• 67,279 square feet at 1001-1091 Davis Road, Elgin, to GIS Rolling LLC, a private investment entity.  Matthew Lewandowski, vice President of Darwin Realty & Development represented the purchaser, and Kevin Lynch of Sperry Van Ness represented the seller.  The property is a multi-tenant building with 10 exterior docks and 18-foot clear ceiling height.
• 53,000 square feet at 1875 Big Timber Road, Elgin, to Smartkams Technologies.  Noel Liston, principal/director of brokerage services of Darwin Realty & Development represented the seller, Tru-Tech Systems, and the purchaser, Smartkams Technologies.  Smartkams Technologies is an Elgin-based company expanding their operations in CNC machining as well as personal computer products, sales and services.  In the transaction, Tru-Tech Systems, a Michigan-based manufacturing company, will leaseback a portion of the 53,000-square-foot building from Smartkams. The building sits on 4 acres of land, has 7,000 square feet of office, a 16-foot clear ceiling height and heavy power.
• 30,000 square feet at 1450 Lunt Ave., Elk Grove Village, to Blades Machinery.  Richard Daly, principal/president, and Jeffrey Provenza of Darwin Realty & Development represented the buyer, Blades Machinery, and Vernon Schultz of Colliers International represented the seller.  The building has one interior truck dock, two drive-in-doors and a 15-foot clear ceiling height.
• 27,000 square feet at 601 Carboy Road, Mt. Prospect, to 601 Carboy LLC.  Richard Daly, SIOR, principal/president, and Dan Prendergast of Darwin Realty & Development represented the Buyer, 601 Carboy LLC, and Steve Sullivan of NAI Hiffman represented the seller. The building has two drive-in-doors and a 14-foot clear ceiling height.
• 19,200 square feet at 764-768 Thomas Drive, Bensenville, to GIS Rolling LLC, a private investment entity.  Matthew Lewandowski, vice president of Darwin Realty & Development represented the buyer, GIS Rolling LLC.
• 19,200 square feet at 729-739 Fullerton Avenue, Addison, to Jim Muccianti.  Adam Haefner, vice president of Darwin Realty & Development represented the purchaser, Jim Muccianti, and Nick Eboli of Lee and Associates represented the seller. The building has 16 drive-in doors.
• 18,000 square feet at 85 W. Industrial Drive, Addison, to Mid-America Protective Coatings Inc. Adam Haefner, vice president of Darwin Realty & Development represented the seller, Building Ownership, Savogran Co., and Brett Rodgers of Marcus & Millichap represented the buyer, Mid-America Protective Coatings Inc. The building features five exterior docks, 25 car parking and a 12-foot clear ceiling height.
• 10,000 square feet at 278 Park Ave., Lake Villa, to SAI Infusion Technologies.  Dan Prendergast of Darwin Realty & Development represented the buyer, SAI Infusion, and Steve Sullivan of NAI Hiffman represented the seller. The building features one drive-in-door and one exterior dock.

1165 Crossroads Parkway, Romeoville

Distribution 2000 Inc., a third-party public warehouse and distribution firm offering food grade storage, has leased 236,000 square feet at 1165 Crossroads Parkway in Romeoville.

The new lease is a relocation and consolidation from two locations, which increases the firm’s total square footage by 61,000 square feet. Sally Macoicz, a senior director of Cushman & Wakefield of Illinois Inc., represented Distribution 2000 in the five-year lease. Dan Leahy and Adam Roth of NAI Hiffman represented the landlord, TA Associates.

The one-story, 471,500-square-foot industrial warehouse building was built in 2004. It has a 30-foot clear ceiling height, 48 exterior docks and two drive-in doors. The building is located one-half mile from the interchange at Interstate 55 and Weber Road and has good visibly from the highway.

Distribution 2000 is an asset-based, third-party logistics provider offering warehousing and distribution services in the Chicago metropolitan area.

