KKR Sells 1.7 MSF Chicago Logistics Portfolio

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Leading global investment firm KKR has sold a 13-property portfolio of distribution assets in the Chicago area to an unidentified global investment manager. The properties total about 1.7 million square feet of warehouse space with typical clear heights of 24 feet.

Neither the buyer nor a dollar amount was disclosed in connection with the transaction, and a KKR spokesperson did not respond to Commercial Property Executive’s request for this and other information.

Ben Brudney, a director in KKR’s real estate group who oversees the firm’s industrial investments in the United States, said in a prepared statement the company continues to see strong demand for well-located, last mile logistics real estate across Chicago.

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KKR originally acquired the properties in December 2020 through its Real Estate Partners Americas II fund. The warehouses were part of the fund’s approximately $835 million purchase of 9.7 million square feet of primarily multi-tenant industrial properties across seven major U.S. metropolitan markets. That seller was High Street Logistics Properties.

Across its funds, KKR has committed or acquired more than $7 billion of U.S. logistics assets since 2018. Recent transactions include the $137 million buy of an Inland Empire property and the purchase of a Dallas-area portfolio. The company currently owns more than 45 million square feet of industrial real estate nationwide.

Planes and trains

Although absorption in Chicagoland’s industrial real estate market declined in the second quarter, from 14.7 million square feet 12 months prior to 8.6 million square feet, strong occupier demand helped push overall vacancy down to 2.9 percent, according to a recent report from JLL.

Further, small redevelopment projects in Cook County have been getting a steady stream of preleases. Overall, leasing was boosted by several sizable deals, mostly lease renewals, involving 3PLs and tire companies.

The metro area’s multiple airports (including Gary and Rockford) and its excellent rail infrastructure will continue to make Chicago attractive to shippers, JLL reported.