Panattoni plans to develop a new 316,680 SF warehouse on Pulaski Road in the SW Side Neighborhood of Chicago
Monday, May 5th 2014
A California developer is buying a Little Village warehouse that became ensnared in a spat about political clout and local pension systems.
A venture of Sacramento, Calif.-based Panattoni Development Co. wants to take down the warehouse at 3348 S. Pulaski Road in the Southwest Side neighborhood and develop a new 316,680-square-foot building, according to a zoning application filed with the city.
The building would offer 30 exterior semi-trailer docks and 34-foot-high ceilings, the application shows. Panattoni would build it on a speculative basis, with no tenants lined up in advance, said Jason Rosenberg, senior development manager in the company’s Rosemont office.
A real estate fund once led by Chicago developer Allison Davis, known for his ties to former Chicago Mayor Richard M. Daley, and Robert Vanecko, Mr. Daley’s nephew, invested in the existing 322,000-square-foot warehouse in 2007, using part of the $66.5 million the fund raised from five municipal pension systems. The city also once leased space in the warehouse but no longer does, said a city spokeswoman.
After the fund attracted scrutiny over how it raised money from the pension systems, Mr. Vanecko resigned as one of its general partners.
Amid steep losses in the fund, the pension systems fired Mr. Davis’ firm two years ago as general partner and subsequently hired Chicago-based Newport Capital Partners LLC in its place.
Derrick McGavic, managing principal at Newport, said Panattoni has the Little Village property under contract, but he declined to disclose how much the developer has agreed to pay for it. A venture of the fund, when it was controlled by Messrs. Davis and Vanecko, paid $10.5 million for the property in 2007, public records show.
“We broadly marketed the property for sale and we’ve been working with Panattoni as a potential buyer,” he said. “They have a development plan that, long term, I think makes sense for the property.”
Mr. Rosenberg said Panattoni likes the site’s proximity to Interstate 55 — the expressway is just south of the property — and thinks a lack of new warehouses in Chicago will help the company draw in tenants that are now forced to move to the suburbs. He declined to say how much the company will pay for the property.
“There’s a scarcity of modern, state-of-the-art distribution and manufacturing facilities in the city,” Mr. Rosenberg said.
Elsewhere, the fund is forming a joint venture with a group that includes Skokie-based Taxman Corp. to develop a retail project anchored by a Mariano’s Fresh Market grocery store at 3030 N. Broadway Ave. in Lakeview, said Bennett Lawson, chief of staff for Ald. Tom Tunney (44th), who represents the area in the City Council.
Mr. McGavic said the deals are part of his firm’s work to maximize the return of capital to the fund’s limited partners.
Those partners are the Policeman’s Annuity and Benefit Fund of Chicago, the Municipal Employees’ Annuity and Benefit Fund of Chicago, the Laborers’ and Retirement Board Employees’ Annuity and Benefit Fund of Chicago, the Retirement Plan for the Chicago Transit Authority and the Public School Teachers’ Pension and Retirement Fund of Chicago.
The fund also recently sold its stake in the former Chicago Defender headquarters building.