Brown Commercial Group negotiated the sale of a 126,537-square-foot industrial facility at 2001 Arthur Avenue in Elk Grove Village, IL, in Chicago’s O’Hare market. Financial terms were not disclosed.
Brown Commercial Group’svice president of sales, Mike Antonelli, and senior associate, Mason Hezner, represented the seller, Spirit Realty Capital, in leveraging the older building’s location for development purposes. The building’s new owner, Seefried Industrial Properties, Inc., plans to build an 80,000 square foot, Class A warehouse on the site. The buyer was represented by Jonathan Kohn of Colliers International.
“There is a tremendous demand for industrial assets in the O’Hare market and limited supply, which creates an environment where developers are willing to tear down or redevelopment older assets to gain a foothold in the market,” Antonelli said. “We assisted the seller with executing a successful exit strategy that looked beyond the building’s obsolescence in the marketplace.”
Chicago’s industrial market has seen significant construction activity since 2013, with approximately 80 million square feet of new inventory added. Most of the buildings were designed for large manufacturing and distribution businesses as well as the growing e-commerce sector.
“Much of the industrial construction activity in the past several years has been focused on buildings that are 250,000 square feet and larger,” Antonelli said. “There is a significant need right now for buildings that are 100,000 square feet and under that can serve mid-sized users.” Elk Grove Village is the largest of Chicago’s industrial markets and has seen record absorption and low vacancy rates for several years. The current vacancy rate is less than 4 percent.
The Arthur Avenue asset was originally purchased by Spirit Realty Capital as part of a larger portfolio acquisition. “Since the building lacks many of the amenities that today’s tenants are seeking, it is more valuable as land for building a modern distribution or warehouse facility,” Antonelli said.
“We’re seeing an abundance of new development activity in the O’Hare market, specifically Elk Grove Village,” Antonelli said. “Developers are in hot pursuit of any in-fill properties that can be repurposed to fit today’s distribution and warehousing needs or razed to allow for new construction.”