Purchasing Spree on Class B Industrials

CHICAGO—In the initial phase of the economic recovery, investors began snapping up much of the available class A industrial product. But as the economy has strengthened even further in 2012 and 2013, investors have starting looking, and buying, the smaller and older class B buildings, many in the suburbs, which form the backbone of the Chicago area’s industry.

“Two years ago, they weren’t even thinking about the B market,” says John Coleman, executive managing principal of Newmark Knight Frank Epic in suburban Rosemont. But several years of growth and strong balance sheets for companies using this building class soothed whatever anxieties investors harbored. Starting around the third quarter of last year, investors “became much more comfortable with the returns and the risk underwriting.”