Exclusive: Ron Frain On His Move From Bridge Development To Sterling Bay
With projects like 1K Fulton, McDonald’s new West Loop headquarters, the Gogo Building, 121 West Wacker and the Hillshire Brands HQ, Sterling Bay has become the most recognizable developer in Chicago commercial real estate across a variety of asset classes. The firm has been notably absent in industrial real estate. That is about to change.
Earlier this month, Sterling Bay hired Bridge Development Partners co-founder Ron Frain as principal to run its new industrial division, a move intended to capitalize on the momentum in the highly competitive Chicago industrial real estate market. It intends to expand this platform nationwide eventually.
Frain’s credentials during his 50-year career may be unmatched. He started his career at Gottlieb/Beale, managing development and marketing activities for industrial and office buildings. In 1972, he and the other principals of Gottlieb/Beale formed Hawthorn Realty Group, where Frain served as executive vice president, chief administrative officer and director of industrial development.
He co-founded Frain Camins & Swartchild in 1978 and oversaw its growth into one of the city’s largest real estate firms. FC&S was acquired by Insignia/ESG in 1997, and Frain left three years later to co-found Bridge Development Partners.
Frain said Bridge went through a period of being a local developer of industrial product, but changed focus after the post-2008 downturn to become a merchant builder. Frain’s capital partners pushed Bridge to expand beyond Illinois into other core national industrial markets.
After building a large national portfolio, Frain and the capital partners began laying the groundwork for a succession plan in 2015.
“I built Bridge as far as I wanted to take it, and we started selling some holdings," Frain said.
When Bridge completed an $80M South Florida portfolio sale to Duke Realty in April and a $69M O'Hare submarket portfolio sale last month, it allowed Frain to pursue new opportunities.
Enter Andy Gloor. Sterling Bay’s managing principal reached out to Frain with an offer: Sterling Bay’s capital partners were pushing to move into industrial real estate. Frain met with Gloor and the partners over the next month, to get a feel for how serious the firm was about moving into industrial.
“It’s a young company,” Frain said. “I like the energy and innovation that Sterling Bay brings to the industry.”
Frain’s move to Sterling Bay is a reunion for Frain and Gloor, who got his start in real estate as a broker with FC&S in 1994. Frain said he knew from his first interview with Gloor that he would be destined for big things in the industry. He saw a high energy level and thought process, an intense competitive streak and, most important, a good nature. Frain knew Gloor had designs beyond being a broker and was not surprised when Gloor left FC&S when it was acquired by Insignia to strike out on his own as a developer.
Frain said Sterling Bay’s industrial strategy will focus on identifying infill sites where it can build state-of-the-art product that it can hold long term. Frain said the key to succeeding in infill sites is be ready to act fast when brokers approach with the right opportunities. He believes his track record for responding quickly will allow Sterling Bay to compete, but not overpay, for opportunities.
“In the industrial sector, as in much of Chicago’s real estate industry right now, seller expectations are currently outsized,” Frain said.
Frain said it is not likely Sterling Bay will build industrial in the nearly 60 acres it controls in the North Branch Industrial Corridor, as it may be too expensive. But he is not discounting it entirely. Frain has been meeting with logistics experts to get a better understanding of the changing dynamics there and in e-commerce. Frain said Sterling Bay is looking for the right sites in the city with access to highways and population density to serve the wider area. One area on Frain’s wish list is along the Stevenson expressway, near Damen Avenue.
“That is an area of Chicago that is ripe with infill industrial opportunities,” Frain said.