Mell & Company has leased 21,880 square feet of warehouse space located at 6700 Touhy Ave. in Niles. Terrence O’Hara, senior vice president of Lee & Associates of Illinois LLC, represented building ownership, Mohawk Building LLC, and Peter Billmeyer of Chicagoland Commercial represented the tenant in the transaction.

Ellen Steinbrecher and CJ Kuehl, both principals of Lee & Associates of Illinois, represented National Louis University in their lease of 11,199 square feet of office space located in the Capitol Commerce Center in Wheeling. Jason Streepy of NAI Hiffman represented building ownership in the transaction.

MKD Electric has purchased a 35,150-square-foot industrial building located at 1450 McLean Boulevard in Elgin.  John Cassidy and Ken Franzese, both principals of Lee & Associates of Illinois, represented the seller, a private trust, and Bruce Granger of Grubb & Ellis represented the buyer in the transaction.

General Electric has leased 32,000 square feet located at 7521 Brush Hill Road in Burr Ridge. Brian Vanosky, principal of Lee & Associates of Illinois, represented building ownership, and Brush Hill Properties and Mike Mangan of CB Richard Ellis represented the tenant in the transaction.

Jim Planey and Jeff Janda, both principals of Lee & Associates of Illinois, represented Coated Sand Solutions in their purchase of 28.05 acres at Ritchie Road and Steward Road in Rochelle.  Planey and Janda also represented ownership, The Boyle Family, in the transaction.

Mike Plumb, vice president of Lee & Associates of Illinois, represented CM2 Properties LLC in their purchase of a 44,300-square-foot warehouse building located at 490 Windy Point Drive in Glendale Heights.

Walter Murphy, principal of Lee & Associates of Illinois, represented JMK-IIT in their lease of 86,631 square feet of industrial space located at 530 W. North Frontage Road in Bolingbrook.  Larry Johnson and Kirk Armour of CB Richard Ellis represented building ownership in the transaction.

USCS built the facility in 1974, with an addition in 1979, and will remain a tenant in 150,000 square feet.  Bridge is already in discussion with users interested in the remaining 162,000 square feet of refrigerated space, which is scarce in and around Chicago.  The building is centrally located in the near southwest submarket with immediate access to Interstate 55, providing direct proximity to the city.

Steve Connolly and Larry Much of Oakbrook Terrace, Ill.-based NAI Hiffman represented USCS in the sale and will serve as Bridge’s exclusive leasing agents for the property.

“We were comfortable with the risk-reward opportunity to gain a 50 percent leased building in a solid submarket with a high-quality tenant,” said Tony Pricco, principal with Bridge.  “The acquisition fits our portfolio and our strategy of pursuing real estate transactions that conventional developers might overlook.”

USCS owns and operates two other facilities it built in Chicago’s southwest suburbs and will continue to manage the refrigeration systems in the Lyons property.

“The Bridge and USCS teams worked diligently together to complete this unconventional sale, and it’s a hopeful sign that the investment market is improving,” said Connolly.

NAI Hiffman Industrial Services Group

Chicago’s O’Hare industrial market houses a diverse mix of distribution and manufacturing companies in one of the largest concentrations of industrial property in the Midwest.  Surrounding O’Hare International Airport, the O’Hare industrial market is comprised of Elk Grove Village, Des Plaines, Rosemont, Franklin Park, Bensenville, Wood Dale and Itasca.  During the economic downturn, this market suffered greatly and still shows signs of high vacancy rates, historically low rental rates and sale prices.  What signs can we look for to forecast the future of the O’Hare industrial market?

It is hard to find consistent and clear data to predict future trends, but two good sources of local information provide an insight into this market.  First, the Chicago Department of Aviation collects monthly air cargo volume figures based on freight tonnage at O’Hare International Airport.  Second, the Federal Reserve Bank of Chicago tracks Midwest manufacturing output in Illinois, Indiana, Iowa, Michigan and Wisconsin.  Reviewing these two indicators tells a great story of where this market has been and where it is going.

