Tratt Properties paid $140 million for a 1.6 million square foot industrial distributuion facility located at 4500 Academy Road in Cookeville, Tennessee. Fully leased to Academy Sports + Outdoors, Tratt Properties acquired the Class A, build-to-suit site from Middleton Partners. Ken Hedrick, Andrew Ragsdale, Phillip Butts, Jonathan Ameen, Will Smith and Spencer Smith at Colliers represented both the buyer and seller during the transaction.

  
Constructed in 2015, the property features approximately 1.6 square feet of warehouse space and approximately 18,901 square feet of office space. The facility is the newest of the tenant’s three U.S. distribution centers, supporting fulfillment for 84 stores across 14 states and the company’s e-commerce operations.

Tratt Properties, headquartered in Phoenix, Arizona, is engaged in the acquisition and development of institutional-grade logistics and E-commerce properties in key markets throughout the United States.

Despite steady rent growth, a deep pool of educated renters and one of the smallest construction pipelines in the country, Chicago’s multifamily market is being held back by one thing.

Institutional capital needs to catch up.

Local and private investors are keeping deals moving, but once institutional money fully recognizes the opportunity to buy assets at below replacement cost in a growing market, Chicago multifamily will take off, Lument Managing Director Todd Stofflet told Bisnow.

“The continued strength in Chicago is starting to wake the herd up, and they’re starting to ask the questions, trying to develop investment theses on Chicago and some of the other Midwestern markets,” Stofflet said. “It takes time and it takes transactions.”

Chicago has one of the smallest multifamily construction pipelines in the country, according to a report from real estate investment sales company Lument shared exclusively with Bisnow.

Units in the pipeline make up less than 1% of Chicago’s total multifamily inventory, a rate only met by Houston and San Francisco. 

There are probably about a dozen sites that are shovel-ready in the city that aren’t getting built because developers aren’t finding equity for them, Stofflet said. Equity challenges make it difficult to project exactly how many units will deliver in the city and when. 

Many of the city’s traditional major sponsors, like JPMorgan Chase and Ares, have pulled back from the market, so the difficulty for investors is finding a source of equity excited about developing in the city and comfortable with returns on its investment, Stofflet said. Many of the institutional investors that were on the sidelines are heading back to growth markets like Austin, Charlotte and Nashville, he said.

“I look at Chicago, and I see less than 1% in the pipeline, 7% year-over-year rent growth in downtown,” Stofflet said. “At some point, you just have to focus back on yield and where I’m going to make more money, and that is the Midwest right now.”

Chicago started off the year with strong multifamily sales. The city recorded nearly $1B in multifamily transactions in the first quarter, one of its strongest quarterly performances on record, according to the report. 

But yearly sales won’t come near a record — total year-end multifamily volume in the Chicago area for 2025 will likely be close to the transaction mark in both 2023 and 2024, which was about $3.9B, Stofflet said. 

That’s a far cry from the nearly $5.9B of multifamily sales in the Chicago area in 2022. Of the 12,400 units on the market in the city, 4,000 have closed or are under contract as buyers and sellers feel out pricing, Stofflet said.  

As more product hits the market, it is starting to draw a wider range of investors back to Chicago, Stofflet said. Groups that have wanted to sell for a while are starting to test the waters to see what today’s market will bear.

Downtown Chicago did see some return of institutional and private equity firms — they accounted for more than half of the dollar volume and nearly a third of transactions, according to the report.

“You’re starting to see institutional groups back on your bid lists in Chicagoland, but for the most part, the groups that are winning are private capital just because they have a longer-term perspective,” Stofflet said. 

Seeking lower rent is renters’ top reason for leaving their units, but Stofflet said that shouldn’t be a big concern for landlords. Chicago landlords are comfortable continuing to push rents because there isn’t a significant amount of new inventory coming online, which means landlords don’t have to compete over concessions. 

Some renters are staying in the rental pool longer and coupling together later, and other renters are leaving Chicago entirely because they can’t afford to live in the city, Stofflet said. 

“For every person leaving Chicago, we’re being replaced with one that is five years younger and making $10K more,” he said. 

