Fulcrum Asset Advisors expanded its sizeable share of suburban midsize office holdings with a sale-leaseback transaction in Lake County.
The Chicago-based private real estate investment firm paid $10.3 million for the three-story, 130,000-square-foot Class B office building at 2100 Norman Avenue in Waukegan. Built in 1989, the property is the headquarters of material handling equipment supplier UCC Environmental. The building’s seller is a limited liability company managed by former UCC chiefs Don and Douglas Basler.
Fulcrum’s Chicago-area office portfolio totals more than 6 million square feet and consists primarily of Class B properties in the suburbs, according to the company’s website. It also has similar properties in the St. Louis and Milwaukee areas. The firm is led by former Ridge Realty Group partner Tom Cox, former Capital Automotive REIT chief operating officer Scott Stahr and former RREEF Property Trust executive Peter Broccolo.
The terms of the lease Fulcrum struck with UCC as part of the deal are unclear from public records. Fulcrum did not respond to a request for comment.
The buyer, which includes one of Fulcrum’s own properties, comes at a tough time for the Chicago suburban office market as investors look to other areas of commercial real estate. Class B office tenants collectively took in 584,000 more square feet in the first quarter than they occupied in the Chicago suburbs, according to Cushman & Wakefield.
Suburban office vacancy rate hits record high 28% By the end of 2022, though, investors are feeling somewhat lucky with well-located, near-fully rented properties, according to a new report from JLL.Another Lake County Class A Office Building Bannockburn Enterprise CenterIts value has fallen only slightly since 2016, selling for $28.6 million this month despite being almost fully occupied.
Lake County is also one of the largest communities in Chicago Office to Industrial Projects In the works, Bridge Industrial competed to purchase the 101-acre former Baxter International headquarters in Deerfield and demolish the corporate building to repurpose the land as a logistics park. Brennan Investment Group The company announced last week that it is also exploring a similar project that could cost $100 million and lead to the demolition of the Rolling Meadows office building that the development company bought.
The projects reflect depleted demand for offices and expansion for industrial assets in commercial real estate.
In addition, Fulcrum, which has held a stake in the 691,000-square-foot Central Park in Lisle, DuPage County since 2010, has faced loan difficulties in recent months, according to the company’s website.The property has its Appraisal cut The hotel hit $68.3 million in March as occupancy rates fell below 80%, according to a new assessment. The loan on the property, which has been exceptionally serviced since September and due in January, has not yet been repaid, according to bond ratings agency DBRS Morningstar.