By Jason West, senior director, Cushman & Wakefield
Ferrara Candy Company’s 747,152-square-foot, full-building commitment at Heitman’s 901 Carlow Drive in Bolingbrook not only ranks among the largest Greater Chicago-area industrial leases of 2014 but also represents one of the year’s most impactful commercial real estate transactions.
Cushman & Wakefield serves as leasing agent and property manager for 901 Carlow Drive. When The Home Depot, a tenant of 13 years, announced that it would not renew its lease (set to expire in January 2014), we launched a proactive marketing campaign to secure another user for this well-located, Class A asset. Our efforts began well ahead of The Home Depot’s departure from several area buildings to its newly constructed facilities at the Joliet intermodal hub.
Offering an attractive business park setting, the nearly 50-acre 901 Carlow Drive site provides multiple points of access to the I-55 and Weber Road interchange. The building, itself, boasts 30-foot clear ceilings, ESFR sprinklers, heavy power, more than 200 exterior loading docks, two drive-in doors, and tremendous trailer and car parking. And beyond its great location and quality construction, 901 Carlow Drive has additional land for expansion, which distinguishes it within the marketplace.
Sean Henrick (another Cushman & Wakefield senior director) and I represented Heitman in the assignment to find a new tenant for the building. Victoria Knudson, national lead for Cushman & Wakefield’s Industrial Property Management platform, and Shannon Arseneau, portfolio manager, head the management team for 901 Carlow Drive; they were instrumental in the process as well.
We set out to market the property as divisible, although finding a full-building tenant was the preference. Given recent deal velocity in the Chicago market, and based on the level of immediate interest in the property, we felt confident that we would meet this objective. More than a dozen companies toured 901 Carlow Drive.
Among them, Ferrara Candy, represented by Matt Mulvihill from CBRE, was looking at several properties across the Chicago metropolitan area. The well-known confectionary company – with brands including Brach’s®, Lemonhead®, Now and Later®, Jujyfruits® and many others – planned to consolidate multiple locations into a single regional operation.
Ferrara Candy was attracted by 901 Carlow Drive’s location, size and features. The flexibility to expand the building to just over 1 million square feet also was key in the firm’s choosing it. That said, responsiveness on part of both Heitman and the Village of Bolingbrook also played an important role in winning this long-term credit tenant.
As landlord, Heitman was flexible in accommodating Ferrara’s requirements. This included approving several building modifications such as air conditioning and upgrades for storage of food products.
Additionally, early in the negotiation process, our team reached out to Bolingbrook’s highly pro-business local government. Mayor Roger C. Claar has enjoyed success in bringing big business to the town during his administration, and he became an integral part of the process as we pursued Ferrara’s commitment. His office did everything possible to promote the strengths of the Village and their desire to attract new business.
Ultimately, the result of our brokerage and property management groups’ collaboration – and the efforts of all other parties involved in this blockbuster transaction – netted less than 45 days of down time between the expiration of The Home Depot’s term and the signing of Ferrara’s lease.
MARKET IMPACT Ferrara Candy Company is new to Bolingbrook, bringing several hundred jobs to support the local economy. Its move to 901 Carlow Drive also serves to offset the loss of The Home Depot, a long-time tenant and important area employer.
The Ferrara Candy lease positively impacted the entire I-55 submarket as well. At the time of the transaction, the industrial vacancy rate there stood at about 9.0 percent. This building alone represents 1 percent of the market’s inventory. Ferrara’s commitment absorbed a major space as soon as it hit the market, essentially keeping the vacancy rate from rising into the double digits.
And the Ferrara Candy transaction certainly made its mark on the larger Chicago metropolitan industrial real estate market. Totaling 27.7 million square feet at the end of the third quarter, industrial leasing in Chicago is up 2.0 million square feet year over year and represents the second highest volume in the nation (after Greater Los Angeles). The current vacancy rate of 6.6 percent represents a drop from 7.8 percent at the end of the third quarter of 2013, and sits below the national average of 7.0 percent.
The Ferrara Candy deal and others have bolstered the acceleration of the region’s industrial market. Many of its large vacancies have been absorbed, which has cleared the way for new construction, including speculative development – which had been missing from the market for several years.
From a broker’s perspective, it is always gratifying to bring landlords and tenants together. Even more so, we are proud to help orchestrate transactions, like the Ferrara Candy Company lease at 901 Carlow Drive, that serve to help our market continue on a positive trajectory.