The Joliet Distribution Center

CHICAGO—Jack Fraker, CBRE‘s managing director of the company’s Capital Markets Industrial Practice, recently told that demand for industrial commercial real estate has far outstripped the supply. “It’s something like a 4:1 or 5:1 imbalance. A lot of capital wants to be in real estate, but there aren’t a lot of available deals on the market. The competition is resulting in a downward pressure on cap rates.”   

Jones Lang LaSalle Income Property Trust, Inc., for example, just completed the acquisition of the 442,000-square-feet Joliet Distribution Center, a warehouse property at 3300-3500 Corporate Dr. in Joliet. The purchase price was approximately $21 million, company officials say. They estimate that, based on the purchase price, the property has a capitalization rate of approximately 6.3%. The center operates under a net-lease and two tenants occupy 100% of the space with a weighted average remaining lease of approximately six years.

LaSalle Investment Management, a Chicago-based member of the JLL group, just released its Mid-Year Investment Strategy Annual report and recommended buying up properties much like the Joliet Distribution Center, a modern facility finished in 2005.

“Where we see value for investors today is the logistics sector, paced by the recovery of world trade and the rise of e-commerce,” says William Maher, LaSalle’s head of North American research and strategy. “Industrial and warehouse buildings tend to earn higher income returns than office buildings or luxury residential properties.”

“This investment adds diversification to our industrial property portfolio while allowing us to achieve stable income returns on a long-term, fully-leased asset in one of our targeted warehouse markets,” says Allan Swaringen, president and CEO of the JLL property trust. “The acquisition of Joliet Distribution Center reflects our approach to grow the company’s portfolio with higher-quality properties that are well-leased to strong tenants in attractive markets and also is consistent with our investment strategy of acquiring core, income-oriented assets.”

Jim Carpenter of Cushman & Wakefield advised the seller on the transaction.