Illinois Real Estate Journal April 2011 : Page 1

VOLUME 14, NUMBER 2 ©2011 Law Bulletin Publishing Co. April 2011 **Directories Inside Economic Developers • Green Building/Products & Services Financial Institutions • Business & Industrial Parks *Page 27 Central Park of Lisle now 92% Leased Mark Thomton W Preparing for expansion By Mark Thomton I-39 readies for industrial growth “When we got involved in 2002, not a lot of bro-kers knew about the corridor,” he says. To help solve this problem, Goode spearheaded the initiative to establish the I-39 Logistics Corridor Association, a group of municipalities and commer-cial real estate firms that now consists of 50 mem-bers. The group pooled together to fund logistic and economic studies regarding the corridor. The asso-ciation helped legitimize the area as a business des-tination for major distribution operations. As the real estate market went through a boom in the past decade, major deals began to take place. “Prior to the recession we had over 7 million square feet of space brought to the corridor,” says Janice McFadden, executive director of the I-39 Lo-gistics Corridor Association. McFadden says that activity in the corridor slowed down considerably during the recession, not only be-cause economic activity was hurting, but also be-cause projects in the corridor are generally com-pleted on a built-to-suit basis. There is not much sec-ond-generation or speculative space available for I-39 continued on Page 18 hite Oak Realty Partners recently signed new leases with Farmers Insurance Ex-change and Armour-Eckrich Meats, LLC, totaling 88,857-square-feet, for a net total of 28,082 -square-feet of space at the Central Park of Lisle I, bringing the facility to 92 percent leased. Armour-Eckrich Meats has occupied a 49,696-square-foot sublease at the facility at 4225 Naperville Road in Lisle since 2007. In an effort to reconstruct its corporate lease, the firm signed a long-term di-rect lease for 71,479-square-feet. This will make the firm the largest tenant in the building, occupying 23 percent of the building. The firm also subleased 13,000 square feet at the neighboring Central Park of Lisle II, which it will now vacate with the new direct lease. In the second lease, Farmers Insurance Exchange will consolidate its three offices located in the west-ern suburbs with a new 17,378-square-foot lease on the 3rd floor at Central Park of Lisle I. EAST-WEST continued on Page 18 P ortions of the I-39 Corridor in North Central Illinois may technically be considered part of the Greater Chicago Metropolitan Area, but proponents of the burgeoning economic area tout its distance from the mega Midwestern city as one of its strongest selling points. In 2002, Mark Goode, principal of Venture One Real Estate, began purchasing land in the DeKalb area. The idea was to find land suitable for distribu-tion firms that allowed them to bypass the heavy congestion in the Chicago area and have easy access to “free highways” throughout the Midwest. I-39, roughly 80 miles west of Chicago, was the key to achieving this goal. “I-39 runs all the way from Madison (Wis.) to Bloomington (Ill.) and it intersects with all major East-West expressways in the Midwest,” says Goode. “It allows you to bypass the congestion in Chicago completely.” While the benefits may have been clear to Goode, convincing potential tenants, and, more importantly, Chicago-area brokers, took some time. PRSRT STD U.S. Postage PAID MINNEAPOLIS, MN PERMIT NO. 31515

I-39

Mark Thomton

Portions of the I-39 Corridor in North Central Illinois may technically be considered part of the Greater Chicago Metropolitan Area, but proponents of the burgeoning economic area tout its distance from the mega Midwestern city as one of its strongest selling points.

In 2002, Mark Goode, principal of Venture One Real Estate, began purchasing land in the DeKalb area. The idea was to find land suitable for distribution firms that allowed them to bypass the heavy congestion in the Chicago area and have easy access to “free highways” throughout the Midwest. I-39, roughly 80 miles west of Chicago, was the key to achieving this goal.

“I-39 runs all the way from Madison (Wis.) To Bloomington (Ill.) And it intersects with all major East-West expressways in the Midwest,” says Goode. “It allows you to bypass the congestion in Chicago completely.”

While the benefits may have been clear to Goode, convincing potential tenants, and, more importantly, Chicago-area brokers, took some time.

“When we got involved in 2002, not a lot of brokers knew about the corridor,” he says.

To help solve this problem, Goode spearheaded the initiative to establish the I-39 Logistics Corridor Association, a group of municipalities and commercial real estate firms that now consists of 50 members. The group pooled together to fund logistic and economic studies regarding the corridor. The association helped legitimize the area as a business destination for major distribution operations. As the real estate market went through a boom in the past decade, major deals began to take place.

“Prior to the recession we had over 7 million square feet of space brought to the corridor,” says Janice McFadden, executive director of the I-39 Logistics Corridor Association.

McFadden says that activity in the corridor slowed down considerably during the recession, not only because economic activity was hurting, but also because projects in the corridor are generally completed on a built-to-suit basis. There is not much second- generation or speculative space available for Lease.

