In a move representing a new real estate strategy that other large firms may emulate, the U.S. investment arm of international electronics giant Siemens AG has purchased a suburban multitenant office building in order to consolidate a number of operations under one roof.
The Chatham Centre Northwest, a 205,000-square-foot building at 1901 N. Roselle Rd. that was 30 percent vacant less than a year ago, has been renamed the Siemens Center.
The seller of the 11-story property, opened in 1989 as the first of a planned twin-tower complex, was a partnership that included Venterra Management Co. of Chicago.
According to Eileen Blaker, vice president of SIBAG Investments Inc., the acquisition was the first step in a Siemens “buy-to-suit” strategy that calls for the phased relocation of a number of local offices into the Class A property at Interstate Highway 90 and Roselle Road.
“Not only does the geographical consolidation make sound economic sense, it also puts these Siemens’ organizations into a position where they can improve the synergy of their common business interests,” Blaker said.
By mid-November, the Chicago-area employees of three subsidiaries-Siemens Energy & Automation, Siemens Components Inc. and Siemens Power Corp.-as well as two departments of Siemens Corp.-legal and public relations-will have moved into the building.
More than 20 Siemens subsidiaries with more than 1,300 employees are scattered around the Chicago area, few in quarters as lush as the Siemens Center will provide.
“Given the combination of the existing tenant base, the incoming Siemens tenants and a direct leasing campaign to speculative tenants, Siemens Center is well-positioned as a long-term investment for SIBAG,” Blaker said.
No purchase price was disclosed.
The buy-to-suit strategy, which involves a company buying quality office space at depressed prices, has been occuring in other parts of the country as well, according to Greg Van Schaack, Midwest marketing director for Hines Interests Limited Partnership, the asset manager and agent for Siemens Center.
Build-to-suit is a term that has been used in real estate to describe the process of a company having a building designed and constructed to its exact specifications, then buying or leasing the new facility.
But with commercial real estate prices having fallen anywhere up to 50 percent in the last three years, more companies are likely to think about snatching up existing properties that can be made to fit their needs, Van Schaack said.
“By opting to acquire existing buildings as an alternative to leasing or new construction, companies backed with capital resources are in the enviable position of being able to make a long-term strategic investment that will also provide flexibility in their immediate space needs,” he said.
Hines recently assisted investment banker Morgan Stanley in a buy-to-suit transaction in New York City. Schaumburg has seen two other such purchases, by Sterling Corp. and Zurich American Insurance.
Racing to Racine
Ashley Capital, a Chicago-based real estate investment firm, has purchased 18 acres at the intersection of Interstate Highway 94 and Wisconsin Highway 11 near Racine and plans to develop the site into a business park for manufacturing and warehouse buildings.
The site offers the potential to build up to 300,000 square feet, either in a single facility or multiple facilities, said Thomas Boyles, Ashley vice president.
Asking price for the parcel was $360,000. An affiliate of Ashley already owns an adjacent 450,000-square-foot warehouse building.
Turnberry churning
Two manufacturers have purchased land in the 556-acre Turnberry Lakes International Business Center, which straddles Roselle and Hanover Park, with plans to construct new facilities in the Hiffman Shaffer Anderson Inc. park.
Camcraft Inc., a maker of precision industrial components, acquired 6.2 acres and plans to build an 82,000-square-foot facility. The company will relocate from Franklin Park upon completion of the building, set for May.
Gammerler (US) Corp., a maker of web printing equipment, bought 2.5 acres for the construction of a 13,000-foot facility. The company will relocate from Elk Grove Village next spring.
Greg French, vice president with Hiffman Shaffer Anderson, said the two new deals bring to five the number of projects under development at Turnberry Lakes, at Lake Street and Gary Avenue.
Care center to rise
Ground was broken last week in north suburban Lincolnshire for a 75,000-square-foot, 144-unit residential facility that will specialize in the care of people with Alzheimer’s disease and related illnesses.
Developer Alexander Blake & Co. of Skokie said The Wealshire, scheduled to open in January of 1995, will offer an alternative to other long-term care facilities and will provide a continuum of care-from day care through skilled nursing-within a home-like setting.
The design, by architects Behles & Behles, is a single-story facility with gardens, courtyards and family-style kitchen, living and dining areas.
The project is at 150 Blake Boulevard, near the intersection of Milwaukee Avenue and Old Half Day Road.
Overnight sensation
Federal Express Corp. broke ground last week for a 55,000-square-foot distribution center at the Meridian Business Campus in west suburban Aurora. The project will consolidate several suburban operations of the package delivery firm.
Aurora Mayor David Pierce said the new facility will bring 150 jobs to the city when it is completed in the middle of next year.
The center, which will contain 7,000 square feet of offices, will be developed by Kevin F. Jones, general partner of St. Joseph-Easton Partners, and constructed by McShane Builders Inc. on a five-acre site at Exchange and Commerce Streets.
Trammell Crow Co. represented land seller the RREEF Funds in the transaction. Jones represented Federal Express.
Plenty in store
Frain Camins & Swartchild retail broker David Metrick has had his hands full with a number of deals recently.
Metrick in the past few weeks has arranged two leases for bookstore giant Barnes & Noble Booksellers, two leases for a pair of high-end area retailers and helped out on three transactions involving Brunswick Corp.’s Leiserve division property Circus World.
The first Barnes & Noble deal was for a 23,200-square-foot build-to-suit store that will be developed by Sunil Puri on the southwest corner of U.S. Highway 20 and Mill Road in Rockford. The new store, located on a 2.5-acre site assembled from four parcels, is set to open in February.
Metrick was the sole broker in a second Barnes & Noble transaction, this one for a 37,200-square-foot lease at South West Plaza Shopping Center in Springfield. The store will occupy a portion of a shuttered Phar-Mor drug store.
Metrick and FC&S’ Roger Ruttenberg represented Circus World in three store transactions at Meadows Town Mall in Rolling Meadows, Stratford Promenade in Bloomingdale and Coral Palm Plaza in Coral Springs, Fla. Together, the deals totaled more than 33,000 square feet.
To cap off the activity, Metrick represented Bentley’s Luggage in the lease for its newest location at Wheaton Town Center and Lester Lampert Jewelers in its lease on Oak Street, a relocation from Michigan Avenue.
Other leases and sales
– Baer Supply Co., which services the woodworking industry, is expanding its facility in The Corporate Woods in Vernon Hills and will occupy 123,000 square feet in the Van Vlissingen & Co. project. Baer, which is also constructing a training and conference center with the addition, is growing to accommodate new product lines, company officials said.
– The Northwestern Medical Faculty Foundation has leased 73,500 square feet at the Time & Life Building, 541 Fairbanks Court in Chicago. Miglin-Beitler Management Corp., leasing agent for the building, said the foundation, a multispecialty group practice of physicians who are faculty members of the Northwestern University Medical School, will consolidate several offices in the space.
———-
Steve Kerch’s columns appear in Real Estate on Sunday and in Your Money on Thursday.
