This Week's Chicago Deal Sheet

The region’s largest and most modern warehouse and distribution buildings saw unprecedented levels of leasing throughout 2021, according to a Colliers International Q4 report.

As distributors continued to reconstruct their supply chains in response to the pandemic-accelerated rise of e-commerce, many decided to occupy spaces in the Chicago area’s 688 big-box properties, meaning precast structures of 200K SF or more and with ceiling heights of 28 feet or higher. That led the sector’s vacancy rate to plunge 484 basis points during 2021, from 8.51% to the historic low of 3.67%.

“The nose-diving vacancy rate demonstrated that despite big box development continuing at full tilt, demand for modern product markedly outpaced new supply during 2021,” Colliers’ study said. “In fact, net absorption totaled 33.5M SF during the year, nearly doubling the previous annual record of 17.4M SF recorded in 2019.”

The largest industrial leases of Q4 were Ryerson’s 897K SF build-to-suit lease at the southeast corner of Central Avenue and West Steger Road in south suburban University Park, Home Depot’s deal for 879K SF at 25101 South Ridgeland Road in south suburban Monee and Best Buy’s 650K SF lease at 1450 Remington Blvd. in southwest suburban Bolingbrook, according to Colliers.   

Local developers set their own record in 2021 by completing 20.3M SF of big-box buildings, just above the 20M SF record set in 2017, Colliers found. And the pace of construction isn't slowing. At the end of 2021, developers had another 23.7M SF underway in 43 buildings, another record for the Chicago region.

EXECS

Dan Fogarty joined Stotan Industrial as managing partner and will help oversee business development and operations. Most recently, Fogarty served as executive vice president–investment and development at Becknell Industrial, sourcing and managing the firm’s build-to-suit and speculative developments across the U.S. Prior to joining Becknell, he was vice president and market officer at Conor Commercial Real Estate in suburban Rosemont.

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Skender hired Eric Fiket as senior project manager, Jen Haub as assistant controller and Andy Reinhard as senior estimator. Fiket joins Skender from Linn-Mathes and will plan and deliver new construction projects with Skender’s commercial projects team. Haub joins Skender from Pepper Construction, following roles at Ragnar Benson Construction and RSM McGladrey. Reinhard previously held estimating roles at Shawmut Design and Construction and Leopardo Cos.

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Robert Person joined Evergreen Real Estate Group as head of market-rate acquisitions. In this newly created position, Person will diversify the company’s portfolio to include more market-rate housing while securing additional capital to acquire, develop and preserve affordable housing on a national scale. Prior to joining Evergreen, Person worked for Strategic Properties of North America, where he was most recently head of acquisitions.

SALES

A joint venture partnership between Oak Brook-based real estate investor Clear Height Properties and Buligo Capital Partners acquired a 265K SF, five-building light industrial portfolio in suburban Hoffman Estates, Schaumburg, Aurora and Bloomingdale. The seller was Chicago-based investor Green Door Capital. The portfolio is 100% leased to four tenants with more than seven years of weighted average lease term remaining. Clear Height and Buligo will launch a capital improvement program to boost the properties’ value. JLL’s Kurt Sarbaugh and John Huguenard represented the seller, Green Door Capital Investments. JLL’s Christopher Carroll and Lucas Borges led the financing efforts.

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Jonathan Rose Cos.’ Rose Affordable Housing Preservation Fund V acquired Archer Courts, the 146-unit apartment complex at the corner of Princeton and Archer streets in Chicago’s Chinatown neighborhood. Rose purchased the property from affordable housing developer Tony Fusco for $11.6M. Prudential Huntoon Paige arranged financing with the Federal Housing Authority.

One of the first affordable housing developments in Chicago for seniors and families, Archer Courts was built in 1951 on land owned by the Chicago Housing Authority. The complex was renovated in 1999 by Landon Bone and Baker Architects, and Rose has begun a new renovation, including upgrades to both units and community spaces as well as improvements to the mechanical and electrical systems to increase energy efficiency. Rose also extended the development’s affordability under its HUD Section 8 HAP contract.

LEASES

Conor Commercial Real Estate leased the 151K SF Executive Commerce Center in northwest suburban Prospect Heights to two tenants. Syncreon, a third-party logistics provider for Samsung, leased half of the building for warehouse and distribution space. Plitek, a manufacturer of precision die-cut components and converted materials, leased the remaining half. Completed in 2020, the 10-acre development features a 32-foot clear height. The design-build team of McShane Construction Co. and Ware Malcomb provided design and construction services. Conor was represented in the lease transactions by Mike Sedjo and Ben Dickey of CBRE.

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Bartesian signed a lease for a new downtown Chicago headquarters at 452 North Sangamon St., a two-story barrel truss building in Fulton Market. The 10K SF office is more than five times the size of its current headquarters at 303 West Erie St. in River North. A manufacturer of crafted cocktail makers, Bartesian plans to transform the property’s lower level into a private bar that will feature its cocktail recipes.

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In-home care and adult daycare firm MedTec Healthcare & Private Duty signed a new 13K SF long-term lease at WiFi Corporate Center at 1400 South Wolf Road in northwest suburban Wheeling, its second location in Wheeling. The center is a 51K SF, single-story office building built in 1970 and renovated in 2001. Cresa’s Juliette Lane represented MedTec in the lease negotiations. It was the second suburban deal in the last 90 days that Lane arranged for the company. The other was a lease for more than 12K SF at 1415 Bond St. in Naperville. 

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Seven retailers signed leases within Evanston’s Church Street Plaza totaling 115K SF. The leases were executed by CBRE’s Brendan Reedy and Jimmy Danaher on behalf of Mitch Goltz and Shai Wolkowicki of GW Properties, who manage and own the 180K SF center at 1715 Maple Ave. AMC Theatres, Sky Zone, Belong Gaming, Big Wig Taco, Cycle Bar and Semper Laser signed new leases, and Northwestern Medicine signed an expansion and renewal.

FINANCING

Berkadia secured financing for Edenbridge Apartments, a 309-unit mid-rise multifamily property at 18134 South 66th Court in suburban Tinley Park. John Schorgl of Berkadia Kansas City secured the acquisition financing on behalf of the borrower, Chicago-based Artisan Capital Group. The deal closed on Feb. 4. The three-year bridge loan, financed through Cohen & Co., features a floating rate, is interest-only and is nonrecourse.   

THIS AND THAT

In Chicago, leasing by law firms jumped 32% after the start of the pandemic, according to an analysis by Savills. The firm attributes the jump to Kirkland & Ellis LLP’s 2021 commitment to 600K SF in the city’s new Salesforce Tower. That lease made up 55% of 2021 leasing activity by law firms in Chicago.

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CommercialSearch and its sister company CommercialEdge analyzed in a new report the deliveries and sales volume from 2012 to 2021 for the 30 large industrial markets in the U.S. The firms found that Chicago ranked third in total industrial space added — almost 154.4M SF. Dallas and Southern California's Inland Empire took the top slots. Since 2012, Chicago added between 7.1M SF and 23.4M SF of industrial space per year. In addition, in 2021, the sales volume in the metro area reached $5.1B, only surpassed by Los Angeles with $7.4B.

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Chicago Loop Alliance released its January report on downtown activity and found pedestrian counts on State Street were nearly double the rate set in January 2021. The office occupancy rate grew by 13.2% from its December low. And even though it wasn't the highest occupancy rate measured since the pandemic began, city offices are twice as full as they were in January 2021. In addition, occupancy rates for Loop hotels reached 70% of 2019 levels.