CBRE Global Investors fund acquires industrial portfolio in Chicago area

CBRE Strategic Partners U.S. Value 8 has acquired a six-building portfolio of class A warehouse and manufacturing buildings totaling more than 1.4 million square feet in master-planned business parks within Chicago’s two largest industrial submarkets.

The portfolio is 95 percent leased to six tenants.

The portfolio includes five buildings located along Chicago’s major east-west thoroughfare and one building located adjacent to the major north-south tollway:

• 2700 Ellis Road, Joliet, Ill.
• 2101 W. Haven Road, New Lenox, Ill.
• 2201 W. Haven Road, New Lenox, Ill.
• 2200 W. Haven Road, New Lenox, Ill.
• 2520 Diehl Road, Aurora, Ill.
• 494 E. Lies Road, Carol Stream, Ill.

The buildings in the high-quality, well-leased portfolio range in size from 90,000 square feet to 690,000 square feet.

Between a quarter and a third of all freight tonnage nationally goes through Chicago, which is a focus market for the fund.

“Chicago is an attractive logistics market due to its central location, abundance of infrastructure and numerous freight transportation modes, and availability is at the lowest rate since 2000,” said Robert Perry, portfolio manager for CBRE Strategic Partners U.S. Value 8. “Additionally, the SW/1-55 Corridor and West Suburban submarkets where these assets are located are expected to outperform the Chicago metro in terms of rent growth. Given both the quality and locations of the buildings, this portfolio perfectly suits the fund’s national industrial strategy, and we welcome more opportunities to make similar investments.”

CBRE Strategic Partners U.S. Value 8 held a final close on Nov. 28, with equity commitments of $1.34 billion.

Other assets the fund has recently acquired include the offices located in Glendale, Calif., at 801 N. Brand, which totals 290,847 square feet; 700 North Central, which totals 136,016 square feet of office space; and a 50 percent ownership interest in an adjacent parking structure.

In addition, the fund acquired Concourse Creative Campus, a 751,093-square-foot office complex that consists of two eight-story office buildings, one four-story office building, three parking structures and a five-acre vacant land parcel in Atlanta.

The fund also acquired North Bethesda Market, a class A, transit-oriented, mixed-use community featuring 182,926 square feet of retail, 411 apartments and a 1,205-space parking garage located in the Washington, D.C., metro area.

Commercial real estate executives are particularly confident in the strength of the industrial sector and are concerned about the impact of natural disasters on the U.S. economy in 2018, according to the results of the 2018 Altus Group Real Confidence Executive Survey. In addition, industrial has emerged as the strongest property sector and the new favorite among investors due to robust fundamentals, including record occupancy and rents, as well as net absorption and construction, reports Colliers International.

Industrial assets among the 7,527 commercial properties indexed by the National Council of Real Estate Investment Fiduciaries posted the highest returns during the fourth quarter 2017, according to NCREIF Property Index. During the fourth quarter 2017, industrial’s return was 3.28 percent, or 13.1 percent on an annualized basis. For comparison, the quarter’s second-best performer among property types, office, posted a total return of 1.65 percent in the fourth quarter and 6 percent over the preceding 12 months.

New leasing activity during the fourth quarter 2017 for the Chicago industrial market totaled just under 17.5 million square feet, 49.8 percent below the record setting 2016 total, according to Cushman & Wakefield. The infill submarkets including Central DuPage, O’Hare, and Western Cook reported the strongest leasing performance either increasing or matching the previous year’s activity. 2017 was in many ways “the year of the renewal”, with large tenants renewing leases, including Kimberley Clark, Mondelez, and Clearwater Paper. M. Block & Sons’ 915,643-square-foot renewal in Tinley Park topped the list as the largest deal of the year. This strong tenant desire to remain in the market for years to come has solidified Chicago as an industrial mainstay.

Investment sales hit 27.9 million square feet traded in 2017, 23.9 percent below the highly active 2016.