Elm Grove-based commercial real estate firm Luther Group has closed out a $20 million fund, exceeding its goal and launching a second fund that will expand the company’s geographic investment area to include the entire Midwest, while continuing its local ground-up development work. LG Industrial Opportunity Fund I, launched in 2021, had a goal to
Elm Grove-based commercial real estate firm Luther Group has closed out a $20 million fund, exceeding its goal and launching a second fund that will expand the company's geographic investment area to include the entire Midwest, while continuing its local ground-up development work.
LG Industrial Opportunity Fund I, launched in 2021, had a goal to raise $20 million in equity. Luther Group ended up raising $24.75 million, which was deployed into roughly $82 million worth of stabilized industrial assets across 13 buildings with 863,000 square feet of space.
[caption id="attachment_594970" align="alignleft" width="300"] Jason Luther[/caption]
"With the success of closing out Fund I and being able to exceed our goal by 25%, that's a pretty remarkable achievement for us, and we still do standalone raises, we're built on organic growth," said Jason Luther, president of the company.
Previously focused on just the upper Midwest, Luther Group has launched a second fund with a goal of $50 million, with which the company is looking to acquire assets as far south as Texas and as far east as Ohio and Kentucky, according to Dave Merrick, vice president of development. The fund would allow them to buy between $175 million and $200 million in assets.
"It'll be pretty similar to Fund I, but we're also going to be looking for some more value-add opportunity, maybe buying buildings that are vacant that we could lease up and create value," Merrick said. "It's a rather large increase in geographic area that will allow us to take advantage of more opportunities."
"This would be an expansion of market territory for us, but we're confident in our underwriting and the relationships that we've developed that would allow us to continue our growth," Luther said.
Meanwhile, Luther Group is also planning to start construction this month on a new speculative industrial building in Menomonee Falls. At 101,000 square feet and located on Davian Drive, near Kohl's corporate headquarters, the building is expected to be completed next spring.
"We're playing at a smaller level so we appeal to smaller tenants, and there's still some really good velocity from smaller tenants in the market," Merrick said of the company's ability to weather the tough development environment. "In addition, targeting urban infill sites, there's barriers to competition, so that's been a better strategy that's allowed us to keep moving forward."