In the heart of this market, air cargo volume at O’Hare can be used as a leading indicator for distribution space demand in this area.  Using a regression model on O’Hare air cargo tonnage and the O’Hare industrial vacancy rate over the past ten years, the effect of cargo tonnage is statistically significant and negative.  This means when air cargo tonnage increases or decreases, there will most likely be a lagging opposite effect on vacancy rate.  As an example, in 2009 we experienced the lowest cargo volume recorded over the past ten years and a 14% decrease from 2008.  The vacancy rate in the first quarter of 2009 was 11.22%.  It increased to its highest reading in the past 10 years to 12.59% in the first quarter of 2010 representing a 12% increase in the vacancy rate within 12 months.  We soon witnessed the opposite effect with a dramatic 24% increase in cargo tonnage during 2010 which paralleled a 7% drop in the vacancy rate from the first quarter of 2010 to the first quarter of 2011.  Currently cargo tonnage through the third quarter of 2011 has decreased slightly by approximately 4% versus the same period in 2010 with a corresponding 10.8% vacancy rate.

The importance of air cargo distribution in the O’Hare market is exemplified by a few recent deals.  The largest transactions in the market this year were logistics companies leasing modern distribution space.  CEVA Logistics leased 232,000 square feet and Hegele Logistics leased 207,000 square feet in the 439,000 square foot ProLogis owned building at 855 N. Wood Dale Rd in Wood Dale.  Companies like these that rely on expediting time sensitive products through O’Hare Airport drive much of the space demand in this market.

The volatility of 2009 and 2010 is behind us.  We now see a stabilization of air cargo volume at O’Hare over the past twelve months.  With no new speculative property development in this market, we should see demand continue to slowly reduce current vacancy rates.

Another pulse to watch in this market is the Chicago Federal Reserve Midwest Manufacturing Index.  While broad in its scope of coverage across the Midwest, it uses “hours worked” data to measure monthly changes in regional manufacturing activity.  The height of this index achieved a reading of 101.3 in January of 2008.  The lowest point recorded a 68.3 in June of 2009, representing a 33% decrease from the peak.  The September 2011 index was 85.2 which is a 25% recovery from the bottom in 2009.  This reading is also the highest level in three years since posting an 86.5 in October 2008.  The current index is only down 7% from the 10 year average of 91.3 although it has remained relatively flat over the past six months.

The Chicago Federal Reserve Midwest Manufacturing Index is not a leading indicator for industrial demand in O’Hare.  However, it is a general gauge for local production which directly impacts the supply chain and movement of goods through this area.  While our economy shifts towards distribution, manufacturing is still dominant in the O’Hare market.  One of the largest manufacturing deals in O’Hare this year was the relocation of Toyo Ink America to 108,000 SF at 1225 N. Michael Drive in Wood Dale which doubled their capacity.

Relative to the air cargo volumes at O’Hare, the Chicago Federal Reserve Midwest Manufacturing Index corresponds to the variability seen over the past couple of years.  Keep a watchful eye on these important statistics as they will likely determine future demand in the O’Hare industrial market.  While both data sources show improvement from the bottoming out of these indexes in 2009, neither set indicates substantial growth in the near future.  The stabilization in these latest figures should allow for a slow but smooth take-off to recovery in the O’Hare market.

Follow these statistics at www.ChicagoIndustrialist.com

Adam Marshall, CCIM, is an industrial real estate broker at NAI Hiffman and specializes in the O’Hare and surrounding markets.

Assoian brings a 25-year career in asset management to the Oakbrook Terrace-based firm and will oversee the Asset Management Group, which currently operates a portfolio of 58 million square feet of third-party assets for investor clients. He will also be active in new business development.

“I’m excited to work with a firm that is locally owned, yet has the size and capacity that NAI Hiffman does,” says Assoian. “I’ve been impressed with the growth of the company and my job now is to make a great firm bigger and better.”

