Liberty Adds 754,231 SF to Midwest Portfolio

EDEN PRAIRIE, MN-In two separate transactions, Liberty Property Trust plans to follow its acquisition of a 408,932-sf industrial property in Joliet, IL with the purchase of the 345,299-sf former Best Buy headquarters building on 47 acres here. The Malvern, PA-based developer already owns nearly four million sf of space throughout Minnesota and more than 2.5 million sf of industrial space in the Chicago metro area and has plans to continue expansion in both markets.

Minneapolis-based Hoyt Properties Inc. sold the now-vacant original Best Buy Co. headquarters, including the surrounding acreage at 7075 Flying Cloud Dr. within the Golden Triangle. According to published reports, Hoyt acquired the property approximately a year ago from Best Buy for nearly $17 million. It has been vacant for four years, following the retailer’s relocation to Richfield. Hoyt initially planned to redevelop the property into either office or retail space.

Because the sale is still under contract, Dave Jellison, VP and city manager of Liberty’s office here, declined to disclose a price tag, but expects the acquisition to close in early 2007. “We could go a couple of different ways with the property,” he tells GlobeSt.com, and says a feasibility study will first take place.

“Plan A,” he says, “would be to tailor down the existing structure to between 200,000 sf and 250,000 sf and renovate it into a large-plate office building, and then develop the balance of the land into other uses, such as office with maybe a restaurant.” He says there are a couple of users in the market seeking new space with a large footplate rather than high-rise construction.

“Plan B would be to destroy the building and develop a brand new campus.” Under this scenario, the development “would be office-driven,” he says, “but could also include mixed uses, such as a restaurant and maybe some retail or something else.” Liberty has enlisted locally based Ed Farr Architects to help with the renovation, “and we’ll see what they come up with.” According to Jellison, Liberty’s existing Minnesota portfolio is 98% leased.

Meanwhile, Don Schoenheider, Jellison’s counterpart in Liberty’s Rosemont, IL office, tells GlobeSt.com the developer paid $13 million for the industrial building at 3501 Corporate Dr. in Joliet. The one-story structure in Southfield Business Park is currently 43% occupied by a single tenant, Ecolab Inc. Schoenheider says the asking rental rate is $2.95 per sf net.

“This acquisition is part of a larger plan to strategically grow Liberty’s portfolio in the Chicago region,” he says, calling it one of “many initiatives we are undertaking to increase our presence in the area.” He says several development projects and acquisitions are currently in the pipeline. He declined to be specific, but says, “we’re focused on land sites in this general area, ranging from as small as 78 acres to more than 200 acres,” which he expects will be announced in early 2007.