High-yield plays in Chicago suburb

Real Estate Alert, July 7, 2004

Three largely vacant office buildings in suburban Chicago are being marketed separately to opportunistic players.

The properties, which comprise about 900,000 square feet, are located in Naperville, Ill., near Interstate 88. They are expected to fetch about $45 million in total.

Buyers would be banking on their ability to lease up the properties, each of which is 15-20 years old. The vacancy rate in the local East-West Corridor submarket stands at a hefty 19%, but market players project that the rate will start declining in 2006.

The largest property being offered is the 341,000-square-foot building at 263 Schulman Boulevard. Bank One, which foreclosed on the property's mortgage, is seeking about $23 million, or $67/sf. Transwestern Commercial Services has the listing.

The 285,000-sf property at 1100 Warrenville Road is expected to trade for about $11.5 million, or $40/sf. New York Life hired Mission Capital Advisors of New York some months ago to sell a defaulted loan on the property for about $20 million, or $70/sf, but only received offers of about $30/sf. New York Life subsequently foreclosed. Now that Mission is marketing the property itself, bids are expected to reach about $40/sf.

A Singapore investment group is offering the 270,000-sf building at 1000 Warrenville. It is expected to sell for about $11 million, or $41/sf. CB Richard Ellis has the listing.