A Chicago firm with a reputation for urban redevelopments has purchased the former Motorola Mobility campus in the far northern suburbs for less than what the seller paid a decade ago and spent redeveloping the site into a mix of modern offices, research and distribution space.
R2 and investment partner JDI Realty last week bought the 83-acre Innovation Park Lake County campus in Libertyville, Illinois, said Matt Garrison, the former's chief executive.
The price was $35 million, according to people familiar with the deal for the property, which exceeds 1 million square feet. That is less than the approximately $47 million that Rockville, Maryland-based seller Beco Management spent acquiring the property in 2014 and overhauling the former cellphone plant and office campus into a multitenant office and research complex.
It continues a national trend of office properties selling for less than previous valuations or development costs amid remote work trends, limited available debt and other challenges.
A deal in the far reaches of Chicago’s suburbs, more than 40 miles north of the Loop business district, is a departure from R2’s typical deal profile. The firm is known for projects on and around Goose Island on Chicago’s North Side, including the redevelopment of a former Morton Salt warehouse into the Salt Shed concert venue, and for taking on office turnarounds such as its $60 million deal for the 41-story tower at 150 N. Michigan Ave., a price just under half the value of the property’s previous sale in 2017.
R2 and its partner on the N. Michigan Avenue deal, the billionaire Italian family that controls global spirits seller Campari Group, also plan a city-backed conversion of some office floors into 117 apartment units. That's to take place in a building at 79 W. Monroe St. in the Loop.
Although Libertyville is miles from R2’s typical focus of Chicago and other cities, Garrison said Innovation Park Lake County’s attributes — including high-end amenities, innovative tenants, and an unusual mix of office, research-and-development, laboratory, and distribution space — led the firm to expand its reach.
“We’re only about 5 miles from what is considered the core Interstate 294 corridor. But when people come to the property the conversion rate is very high because they love the property when they see it,” Garrison said. “It offers a user experience that doesn’t exist [in] other places. Our job is just to get people out there, and we’re likely to succeed. User experience wins.”
Beco and Chicago-based JDI did not respond to requests for comment from CoStar News. The sale was previously reported by Crain’s Chicago Business.
Former Motorola hub
Garrison said the new owners plan to invest in move-in-ready speculative suites in the property that includes connected buildings at 1910, 1920, 1930 and 1940 Innovation Way along U.S. Highway 45 in Lake County.
Beco paid Google $9.5 million for the property in 2014, after the search giant put it on the market for sale in 2013 and following an announcement that it would move the Motorola Mobility cellphone unit to Chicago’s Merchandise Mart. Google sold Motorola Mobility to China’s Lenovo Group in 2014.
Beco spent almost $38 million in capital improvements to the property, including leasing costs and amenities, according to marketing materials from Eastdil Secured, which brokered the sale.
The property was 71% leased when it hit the market more than a year ago, with a weighted average lease term of 9.1 years, according to Eastdil.
But one major tenant — medical products giant Medline Industries, which leases 138,089 square feet — is set to move out in less than two years, according to R2. Medline recently signed a massive office lease in north suburban Northbrook.
The largest tenant in the Libertyville property is Valent BioSciences, a subsidiary of Japan’s Sumitomo Chemical, which leases 172,269 square feet and has invested more than $35 million building out its space, according to Eastdil. Juno Therapeutics, a subsidiary of Bristol Myers Squibb, leases 118,221 square feet in a 13-year deal signed in June 2023.
For the record
Eastdil Secured brokers Bryan Rosenberg and David Caprile represented the seller.