CHICAGO—As reported in GlobeSt.com earlier this week, CPA®:18 – Global, a non-traded REIT affiliate of W. P. Carey Inc., just completed its $85 million acquisition of the giant Dart Container/Solo Cup National Distribution Center in suburban University Park. At 1,552,475-square feet, it was the largest Chicago-area transaction involving corporate distribution space since early 2006, and only a handful of recent deals in the nation approach its scale.
Furthermore, according to Erik Foster, the national practice leader of Avison Young’s Industrial Capital Markets Group, who helped broker the deal, the purchase price of nearly $55-per-square foot shows that demand for the best distribution product in core markets like Chicago has approached pre-recession levels.
In January 2006, the 1.69 million-square-foot Kraft Food’s portfolio in Aurora was sold for about $55-per-square-foot, according to Real Capital Analytics. And in 2012, the Clorox Company’s 1.35 million-square-foot distribution space, also in University Park, sold for only $48-per-square-foot.
Dart “was a very competitively bid asset,” Foster says. “The usual players were looking at it, including Canadian and other foreign investors.” Avison began shopping the property around in late fall and after “a couple weeks of marketing we had a very deep field. I think that’s a confirmation of our ability to create a global marketplace for core product.”
Few industrial properties in the US could match the attractiveness of the Dart building. Located on a 90.24-acre site at 701 Central Ave., it was developed in 2002 and has 32′ clear height, 120 docks and three drive-in doors. Best of all, Dart has about ten years remaining on its net lease, and along with Solo Cup, a $1.6 billion company wholly owned by Dart, uses the building as its Midwest distribution center and national logistics hub.
“Suffice it to say that at market-rate rent levels, it was a very aggressive cap rate,” Foster adds, below 6%. He expects the new owners “will hold onto this for a very long time.”