system, 45 mil EPDM ballasted roof, and 96 parking spaces, of which five are

handicapped, 28 trailer parking spaces and 12 docks add to the building’s appeal. The Principle team is expected to complete construction by the end of November 2023. Principle’s Jim Greco is working as senior project manager while Principle’s Mark Frane serves as director of field operations. Harris Architects will serve as project architect.

New Construction Facility Renovations Tenant Improvements Additions / Expansions

Thanks to Our Clients for Making 2023 a Success!

Entre Commercial Realty has recently completed a 17,168-square-foot lease at 1883 Circuit Court in Round Lake Beach, Illinois. The pre-cast building features 24-foot ceilings, two docks, and one drive-in door. Entre’s Denise Chaimovitz, SIOR, MA, represented the landlord, Tenbar, Inc., with Jeff Blake, SIOR, of DarwinPW Realty/CORFAC International. The tenant, W.H. Endeavors, was represented by Nick Panarese, SIOR, of Van Vlissingen and Co. W.H. Endeavors is a franchise of Belfor Property Restoration and Belfor is a worldwide leader in integrated disaster recovery and restoration services.

Principle Construction Corp. building new spec warehouse for Stotan Industrial Principle is constructing a new 100,000-square-foot warehouse at 350 N. Wolf Road in Mount Prospect, Illinois. Principle’s client, Stotan Industrial, is developing the new speculative warehouse in the center of Mount Prospect’s central business district because of its close proximity to major expressways and airport cargo facilities.

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CIP MARKETPLACE CONSTRUCTION COMPANIES/GENERAL CONTRACTORS

ALSTON CONSTRUCTION COMPANY

1901 Butterfield Road, Suite 1020 Downers Grove, IL 60515 P: 630.437.5810 Website: alstonco.com Key Contact: Robert Murray, SVP/ Regional Manager, RMurray@alstonco.com, 908.966.1306 Services Provided: Alston offers a diverse background of design-build experience, general contracting and construction management of industrial, commercial, healthcare, retail, and municipal projects. Company Profile: Alston Construction’s success begins and ends with our approach to planning, scheduling, and choosing the right team. We have been adhering to an open and collaborative approach since our founding more than 35 years ago. Notable/Recent Projects: Project Heartland 1.5 Million SF build to suit distribution facility for Proctor & Gamble in Morris, IL. Lakeshore Manor 210 unit senior living facility in Northwest Indiana. Dynamic Foods 3PL 500,000 SF build to suit distribution and packaging facility in Wilmington, IL. Brown Deer Distribution Center 420,000SF two building speculative distribution center in Milwaukee, WI. 106,000 SF meat packaging facility in Northwest Indiana.

MCSHANE CONSTRUCTION COMPANY

9500 West Bryn Mawr Avenue Ste. 200 Rosemont, IL 60018 P: 847.292.4300 | F: 847.292.4310 Website: www.mcshaneconstruction.com Key Contacts: Mat Dougherty, PE, President, mdougherty@mcshane.com Services Provided: McShane Construction Company offers more than 35 years of experience providing design-build, design-assist and general construction services on a national basis The firm’s diverse expertise includes build-to-suit and speculative warehouse, distribution and manufacturing facilities, as well as multifamily, commercial and institutional developments. Company Profile: Headquartered in Rosemont, Illinois with regional offices in Auburn, Alabama, Irvine, California, Phoenix, Arizona, Madison, Wisconsin and Nashville, Tennessee, McShane Construction Company provides comprehensive construction services on a local, regional and national basis for a wide variety of market segments. The firm is recognized as one of the Chicago area’s most diversified and active contracting organizations with a reputation built on honesty, integrity and dependability. Recent/Notable Project: Industry Center at Melrose Park – the construction of three speculative industrial buildings in Melrose Park, Illinois. The new development incorporates a total of 651,617 square feet.

