Industrial Realty Group LLC has purchased the former home of Caterpillar’s hydraulic manufacturing operations, a nearly 1.5 million-square-foot industrial site in Rockdale, Ill., roughly 45 miles southwest of Chicago.
The real estate development and investment firm plans to transform what was once a single-tenant facility into a multi-tenant complex featuring warehouse, distribution and manufacturing accommodations.
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“IRG owns other positively-performing properties in the area, and this acquisition reflects our efforts to further expand our nationwide portfolio in the dynamic Chicago market,” Onno Steger, senior vice president with Industrial Realty Group LLC, told Commercial Property Executive.
As part of its corporate policy, IRG does not disclose details on purchase prices. The 69-acre property last changed hands in 2014, when Griffin Capital purchased it for $57 million. Carrying the address of 2200 Channahon Road in the I-80 submarket near Joliet, the site fronts the Des Plaines River and presently hosts three buildings, the largest of which encompasses 1.3 million square feet, roughly 65,000 of which is office space. And the site certainly boasts a desirable location; the Houbolt Road Bridge, scheduled to reach completion in 2023, will connect neighboring I-80 and intermodal facilities in Joliet.
Repositioning 2200 Channahon is the priority, and IRG plans to subject the property to substantial renovations, investing in upgrades spanning from the addition of roughly 78 dock doors, to updated lighting and improved onsite traffic circulation. Pending future tenant requirements, IRG sees potential for upgrades to existing rail and barge infrastructure as well.
“The logistics sector of this market continues to maintain its strength, largely due to onshoring of the logistics supply chain. We see that trend continuing and believe the site will provide much-needed options for users within this sector,” Steger said. “In addition, sitting just outside of Chicago allows us to provide tenants competitive market rates in comparison to other options closer to the city center.”
IRG’s purchase of the former Caterpillar property comes on the heels of the company’s issuance of $335 Million of USPP bonds, with Goldman Sachs having served as sole placement agent for the offering.
As IRG noted at the time of the March 2021 transaction, the company’s plan for deploying the capital consists of a three-pronged approach that involves reducing secured debt, increasing capital investments into existing properties and acquiring new industrial assets in dynamic markets across the U.S.
Chicago is one such dynamic industrial market. Metropolitan Chicago’s industrial sector was firing on all cylinders before COVID-19 struck, and one-year later, the market is back to its prime performance level, with 5.7 million square feet of positive net absorption in the first quarter of 2021, rents holding steady at a record high and the average vacancy rate at 6.2 percent, the lowest point in 10 years, according to a report by Newmark.
Renovations at the newly acquired Rockdale property will commence immediately, as will marketing efforts. IRG has divulged that it is already in talks with a number of industrial-space users that have taken interest in the project.