“Firms that move here have to want new construction,” says McFadden. “But if you need to serve Wisconsin, Minnesota, and Missouri, our corridor is very enticing.”

Venture One’s Park 88, a 450-acre industrial park outside of Dekalb, has been very successful in luring big firms for ground-up construction. Retailer Target Corp. developed a 1-million- square-foot facility and Minneapolis- based 3M has a 401,000- square-foot facility as well. Of the original 450 acres, 285 remain available.

The biggest news to come out of the corridor in 2010 was 3M’s development of its second facility at Park 88. The firm broke ground in August, with Clayco acting as the general contractor, on a 650,000-square-foot distribution center. The firm will have the option to expand the property to 1-milion- square-feet if needed. The corporate conglomerate, which specializes in medical products, electrical products, and laminates, among others, also has 500,000-square-foot facility in a nearby location in DeKalb.

Another large deal to emerge in the corridor recently is the 250,000- square-foot built-to-suit facility for the Japanese company Nippon Shayro. The firm will break ground this summer in Rochelle, Ill. Nippon Sharyo is a major supplier of commuter rail cars and will serve clients like Metra and the City of Chicago from this new assembly facility, says McFadden.

While the market may not be labeled as robust, it has improved in recent months, making Venture One’s Goode optimistic for the next 12 months.

“It’s been slow for the last couple of years, but now it is rather active,” says Goode. “We need the larger companies to build new facilities and expand. I think they have to if they want to be competitive. 3M is evidence that firms are willing to expand.”

As the market improves Goode likes his position. Land is available along some portions of the I-80 corridor in the Chicago metropolitan area, but sites for new industrial product have become scarce otherwise, and, not to mention costly when compared to land prices along the I-39 corridor.

“There are very few land sites available for industrial development east of the Fox River,” says Goode. “It is hard to find a 50-acre land site. If you can’t build east of Fox River, where can you build? Firms need infrastructure and a large four-way intersection. The I-39 corridor is the next logical step.”

Read the full article at http://www.irejofficecentre.com/article/I-39/692074/66321/article.html.

East-West Corridor

Mark Thomton

White Oak Realty Partners recently signed new leases with Farmers Insurance Exchange and Armour-Eckrich Meats, LLC, totaling 88,857-square-feet, for a net total of 28,082 - square-feet of space at the Central Park of Lisle I, bringing the facility to 92 percent leased.

Armour-Eckrich Meats has occupied a 49,696- square-foot sublease at the facility at 4225 Naperville Road in Lisle since 2007. In an effort to reconstruct its corporate lease, the firm signed a long-term direct lease for 71,479-square-feet. This will make the firm the largest tenant in the building, occupying 23 percent of the building. The firm also subleased 13,000 square feet at the neighboring Central Park of Lisle II, which it will now vacate with the new direct lease.

In the second lease, Farmers Insurance Exchange will consolidate its three offices located in the western suburbs with a new 17,378-square-foot lease on the 3rd floor at Central Park of Lisle I.

The building’s owner, a joint venture between White Oak Realty Partners, Fulcrum Asset Advisors and Angelo Gordon and Company, was represented in-house by Tom Saletta of Saletta Commercial Realty in both leases. Kevin McLennan and Robert Sevim of Studley represented Armour-Eckrich Meats, while Jeff Miller of UGL\ Equis represented Farmers.

The ownership group purchased the class A complex in March of 2010 for a reported $80 million. Central Park of Lisle I & II is a total 693,000 rentable square feet, of which Saletta has leased more than 130,000 square feet in the last year.

When the firm purchased the building, BP occupied a major portion of Central Park II at 3333 Warrenville Rd. Saletta says that the ownership group was unsure if BP would re-sign when its lease was set to expire at the end of 2010. The energy firm went through a corporate restructuring and decided to vacate the facility in November of last year, leaving a 77,000- square-foot plate on the building’s top two floors.

Saletta has been pleased with progress at Central Park I, but has now focused his efforts on leasing the remaining space at Central Park II. He cites the amenities, such as an on-site health club, and a recently built 80-seat conference center, as selling points to potential large users.

Currently, firms such as RR Donnelley, Harris Bank, JP Morgan, and Wilton Industries, are all reportedly searching the market for large floor plates.

While Saletta would certainly like to fill the space in one large deal, he says that is not the highest priority.

“The strategy at this point has not been to wait for the two-floor user,” he says.

With the amount of users active and the real estate market seemingly in a recovery stage, Saletta believes he can meet the goal this year of leasing the majority of the 77,000 square feet.

“We are feeling confident based on the large users out there looking right now,” he says. “Since we bought the building, we have been impressed by large amount of activity and showings. I’m optimistic that it will happen this year.”

Read the full article at http://www.irejofficecentre.com/article/East-West+Corridor/692076/66321/article.html.

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