MERIDIAN DESIGN BUILD

9550 W. Higgins Road, Suite 400 Rosemont, IL 60018 P: 847.374.9200 | F: 847.374.9222 Website: meridiandb.com Key Contacts: Paul Chuma, President; Howard Green, Executive Vice President Services Provided: Meridian Design Build provides construction and design/ build construction services on a national basis with a primary focus on industrial, office, medical office, retail and food and beverage work. Company Profile: With a team of in-house professional project managers, Meridian has extensive experience coordinating the design and construction of new buildings, tenant improvements, and additions/ renovations from 15,000 square feet to 1,000,000+ square feet. Meridian Design Build has been a Member of the U.S. Green Building Council since 2007. Notable/Recent Projects: Clarius Park Joliet Building #2, Joliet, IL - 906,517 sf speculative industrial facility for Clarius Partners. Commerce Park Chicago Building B, Chicago, IL - 602,545 sf speculative multi-tenant industrial facility for NorthPoint Development. Halsted Delivery Station, Chicago, IL - 112.000 sf package delivery station on a 17-acre redevelopment site for Prologis.

PRINCIPLE CONSTRUCTION CORP.

9450 West Bryn Mawr Ave., Suite 120 Rosemont, IL 60018 P: 847.615.1515 | F: 847.615.1598 Website: pccdb.com Key Contacts: Mark L Augustyn, COO, maugustyn@pccdb.com, James A.. Brucato, President, jbrucato@pccdb.com Services Provided: Principle specializes in commercial and industrial property and is committed to providing clients with the highest level of design/build construction services with an absolute dedication to each project. Company Profile: Design/Build General Contractor established in 1999 specializing in the design and construction of Build-to-Suit, Speculative, Retail, Food Processing, Expansions/Additions, Tenant Improvements, & Specialty Facilities. Principle also has extensive experience in interior improvements, site evaluation, due diligence, and value engineering. Recently Completed Projects Include: • 282,588 SF dry-cleaning facility for Tailored Brands, at 2000 Deerpath Rd. in Aurora, IL. • 31,200 SF facility for Alvil Trucking, at 2570 Millenium Dr. in Elk Grove Village, IL • 6,200 SF Warehouse for Superfast Trucking, at 1001 Raddant Rd. in Batavia, IL

FOR ADVERTISING OPPORTUNITIES IN THIS SECTION, PLEASE CONTACT SUSAN MICKEY AT SMICKEY@REJOURNALS.COM OR 773.575.9030

SUMMIT DESIGN + BUILD, LLC

1036 W. Fulton Market, Suite 500 Chicago, IL 60607 P: 312.229.4630 Website: summitdb.com Key Contacts: Adam Miller, President, amiller@summitdb.com; Deanna Pegoraro, Vice President, dpegoraro@summitdb.com; Jon Silvers, Business Development, jsilvers@summitdb.com Services Provided: Summit Design + Build, LLC is a provider of full service general contracting, construction management and design/ build construction services for the commercial, industrial, multifamily residential, office/tenant interiors, hospitality and institutional markets. Company Profile: Located in Chicago’s Fulton Market and with regional offices in Tampa, FL, Austin, TX and North Carolina, Summit Design + Build has been involved in the design and construction of over 400 buildings and spaces totaling more than 10 million square feet over the firm’s 18 year history. Notable/Recently Completed Projects: Eli’s Cheesecake (Industrial), 2217 Loomis (Industrial), 1436 W Randolph (Adaptive Reuse Hotel), 718 Main (Multifamily), Prenuvo (Medical TI), 5691 N Ridge Ave (Multifamily).

