• Tesla Service Center Sale in Chicago Underscores the Way Electric Vehicles Boost Property Values

    The Tesla service center at 3059-3067 N. Elston Ave. in Chicago sold for $13.1 million. (Cushman & Wakefield)
    The Tesla service center at 3059-3067 N. Elston Ave. in Chicago sold for $13.1 million. (Cushman & Wakefield)

    By Ryan Ori
     
    Growth in the electric vehicle industry is charging up commercial real estate demand. The latest example comes from Chicago, where a Tesla service center on the North Side has sold for more than $13 million.
    Exan Capital paid $13.1 million for the property at 3059-3067 N. Elston Ave., according to a statement Tuesday from the buyer and Cushman & Wakefield, which brokered the sale.

    The property was sold at a significant profit by Chicago’s Baker Development. The developer spent about $6 million combined to buy the land parcels in 2014, renovate part of the existing building on the site and add on to it for Tesla, firm founder Warren Baker told CoStar News.

    “It was a combination of some really hard work and some good luck too,” Baker said.
    The building is now 31,700 square feet. Baker Development still owns 1.2 acres of land directly east of the Tesla facility, which Baker said remains for sale.

    The electric vehicle industry’s need for real estate is still in the early stages. As adoption of electric vehicles grows in the coming years, there’s expected to be a need for significantly more facilities such as charging stations, service centers, manufacturing plants and other real estate throughout the world. Ford Motor Co. this week announced plans to spend $11.4 billion on building new production sites in Tennessee and Kentucky.

    The Elston facility in Chicago opened in November 2019. It is one of two Tesla maintenance and repair centers in the city. The 1.73-acre site also includes parking for about 90 vehicles. “A property of this quality with a high-profile, publicly traded tenant drew strong investor interest,” Cushman & Wakefield Managing Director Michael Marks said in the statement. “With abundant capital on the sidelines poised for investment and an overall flight to quality, we’ll continue to see buyers take an aggressive approach on opportunities with infill locations and strategic fundamentals.”

    The property is a small part of Tesla’s ever-growing real estate portfolio. Elon Musk’s company recently leased a roughly 76,500-square-foot research-and-development property in San Jose, California. The Palo Alto, California-based company occupies more than 7.5 million square feet of real estate in the Bay Area alone, mostly for manufacturing operations, according to CoStar data.

    Electric vehicle startups have been gobbling up space in the Chicago area as well. Rivian, which has a central Illinois plant in Normal, plans a showroom in Chicago’s Fulton Market district. Lucid Motors is expecting to open a service center on Cherry Street on Chicago’s Goose Island, along with an upcoming showroom in the Oakbrook Center shopping mall in the western suburbs.
    Lucid Motors is planning a service center in a Cherry Street building on Chicago’s Goose Island. (Ryan Ori/CoStar)

    Canada’s Lion Electric is eyeing Joliet for its first U.S. manufacturing plant, about 40 miles southwest of downtown Chicago.

    For the Elston facility, Tesla has a 10-year lease with a 10% rent increase every five years through the base term and five-year option periods, according to materials on the property that Cushman & Wakefield provided to potential buyers. The property includes 10 superchargers capable of an 80% vehicle charge within 40 minutes, according to the brokerage. About half of the building was new, ground-up construction, the materials say.

    Exan has made six transactions in Chicago with a combined volume of more than $220 million, senior associate Nicolas Guemes said in the statement. The Tesla property is “a phenomenal asset that meets all of our investment requirements,” he said.

    The firm’s largest deal in Chicago was a $72.2 million purchase of the office tower at 20 S. Clark St. in the Loop business district in August 2016. A year and a half later, Exan flipped the 30-story building for $85.6 million. Exan is based in Miami, with offices in Madrid.

    Source: CoStar Group, www.costar.com