CHICAGO—The industrial developer and investor Molto Properties has just acquired 351 Hastings, a 68,735 square-foot industrial building in suburban Buffalo Grove, the first existing asset purchased with its second fund, which it originally launched in late 2013 with a $100 million commitment. And an official from the Oakbrook Terrace, IL-based firm tells GlobeSt.com that the market is so healthy that they are using a very different strategy with the second fund than they did with the first.

“With the first fund, we purchased more existing buildings,” says senior principal and founder Todd Naccarato, many of them big box facilities with up to 600,000 square feet. “But I think what we are seeing right now in Chicago is what has been going on in places like California's Inland Empire for several years. We feel there is now enough demand to do speculative development.” Buildings for users that need less than 300,000 square feet are in great demand, for example, and in addition to those projects, Molto plans to buy smaller buildings like 351 Hastings and add value through active leasing and management.

Molto, founded in 2008, has acquired about four million square feet of distribution space, mostly in Chicago suburbs like Romeoville, Joliet, New Lenox and Woodridge. But with the second fund it also just completed a 166,000 square-foot building in Houston and purchased 80 acres in Louisville where this year it will complete a 600,000 square-foot building. Overall, Naccarato expects they will use the second fund to buy or develop about 15 properties, the majority in the Chicago area.

As reported in GlobeSt.com, last year Molto used the second fund to break ground on a 189,731 square-foot distribution facility at 1485 Normantown in suburban Romeoville with 32' clear height. Molto completed the project in January and has just signed a seven-year lease with HellermannTyton North America, a Milwaukee-based manufacturer. Molto also just bought 14 acres down the street and will develop a 203,000 square-foot building on that site this year. Furthermore, it purchased a site in nearby Bolingbrook on the corner of Remington Blvd. and Veterans Pkwy. where it will soon complete a 116,000 square-foot building.

The Buffalo Grove building is located in the Chevy Chase Business Park north of Lake Cook Rd. and west of Milwaukee Ave. near the Chevy Chase Country Club. JLL's Kurt Sarbaugh and Robin Stolberg sourced the opportunity and approached Molto Properties with the transaction. A private investor was the seller.

It was attractive partly because it had two tenants with short-term leases, both of which are up in the middle of this year, Naccarato adds. That will allow Molto to re-lease the spaces at better rates. “It's a very strong business park and we also like the location because it seems to be a market where the rental rates did not decline much even in the downturn.”