ELGIN, IL-San Francisco-based Stockbridge Real Estate funds has purchased a two-million-square-foot industrial portfolio from a joint venture of Interstate Partners and Towne Investments for a reported $130 million. Seven of the eight properties are located here, with the remaining site in the Milwaukee suburb of Pewaukee, WI.

The properties included sites in both the NorthWest Corporate Park and the NorthWest Business Park here, which are 95% leased to 18 tenants. The Milwaukee property is in RidgeView Corporate Park, and is 100% occupied. The properties were developed by Interstate.

Jim Carpenter and Ken Szady with Cushman & Wakefield of Illinois Inc. represented the seller. The men tell GlobeSt.com that the sale indicates the local Chicago industrial market is starting to take off. “The number of transactions is up,” Carpenter says. “In just Chicago alone we have close to 17 million square feet in the market or closing, that’s double what we had last year.”

This type of portfolio sale will bring out other buyers and help encourage pricing increases, Carpenter says. “People fell comfortable that assets are now priced in a predictable way. Now once that benchmark is set, people will start to think about appropriate yield, and whether to take a little risk to improve on their overall return. We’re starting to see buyers price risk, though that risk is still going to be taken on the class A properties,” he says.

It’s more likely that buyers will pursue vacant A parcels than chase partially-rented B properties, showing that core markets still rule volume, Carpenter says.

Both men agree that industrial has joined apartments as one of the hottest asset classes, with buyers interested in Chicago because the yields are better than the core markets. “Your return thresholds, you’re looking at a 5.5% to 6.5% cap rate on industrial, where retail doesn’t drop below 7% and office is even higher,” Szady says. “We’re in a recovery. The portfolios are seeing 10 bidders on every deal.”