Assoian is joining NAI Hiffman from Grubb & Ellis Realty Investors, where he oversaw various investor clients such as Prudential, with responsibility for assets in Chicago, Indianapolis, Milwaukee, Minneapolis, St. Louis, Cincinnati, Columbus, Denver, Miami, Portland, Detroit and Nashville.

However, it is Assoian’s experience on the institutional side, with firms like Travelers Insurance, and his exposure to office property management that has made him most appealing to Hiffman.

“Bob has spent many years as an institutional asset manager, which granted him an owners perspective and the ability to offer clients valued strategic asset management advice,” said David Petersen, NAI Hiffman’s CEO, in a statement. “His commitment to cultivating new relationships, as well as enhancing those we have with existing clients, fits perfectly with NAI’s dedication to client service.”

Assoian says that 80 percent of his background work has been with office product, both on the institutional and third party provider side. He plans to build on existing relationships to grow the office portion of Hiffman’s portfolio.

“We are growing all lines of our services, which include office, industrial and retail,” says Petersen. “We have had a tremendous increase in the office sector, to which Bob brings a unique perspective.”

He will be based out of the company’s Oakbrook Terrace headquarters, from which he will manage NAI’s six satellite management offices and the group’s 160 employees.

“I’ve had the job that my clients now have. I can take the best practices I’ve seen from those situations and bring them to a service company,” says Assoian. “It is refreshing that I’m not replacing anyone. NAI is actually adding people, making new hires. I’m looking forward to contributing to the continued success of the company.”

Things are going well in the Lake County industrial market as the area is coming off of a positive third quarter that experienced more than 700,000-square-feet of positive absorption. Activity is building momentum and brokerage professionals are anticipating a strong fourth quarter to close out the year.

According to research from NAI Hiffman, the Lake Co. market has experienced 1,067,497 square feet of positive absorption in 2011, with 792,153 square feet of activity coming in the third quarter alone. This brought the vacancy rate down to 10.3 percent.

705 Tri State Parkway

The market comprises roughly 66 million square feet of industrial space, making it the fifth largest submarket in the Chicago area, according to the NAI report. However, despite its size and recent activity, the market is never quite considered the industrial powerhouse other areas such as the I-55 corridor and I-80 corridor on the southwest side of the metro area. Simply put, it does not have the capacity to attract large-scale distribution operations.

“Overall, it is not a market that has many 500,000-square-foot buildings,” says Robin Stolberg vice president of industrial services for Jones Lang LaSalle. “Historically, there has been a real presence of mid-sized companies in Lake County. A lot the buildings are operated by user-owners.”

Lake County has always been considered more of a residential market with pockets of corporate activity. Fortune 500 companies like Abbot, Baxter, and Walgreens, call Lake County home. The trend is for firms to occupy a large corporate campus, but this does spawn ancillary activity as suppliers and third-party providers desire space in nearby locals.

Some developers have attempted to capture these firms in recent years and numerous speculative facilities went up at the height of the real estate boom. Many of the recent deals have taken advantage of this as firms are filling this vacant Class A space.

“We had an excellent quarter,” says Steve Sullivan, vice president in the Industrial Services Group at NAI Hiffman. “We have had an inventory of Class A industrial product that has been sitting empty for more than two years. Companies were looking at the market, waiting for the fundamentals to improve. The product was there for the taking.”

The biggest deal in the second quarter was a 200,000-square-foot lease by High Sierra in Gurnee. The sporting goods retailer took space in a speculative facility developed by CenterPoint Properties at 705 Tri State Parkway. The building is a part of the firm’s $117 million CenterPoint Business Center – Gurnee development.

“That was a monster deal for the corridor,” says Sullivan. “High Sierra went from 45,000 square feet to 200,000 square feet.”

