Some of the largest investors in industrial real estate exited big properties in the western suburbs of Chicago in similar fashion in the past month: with sales to their tenants, totaling more than $87 million.
Among the sellers are Blackstone unit Link Logistics, Oak Brook-based Midwest Industrial Funds, and Atlanta-based Seefried Properties.
All looked to the same source to pull it off: the warehouses’ own tenants.
Local firm Midwest Industrial made the biggest deal of the three, with its $44 million sale to RIM Logistics for the 400,000-square-foot asset at 1303 Jack Court in west suburban Bartlett. Farther west in Kane County, Link sold the 238,000-square-foot property at 1789 Hubbard Avenue in Batavia, for $24 million, to its former tenant DS Containers. Seefried moved on from the 145,000-square-foot warehouse at 1705 Madeline Lane in Elgin for $19.4 million. An affiliate of Component Plastics was the buyer.
The purchases show the pressure on tenants to buy amid growing demand for industrial real estate in Chicagoland, where rents for warehousing have been on the rise since the pandemic sent demand surging.
Developers delivered a record amount of space to the market last year, but many speculative developments are leased quickly, and at higher rates. Average industrial asking rents in Chicagoland were $7.20 per square foot in the fourth quarter last year, up 45 percent from the same time in 2021, according to Colliers.
Taking ownership of leased buildings is becoming a popular solution to rising costs.
“Our ability to navigate a sale process direct to an end user speaks to our company’s flexibility, deal-making creativity, and ability to adapt to ever-changing market dynamics,” Midwest Industrial founder Justin Fierz said.
A team of Lee & Associates brokers consisting of Michael Androwich Jr., John Cassidy and Chris Nelson represented Midwest Industrial in the Bartlett sale, while Dan Smolensky of TMG represented the buyer.
Midwest Industrial developed the Bartlett building, using a $24 million mortgage from Lake Forest Bank & Trust issued in 2022.
Blackstone and Seefried did not immediately return requests for comment. While public records show Seefried paid $9.5 million for the Elgin property in 2023, further details of the two Kane County transactions weren’t immediately available.