CHICAGO—Erik Foster and Mike Wilson of Avison Young's national industrial capital markets group have been awarded the exclusive sale listing of a four-building industrial portfolio in the Chicago metro area with a total of about 900,000-square-feet. The portfolio, owned by institutional investors advised by J.P. Morgan Asset Management, includes newer, fully-leased buildings with strong tenants.

“These are core-quality, institutional-grade assets,” Foster tells GlobeSt.com. “They are right off major expressways in well-located parks; there are not a lot of core-quality assets like this on the market so we believe we will get national attention.”

The properties, all triple net lease, include:

• A 246,300-square-foot building at 25777 S. Cleveland Ave. in suburban Monee, IL. Liberty Furniture, a privately-owned furniture manufacturer with a national distribution base occupies the building. Built in 2001, the it has 30' ceiling heights.
• A 239,700-square-foot facility at 25975 S. Cleveland Ave., also in Monee. DIY Group, a packaging, warehouse and distribution services company, leases 100% of the space. The building, built in 2005, has 30' ceiling heights.
• A 251,465-square-foot building at 1160 Pierson Dr., in suburban Batavia, IL. DS Containers, a consumer packaging company, leases 193,465-square-feet, and Superior Health Linens, a healthcare supply company, leases the remainder. Built in 2006, the building has 30' ceiling heights.
• A 157,120-square-foot building at 5900 Carlson Ave. in Portage, IN, in Northwest Indiana, but considered part of the greater Chicago market. Manufacturing Solutions, a leading manufacturing and engineering company, leases the building, which was built in 1995 and has 29' ceiling heights.

“We've got very sticky tenants who've been in these buildings for a very long time,” Foster says. Manufacturing Solutions, for example, runs a 24/7 operation in its Portage building and “they are very, very entrenched in that facility.”

Foster compares the portfolio to the 1,552,475-square-foot Dart Container/Solo Cup National Distribution Center in suburban University Park, which, as reported in GlobeSt.com, he helped sell earlier this year to CPA®:18 – Global, a non-traded REIT affiliate of W. P. Carey Inc., for $85 million. Although the Dart building is considerably larger, it is also a very modern space and in the same submarket as several of the properties in the new portfolio. The Dart building sparked global interest, and the sale price of nearly $55-per-square foot showed that demand for the best distribution product in Chicago is approaching pre-recession levels.

Although the region has begun to see some new construction, Foster does not believe developers are active enough to meet the high level of demand. “We are experiencing an annual rate of construction, spec and build-to-suit, of about 160-million-square-feet, but in 2007 we were up to 250 million. This is why you are seeing healthy rent growth and absorption.”

All of these factors have pushed down cap rates, which, for recently-traded, modern core properties usually hover in the mid-5s, he adds. And for this new portfolio, “that may be the level we're talking about.”