Despite a cooling industrial market, a suburban Chicago warehouse proved there’s still hot property out there.
The warehouse sold for $36 million, which is more than quadruple its value a decade ago.
Massachusetts’ High Street Logistics Properties picked up the 252,000-square-foot warehouse at 1455 West Thorndale Avenue in Itasca from Top-Line Furniture, which subsequently entered into a long-term lease for the property. The company paid $8.1 million for the property in 2012, a discount from its previous sale price of $13.5 million in 2003.
The sale is further proof that even as transactions slow their pace in the industrial market, values have remained elevated.
“The interest is out there, it’s just pricing and trying to line up buyer and seller expectations. As we get into the fall and more and more people chase opportunities, cap rates will come down slightly, which will mean values are going up,” said NAI Hiffman’s Pat Sullivan, who represented the seller along with Eric Tresslar.
Sullivan said the industrial market slowdown over the past 90 days is “a temporary pause” and that he is optimistic overall about the year. He said the market saw a bigger pullback this summer than in previous years due to increasing interest rates.
“Debt has become less available, and when terms change, values change,” he said.
The Thorndale Avenue property is located about five miles west of O’Hare International Airport, a submarket with a vacancy rate of around 2 percent, according to research from NAI Hiffman.
Vacancies in Chicago-area industrial buildings of 200,000 square feet or more rose for the first time in nearly two years in the second quarter, a result of developers putting a record amount of projects in the pipeline, according to Colliers. The vacancy rate rose to 2.9 percent from the all-time low of 2.6 percent.
The largest lease recorded in Q2 was 757,000 square feet at a Kenosha, Wisconsin facility taken by Uline, followed by Ceva Logistics leasing 708,000 square feet and 3 Expeditors, which leased 670,000 square feet, both at Bridge Industrial’s Melrose Park campus.
Nationally, industrial absorption stayed high and rents were up, but those trends aren’t expected to last as the market is poised to follow the trajectory of declining global growth forecasts from the World Bank.
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