Range Group and HSA Commercial are diving into the Near West Side industrial market on the heels of a massive development site purchase by Prologis next door and a city push for a modernization of workspaces along the Kinzie Corridor.
Range, led by former Shapack executives Seth Halpern and Jared Rubin and fellow co-founder Brett Katz, teamed up with the Robert Smietana-led firm HSA Commercial to buy adjoining parcels at 2519 West Fulton Street and 2520 West Lake Street for almost $3 million earlier this month, they said.
The purchases give them a 2.3-acre development site assembly, with plans to tear down the structures to make way for two buildings spanning a combined 70,000 square feet to help fill a lack of supply in modern, midsize industrial spaces in Chicago.
“It takes a lot more effort to do what we did than buy a 20-acre farm in some rural area and build a 150,000 or 200,000-square-foot typical big footprint warehouse,” Smietana said.
Much of the speculative development in the industrial sector has taken place closer to the outer rings of urban areas, resulting in a surge of big-box warehouse supply. Leasing of those properties has started to slow in the past year, however, as the pandemic-driven boom in demand subsides. There is still a lack of supply for slightly smaller spaces near city cores, with features set to accommodate contemporary technologies and delivery trends, the veteran Chicago developers contend.
They may end up competing with Prologis, the world’s largest industrial landlord that in 2020 spent $12 million to buy an even bigger vacant parcel just to the west of railroad tracks near the border of the Range-HSA site, according to Cook County records. Prologis’ plans for it aren’t yet clear, but Chicago officials have been pushing for renewed investment in the area.
In 2022, Chicago City Council voted to extend the life of the Kinzie Industrial Corridor tax increment financing district, or TIF, through 2034. The TIF, which includes the Range-HSA site, handed out nearly $18 million — the district’s largest ever allocation at the time — to manufacturing incubator mHub for its $32 million acquisition of an Ashland Avenue property from West Loop real estate player Phil Denny’s firm Peppercorn Capital.
With the westward expansion of Chicago’s major commercial real estate development market on the tail of Fulton Market’s success — the Bulls and Blackhawks owners are set to pour $7 billion more into building up the area around the United Center — Range and HSA expect tenants from sectors as varied as plumbing, logistics, catering and light manufacturing will want to operate as nearby as possible.
“We look at the Kinzie Industrial Corridor as being 15 minutes from some of Chicago’s most affluent neighborhoods,” Halpern said. “With thousands upon thousands of housing units and millions of square feet of office space nearby and coming, the type of user for this product is really somewhat endless.”
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