Chicago warehouse, land on block

Real Estate Alert, April 28, 2004

A Chicago warehouse is on the market, along with a neighboring parcel of land that would allow the buyer to more than double the property's size.

The existing building, at 2800 West Columbus Avenue, encompasses 658,000 square feet. The buyer could use the accompanying 33-acre plot to expand the property to up to 1.6 million sf. The building has an asking price of $26.3 million. The land is priced at $7.2 million. They are available separately or as a package. Staubach Co. has the listing.

Staubach is planning to target owner-occupiers. The only tenant, J.R. Plastics, occupies 368,000 sf, or 56% of the building, at a triple-net rent of $4.20/sf. The company's lease calls for it to expand to 460,000 sf, or 70%, in October at the same rent. But if an owner-occupier purchased the property before then, J.R. may consider remaining in its existing space.

The building, constructed in 2001, could also go to a value-added investor that would then seek to fill the remaining space, which has an asking rent of $3.35/sf. Under that scenario, the buyer's initial annual yield would be 5.9%. The stabilized yield would be 9.9%.

The properties are located in the southwest part of the city, across the street from the Norfolk & Southern 79th Street Terminal, a major railyard. They are also within four miles of two other railyards and are situated within an enterprise zone, which provides the owner with tax incentives from the city, and gives tenants tax incentives from Cook County.

The building and land are owned by a principal of privately held J.R. Plastics. The company rose from the ashes of the former Stylemaster, which went out of business in 2002.

For more information, call Staubach's Trevor Ragsdale at 312-245-5092.