VICTOR CONSTRUCTION

2000 Center Dr., Suite East C219 Hoffman Estates, IL 60192 P: 847.392.6900 Website: victorconstruction.com Key Contact: Zak Schuttler, President, ZakS@victorconstruction.com Services Provided: Victor Construction Co., Inc. manages projects from ground-up site developments to interior buildouts, specializing in retail, industrial, and commercial markets. Company Profile: Victor Construction Co., Inc. remains a family-owned and operated General Contractor. Having been in business since 1954, our firm has extensive experience managing every aspect of interior construction for the corporate, manufacturing, industrial, and retail sectors. Notable/Recent Projects: Owens + Minor Distribution – 600K SqFt distribution facility that involved a full LED lighting upgrade, new HVLS fans, 200K SqFt section that required new cooling for medical distribution, an office renovation of 20K SqFt, and a new exterior employee pavilion.

FINANCE & INVESTMENT FIRMS CENTERPOINT PROPERTIES

1808 Swift Drive Oak Brook, IL 60523 P: 630.586.8000 Website: centerpoint.com Key Contacts: Bob Chapman, Chief Executive Officer, bchapman@centerpoint.com; Jim Clewlow, Chief Investments Officer, jclewlow@centerpoint.com Services Provided: CenterPoint Properties is an innovator in the investment, development and management of industrial real estate and multimodal transportation infrastructure. CenterPoint acquires, develops, redevelops, manages, leases and sells state-of-the-art warehouse, distribution and manufacturing facilities near major transportation nodes. Our experts focus on rail and portproximate distribution infrastructure assets. Company Profile: CenterPoint Properties continuously reimagines what’s possible by creating ingenious solutions to the most complex industrial property, logistics and supply chain problems. With an agile team, substantial access to capital and industry-leading expertise, we provide our customers with a competitive edge and ensure their success — no matter how great the challenge.

MARQUETTE BANK

10000 W. 151st Street Orland Park, IL 60462 P: 708-364-9131 Website: emarquettebank.com Key Contact: Gene Malfeo, Senior Vice President, gmalfeo@emarquettebank.com Services Provided: Full line of Commercial, Business and Real Estate loans customized to your individual needs including: commercial and residential construction loans, commercial mortgages, equipment loans and working capital lines of credit. Company Profile: Marquette Bank started in Chicagoland in 1945 and is still locally-owned/operated. Expect quick decisions, competitive rates, easy application and personal service. Personal/business banking and lending, home mortgages, land trust services, estate planning, insurance services, wealth management and multifamily lending.

MAVERICK COMMERCIAL MORTGAGE

853 N. Elston Avenue Chicago, IL 60642 P: 312.268.6000 | C: 312.953.4344 Website: mavcm.com Key Contacts: Ben Kadish, President, ben.kadish@mavcm.com; Services Provided: Maverick finances all commercial real estate properties for builders, developers, investors and owner-occupied properties. For apartment loans, Maverick has access to every multifamily program available for property owners as we are a correspondent for Fannie Mae and Freddie Mac execution along with Freddie Mac small loan program. CMBS fixed and floating rate non-recourse loans available. Bank, portfolio, and debt fund non-recourse construction and permanent financing available on a national basis. Company Profile: Maverick Commercial Mortgage, Inc. is a boutique firm focused on middle market borrowers for properties in Chicago and surrounding areas, with a focus on Illinois, Indiana, Wisconsin, Iowa, Missouri, Michigan, and Kentucky. We are a niche lending source for Manufactured Housing Community mortgages and portfolio loans across the country with fundings in excess of $80,000,000 for MHC product on an annual basis. Significant financings in 2023 include a multifamily construction loan for $12,125,000, an industrial building loan for $7,500,000, a hotel to multifamily conversion bridge loan for $5,400,000 and a multifamily term loan for $13,000,000. Service Territory: Midwest for general mortgage loans, and national for MHC financing

2024 Chicago

FORECAST summit

January 16, 2023

22nd Annual

Chicago Marriot Downtown Magnificent Mile 7:00am - 8:30am Registration, Networking & Exhibits 8:30am - 11:00am General Session Panels 11:00am - 12:00pm Breakout Sessions

Scan for more information and to register

www.rejournals.com/upcomingevent/

Speaking and Sponsorship opportunities available Mark Menzies menzies@rejournals.com 312-933-8559

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