Elgin Area Chamber Of Commerce: Suburban Chicago Office Owner Seeks $185 Million In Sale

Press release from the Elgin Area Chamber of Commerce:

October 21, 2021

The four-building Kemper Lakes Business Center office complex is alongside a top golf course in the Chicago suburb of Long Grove, Illinois. (CoStar)
 

By Ryan Ori
 
A corporate campus that neighbors one of Illinois’ top golf courses has gone on the market in what could be one of the highest-priced office sales in Chicago’s suburbs in years.
 

Apollo Global Management is looking to sell the four-building Kemper Lakes Business Center for about $185 million, according to someone familiar with the deal. The nearly 1.1 million-square-foot property is on 164 acres in Long Grove, Illinois, a suburb almost 40 miles northwest of Chicago’s Loop business district.

New York-based Apollo has hired brokers from the Chicago office of Eastdil Secured to market the property, which consists of three-story buildings built in phases in the 1970s, ’80s and ‘90s.
Apollo has owned the property since November 2014, when it paid $127 million. An Apollo spokeswoman did not immediately respond to CoStar News' request for a comment Wednesday.

The office complex is alongside Kemper Lakes Golf Club, one of the top courses in the state. The golf course, which is owned separately, held the 1989 PGA Championship won by Payne Stewart.
Kemper Lakes is going on the market at a time when there's a historically high level of available space in the Chicago-area office market: 94.8 million square feet, or 18.6% of the entire supply, according to CoStar data. Overall vacancy in the Chicago area is at a 10-year high, 14.6%.

That has contributed to just $1.5 billion in total sales volume in the Chicago market, according to CoStar. Recent full-year totals were $2.4 billion in 2020, $2.8 billion in 2019 and $5.8 billion in 2018. But Kemper Lakes could be shielded from the effects of COVID-19 because of its low vacancy and the length of remaining lease term for the property’s largest tenants. Kemper Lakes is 94% leased and its three main tenants have lease expirations in the 2030s, according to the person familiar with the property.
The largest tenant is Fresenius Kabi USA, which leases about 343,000 square feet until 2034. Dovenmuehle Mortgage leases about 270,000 square feet until 2032, and ACCO Brands leases about 173,000 square feet until 2030.

The largest suburban Chicago office sale this year has been a $57.5 million deal for the Illinois Science & Technology Park in Skokie. A $185 million sale of Kemper Lakes would represent a capitalization rate, or rate of return, of about 7.3%. It also would be one of the largest in Chicago’s suburbs in the past decade.
One Tellabs Center at 1415 W. Diehl Road in Naperville sold for $187.5 million in 2014.

Source: CoStar Group, www.costar.com

This press release was produced by the Elgin Area Chamber of Commerce. The views expressed here are the author’s own.