In the second quarter, another large speculative facility was absorbed as Sysmex, a Japanese-based healthcare firm, signed a lease 146,850 square feet in Bridge Development’s Aptakisic Creek Corporate Park in Buffalo Grove. The firm also leased a 163,739 class A office center across the street, which Bridge Development marked for sale in September.

Sullivan also noted that Hearthware Home Products expanded its lease from 75,000 to 200,000 square feet in Libertyville earlier this year.

Taxes are part of the discussion…

Expansions of existing firms has played a large role in the recent activity, but frequently brokers field inquiries from neighboring Cook County firms looking to lower their tax base.

“Taxes are always an item of discussion,” says JLL’s Stolberg. “Whether it is a sale or a lease, there is a substantial tax difference between Cook County and Lake County.”

However, Lake County itself may now be under fire as Wisconsin has now targeted Illinois companies in the wake of the Prairie State’s decision to increases its corporate tax rate to 7 percent. That is still below Wisconsin’s 7.9 percent rate, but the state has been aggressive with its financial incentive packages to help off-set the difference and it touts its lower cost of labor as a strong draw. Several firms have made the move in the past year. Catalysts Exhibits, one of the first to do so, announced a pending move from Crystal Lake in March to a 144,000-square-foot facility in Kenosha County.

Stolberg says that bigger firms are taking this seriously and many have taken a hard look at the prospect of relocating to Wisconsin.

“The 20,000-square-foot user in Buffalo Grove isn’t looking at Pleasant Prairie (Wis.), but the 100,000-square-foot user in Waukegan is,” says Stolberg.

4^th quarter…

A prime example of this can be seen in U-Line, a shipping supply company that announced its move to Wisconsin from Waukegan in 2008. The firm left behind roughly 600,000 square feet of space.

Yet as activity picks up, NAI’s Sullivan believes that several local operations will look to expand into that space, potentially making for a very strong 4^th quarter.

“I think the 4^th quarter is going to be fantastic as well,” says NAI’s Sullivan. “Several deals are pending and I think we are going to see a lot of the space vacated by U-Line back filled this quarter. A lot of entrepreneurial talent lives nearby and owners want to be in close proximity to their homes and employee base. We are thrilled that local companies are expanding again.”

The Boston, Massachusetts-based investment firm acquired the property from Qualified Intermediary Land Trust of Southern Illinois for an undisclosed amount. The 262,500-square-foot facility is situated on 13.07 acres and includes 50 exterior docks and 4 drive-in doors with a 30 foot clear ceiling height. The entire building is leased on a long-term basis to Goglanian Bakeries, Inc. High Street has awarded the property management of the facility to NAI Hiffman‘s Asset Management Group.

Michael Tenteris, senior vice president with NAI Hiffman’s investment services group and Jeff Fischer, vice president with NAI’s industrial services group, represented High Street in the transaction.

Building owner, Broe Real Estate was represented by Michael VanZandt, senior vice president, Brian Edgerton, vice president, and Matt Novak, associate, with NAI Hiffman office services group. Marty Schatz with LaSalle Ventures represented Biotronic.

Biotronic is one of the oldest, largest, and most respected providers of neurophysiological intraoperative monitoring services in the country. They work with more than 400 hospitals and over 850 physicians throughout the United States, and have over 175 neural monitoring technologists located around the country.

Universal Beauty will relocate from its current Elk Grove Village location after the completion of the construction of its office and lab space.

Brian Colson, executive vice president, and Eric Fischer, senior associate, with NAI Hiffman’s industrial services group, represented Universal Beauty Products in the transaction. David Bercu and Brian Kling with Colliers International, represented the seller, ML Realty Partners.

“Univeral Beauty needed to expand and decided to take advantage of the favorable financing environment by purchasing a building they could claim as their long-term headquarters,” said Colson in a release.  “The facility at 500 Wall Street in Glendale Heights fit their location, warehouse and office requirements along with achieving their financial goals.”