CRE N Illinois

NGKF represents two clients in sizable build-to-suits within two months

This past May and June, Newmark Grubb Knight Frank (NGKF) participated in two major groundbreaking celebrations in Illinois.


This past May and June, Newmark Grubb Knight Frank (NGKF) participated in two major groundbreaking celebrations in Illinois. Batory Foods broke ground on May 16th for a 678,300-square-foot facility in the RidgePort Logistics Park in Wilmington. On June 30th, MC Machinery Systems, a subsidiary of global Mitsubishi, broke ground on its 175,900-square-foot facility in the Northwest Pointe Business Center in Elk Grove Village. Both of these build-to-suits add 854,200 square feet of new product to the Chicago area industrial base, which is part of today’s healthy market balance between speculative and build-to-suit projects.

NGKF was appointed as exclusive representative for both build-to-suits, also about a month apart. In October 2014, NGKF professionals Brian Reaney, director, Paul Buckingham, senior managing director, and Brian Carroll, executive managing director, were engaged by Batory, a Des Plaines-based, national food ingredient distributor providing a broad range of ingredients to food and beverage manufacturers. MC Machinery, now in Wooddale, develops, sells, and supports state-of-the-art equipment serving the tool and die, mold making and fabrication industries, and hired Carroll and Tom Gath, managing director, in November 2014.

Early on, the Batory search was for an existing facility of about 700,000 square feet. The NGKF team reviewed multiple submarkets from O’Hare east into Chicago, and along the I-355 and I-55 corridors to I-80. Seven buildings were toured and as the project scope galvanized, it became clear a build-to-suit was the answer, the ideal location being close to I-80 and the BNSF and UP terminals for drayage. Proposals from four business parks were solicited and after extensive study and municipal meetings, the RidgePort Logistics Park was the decisive choice. Easy highway access, optimal overweight permitting conditions, favorable land pricing, aggressive developer, available TIF funds, park amenities including a new truck stop-travel center with restaurants, scales, vehicle maintenance and power washing services, and on-site police and fire departments, all aided in the decision. Batory purchased 40 acres from Ridge Development with an option for eleven more. Designed by Harris Architects and general contracting by Alston Construction, the build-to-suit scope features 36’ ceilings, 28,000 square feet of office, temperature controlled warehouse, cooler/freezer areas, 111 docks, 180 trailer spots, Ductile concrete floors, and the development will be BRC certified, C-TPAT certified, FSMA prepared, and OSHA VPP certified. The project will employ 55 people and occupancy by year-end is targeted. In about half of the space, Batory will provide third party logistics service for New Zealand-based Fonterra Foods, the world’s largest exporter of dairy products, and other food ingredient suppliers. “The state-of-the art technology design focus will give us an edge from the business perspective, and also allows us to meet and exceed world-class standards in food safety, security, and employee wellness”, says Jessica Stoja, Batory operations project manager.

The MC Machinery search focused in the O’Hare, North DuPage, and I-90 sub-markets for an existing facility of about 200,000 square feet. Four buildings were toured and MC decided that new construction was the best option. Multiple sites were reviewed and three built-to-suit proposals were received from developer-owned sites in Hoffman Estates, Itasca, and Elk Grove Village. Expert evaluation, coupled with numerous community and developer meetings followed. Ultimately, MC selected the Northwest Pointe Business Center based on employee retention, the Class 6 tax incentive, convenience to O’Hare International Airport as well as I-90 frontage. MC acquired 11.9 acres for their new North American headquarters and hired Heitman Architects and the Opus Group as general contractor. The NGKF Project Management Group is advising MC.

The development includes a 50,000-square-foot, two-story office, a 50,000-square-foot demonstration/showroom, and the remaining space planned as production, warehouse, 3D imaging, call center, plus six docks and 220 car parking. The Class 6B tax incentive program was approved for the project by Elk Grove and Cook County. MC will relocate 150 employees into the new facility early 2017. “Our goal for our new corporate headquarters was very simple. Stay in the vicinity of our current location to retain our biggest asset, our employees,” said Patrick Simon, marketing manager, building team member. “Secondly, create a state-of-the-art facility for those employees to call home and for our customers and partners to enjoy. Our partnership with NGKF has been critical to the success of this project. We are so excited to watch the progress and get into our new home.”

The build-to-suit pricing of both developments is valued at $80 million.

Per NGKF research, the industrial new construction deliveries estimated to be delivered in 2016 is pegged at 16 million square feet with just under half as build-to-suits. This is a healthy ratio of speculative versus build-to-suit deliveries, which historically if the speculative part of that ratio doesn’t go much above 75 percent; the market is in a relatively healthy state. Though, when the ratio moves well beyond 75/25 the market health is questionable, as late 2008 showed us when the ratio was racing to above 90/10 on 19 million square feet of deliveries that year.