The percentage of Chicagoans between 25 and 34 years old with a bachelor’s degree or higher is nearly 11% above the national average, and the city’s demographics are shifting. Chicago’s major universities are bringing an influx of educated people to the city, Stofflet said.  

But still, some investors remain skeptical of Chicago’s reputation because they are inundated with “clickbait” that the city is filled with crime, overly progressive and bankrupt, Stofflet said. Until those perceptions shift, institutional capital is likely to stay away, leaving deals to contrarian investors and family offices.

“The more that we can show a stable transaction environment in Chicago, the more that institutional money will feel comfortable investing back in Chicago,” Stofflet said.

CORRECTION, NOV. 11, 3:25 P.M. CT: This story has been updated to correct the misspelling of a company name.

ExchangeRight, a Pasadena, CA-based provider of diversified real estate DST and REIT investments, said Monday that its Net-Leased All-Cash 9 DST was fully subscribed. The $24.78-million portfolio of net-leased real estate, backed by primarily investment-grade companies operating in necessity retail, provides investors with monthly distributions at a current rate of 5.20%.

Net-Leased All-Cash 9 DST features five net-leased properties tenanted by Tractor Supply, Dollar Tree, and Dollar General Market. The portfolio’s properties span 75,148 square feet and are located in Texas, Iowa and Florida.

“Our commitment to capital preservation and stable income through a debt-free option for necessity-based investments continues to resonate with investors nationwide,” said Joshua Ungerecht, managing partner at ExchangeRight. “We are grateful for the continued trust and support from our investors, and we remain dedicated to serving them by designing our offerings to provide multiple strategic exit options designed to meet their potential future tax-advantaged 1031, 721 or liquidity needs.”

Homebuilder Taylor Morrison paid $58 million for lakefront property outside of Charlotte.

Taylor Morrison says it will deliver a mix of townhomes, single-family homes and lakefront options in The Palisades neighborhood at Lake Wylie. The company is permitted to build 499 units on 162 acres. The Coves at Lake Wylie will be part of a master-planned community that will include retailers, grocers and a variety of restaurants 30 minutes from Charlotte’s city center.

Alex Phillips, Andy Slowik, Battle Smith and Sparling Davis of Cushman & Wakefield represented the seller, Drapac Capital. Phillips added, “What really set the Coves at Lake Wylie apart is the years of effort put in by Drapac Capital Partners to mitigate all controllable risk and deliver a fully approved site.” The developer is expected to begin work immediately.

CBRE facilitated the sale of Rowland Medical Plaza, an 81,410-square-foot medical outpatient building (MOB) located in Novato, and secured financing for the buyer, Los Angeles-based Stockdale Capital Partners. The buyer reported an acquisition price of $32.8 million. 

Chris Bodnar, Brannan Knott, Cole Reethof and Trent Jemmett of CBRE U.S. Healthcare Capital Markets partnered with Kyle Kovac and Mike Taquino of CBRE’s Bay Area Capital Markets and Trask Leonard of Bayside Realty Partners to advise the seller. Zack Holderman and Jesse Greshin of CBRE’s Healthcare Debt and Structured Finance team secured the financing for the purchaser.

Located at 75 Rowland Way, Rowland Medical Plaza is a fully leased, Class A MOB adjacent to Sutter Health’s 47-bed Novato Community Hospital. “This is a highly strategic outpatient facility for the anchor tenant, MarinHealth, who has made significant investments and a long-term commitment to this location,” said Bodnar. “Healthcare investors continue to gravitate toward the resiliency and growth of the healthcare real estate sector as demonstrated by this transaction.”

The deal represented Stockdale’s sixth acquisition of its recently formed, U.S.-focused, open-ended Healthcare Real Estate Investment Fund

Gorman & Co. has debuted its second affordable housing community in Atlanta. Located along Martin Luther King Jr. Drive across from the H.E. Holmes MARTA Station in Southwest Atlanta, Hamilton Hills offers 52 apartment units featuring one-, two- and three-bedroom floor plans. Gorman & Co. broke ground on Hamilton Hills in early 2023. The project cost $17.4 million to develop. The community is already fully leased and occupied.

