Brookfield Asset Management is placing a big bet on the Chicago-area logistics market, forming a joint venture to build about $1 billion of warehouse space 60 miles southwest of Chicago.
The Toronto-based investment giant has agreed to invest in the Elion Logistics Park 55, a big industrial park in Wilmington, a sign of confidence that the Chicago-area warehouse boom will continue. With e-commerce and logistics firms gobbling up industrial space, deep-pocketed investors have been pouring money into the sector and developers have been building warehouse space as fast as they can.
Brookfield is teaming up with the developer of the Wilmington project, Miami-based Elion Partners. Under the deal, the joint venture will own five fully leased buildings totaling 4 million square feet in the park, with plans to build as much as 15 million square feet more, according to a statement from the companies about the deal.
“We are excited about the partnership with Elion and the opportunity to gain exposure to high-quality industrial assets in supply-constrained markets with significant potential upside,” Chris Reilly, managing partner at Brookfield, said in the statement.
The deal does not include three warehouses in the park totaling 2 million square feet leased to Michelin North America. Earlier this year, a California investor paid $130 million for the buildings, the second-biggest local industrial property sale ever.
Led by Amazon, e-commerce, logistics and retail companies have developed a voracious appetite for warehouse space, pushing the Chicago-area industrial vacancy rate down to 6.29% in the second quarter, from 6.42% a year earlier, according to Colliers International.
Tenants signed 173 leases totaling 15.4 million square feet in the second quarter, the most industrial space ever leased in the Chicago area in a three-month period, according to Colliers. The Colliers data does not include leases of less than 10,000 square feet.
“Industrial logistics real estate continues to experience positive momentum, and now is the logical time to seek long-term capital,” Juan DeAngulo, managing Partner at Elion, said in the statement. “This partnership structure and Brookfield’s support will enable Elion to fulfill the long-term development plans for ELP 55.”