New joint venture ramps up Chicago industrial investments

CHICAGO, April 15, 2021 – JLL Capital Markets announced today that it has closed a $55-million-plus recapitalization of a 15-building multi-use logistics portfolio totaling more than 1 million square feet of industrial and flex space throughout the Chicago area.

JLL arranged the transaction between Chicago-based real estate investor Clear Height Properties and Harbert U.S. Real Estate, an investment strategy sponsored by Harbert Management Corporation. Clear Height Properties will maintain management of the assets and retain an ownership percentage.

The new venture will seek to double the size of the portfolio by acquiring additional properties throughout the Chicago industrial market over the next 12 months.

The portfolio is approximately 90 percent leased to 127 tenants and a weighted average lease term of 2.73 years. All the assets are within various infill western Chicago Industrial submarkets, including O’Hare, North Cook County and DuPage County. This primary transportation hub allows tenants to reach an overwhelming majority of the country within a two-day’s drive. Additionally, as the only city in which all seven Class I railroads operate, tenants have access to an extensive rail system, in addition to two international airports.

JLL Capital Markets’ recent research report details how multi-use logistics assets like the properties that comprise this portfolio are seeing increased investor interest due to the irreplaceable nature of the asset sub-class and compelling rent growth profiles. Specifically, in the Chicago MSA, the average vacancy rate of these older, smaller product types is 5.3 percent, and it has outperformed the larger, bulk industrial product since 2010.

The JLL Capital Markets team representing the seller was led by Senior Director Kurt Sarbaugh and Managing Director Christopher Carroll, with assistance from Senior Director Robin Stolberg.

“These light industrial-type assets are increasingly difficult to reproduce in infill markets,” Sarbaugh said. “The underlying cost of land and the added expense associated with constructing smaller buildings and higher office finish make new supply tougher to pencil out.”

JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm's in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether investment sales advisory, debt placement, equity placement or a recapitalization. The firm has more than 3,700 Capital Markets specialists worldwide with offices in nearly 50 countries.

For more news, videos and research resources on JLL, please visit our newsroom.