All units are reserved for residents earning 50%-60% of the area median income. For a four-person household in metro Atlanta, this constitutes an annual gross pay of $53,750-$64,500, according to the 2024 income limits set by the U.S. Department of Housing and Urban Development.

The Residences at Westview, also located along MLK Jr. Drive, delivered 60 affordable and market-rate units to the city’s Westside.

Marcus & Millichap completed the sale of Spring Creek Center, a 31,557-square-foot retail strip property located in Derby, Kansas. The property sold for $5.3 million. 

“We sourced an all-cash private investor from the East Coast who offered a higher price than local buyers while securing a better deal than he could find in his home market,” said Alex Perez, first vice president of investments. 

Perez and Chris Garavaglia, investment specialists in Marcus & Millichap’s St. Louis office, had the exclusive listing to market the property on behalf of the seller, a private equity group. Colby Haugness, Broker of Record in Kansas, assisted in closing the transaction. 

Built in 2007, Spring Creek Center is located on 3.28 acres at 1821 E. Madison Ave. in the Wichita, Kansas, MSA. The retail strip consists of 12 fully leased suites spread across three buildings, with a mix of medical, dining and service-oriented tenants.

Pasadena-based ExchangeRight, one of the nation’s leading providers of diversified real estate DST and REIT investments, said investors have fully subscribed its Net-Leased Portfolio 65 DST, an $82.28-million offering featuring 416,735 square feet of national tenants in necessity-based industries. The portfolio is structured to provide monthly distributions with a current annualized rate of 5.00%.

The DST contains 13 properties diversified across 10 states and five historically recession-resilient tenants, including FedEx, Tractor Supply, Dollar General, Dollar Tree and Family Dollar. The offering was launched with a 40.23% loan-to-value and non-recourse interest-only financing at a fixed rate of 5.82% over a 5-year term.

“We remain committed to working with representatives and advisors to provide offerings that are structured to preserve their clients’ capital and provide stable, passive income, even through economic volatility,” said Joshua Ungerecht, a managing partner at ExchangeRight. “As increasingly more investors are transitioning from active to passive real estate investments, we are pleased to help meet that need with a 1031-compatible offering designed to protect investors.”

Ovation Development Corp. and Coordinated Living of Southern Nevada have received financing and an agency grant to develop a 194-unit affordable senior housing project in Las Vegas. Commercial Edge reported last year, Ovation received a $60.3 million construction loan. The construction loan was provided by the Nevada Housing Division, Citibank and Wells Fargo. Clark County also provided $ 11.8 million in funding for the project. The community will break ground at the end of next year.

The affordable and age-restricted community to rise at Pebble Road and Eastern Avenue will serve seniors earning 30, 50 and 60 percent of the area median income. Upon completion, the four-story building will feature one—and two-bedroom floorplans ranging between 689 and 905 square feet. Common-area amenities will include a swimming pool, a fitness center, a game area, a spa, outdoor courtyards, community gardens, laundry facilities and controlled access.

CBRE arranged the $7.8-million sale of Main Street Village Center, a 20,000-square-foot-retail center located at 135, 175, and 265 E. Ontario Ave. in Corona. The firm’s Alan Krueger and Vanessa Haddad represented the all-cash, non-trade buyer, Pacific Petroleum, Inc., as well as the seller, LJZ Corona LLC.

“Main Street Village offered a strategic investment opportunity,” said Krueger. “It boasts exceptional tenant retention history, with over 90% of the tenants choosing to remain at this location for more than a decade.”

Main Street Village Center caters to a densely populated community, serving more than 118,000 residents living within a three-mile radius and earning an average annual household income exceeding $120,000. Located across from a major grocery store and pharmacy chain, the fully occupied center features e-commerce resistant services such as Kumon, a fitness center and Yogurtland.

Be there in person for the 8th Annual Connect Los Angeles 2024, May 1 at the Intercontinental Los Angeles Downtown. Industry leading experts will share insights and forecasts on today’s CRE markets.