Element Bars Leases Manufacturing Space on Chicago’s West Side

This food manufacturer who appeared on Season 1 of TV’s Shark Tank has grown more than 100X since airing.

One of Element Bars production lines of custom protein and nutrition bars.

Jonathan Miller is a successful entrepreneur. This founder and owner of protein bar manufacturer, Element Bars, saw his business outgrow the company’s 15,000 square foot building on West Belmont Avenue in Chicago. Trying to find a larger building to buy in the city proved to be impossible. After three years of diligently searching for a building to purchase, he eventually became desperate to relocate to a bigger production and warehouse facility.

Miller says ” I was shocked at the lack of available properties for sale. Ultimately I felt forced to accept leasing as the only alternative available to my company.”

Element Bars finally leased a 50,000 square foot production and warehouse space at 1140 S. Washtenaw on the eastern edge of the Lawndale neighborhood. The space was previously leased to Best Crouton Company, a supplier of salad ingredients to restaurants like McDonalds and Wendy’s.

Approximately 50% of manufacturing and distribution companies in the Chicago area lease their industrial facilities according to George Cutro, director of industrial research at the Chicago office of JLL. The other half are owner-occupied. What’s behind this statistic? Industrial property experts say there are four main reasons that many companies decide to be tenants rather than property owners.

First, most company owners believe that every dollar of capital deployed in their operations will generate a significantly better return on investment than equity invested in real estate.

Second, a leased building provides a quick solution with short term flexibility to address the ever-present uncertainty regarding the future need for more or less space, depending on revenue growth or shrinkage.

Third, in practical terms, many business owners simply do not have the deep financial wherewithal to come up with a down payment and then consistently pay the expenses for upkeep, even with the benefit of historically low interest rates for new mortgages.

Fourth, frustrating for many business owners, like Jonathan Miller, who are seeking to buy a property, owners of stand-alone buildings rarely sell. There is plenty of demand from buyers, but slim pickings on the supply side.

“I was shocked at the lack of available properties for sale. Ultimately I felt forced to accept leasing as the only alternative available to my company.” – Johnathan Miller

Let’s say a company is considering the pros and cons whether to lease or buy a new facility. The decision is primarily based on a simple mathematical calculation. A budget and an analysis is prepared to determine the suitable size and specifications and the search begins.

Finding a space to lease is relatively easy and is a much faster process than buying. But, buyers are frustrated instantly because it is difficult to find buildings for sale with a high ceiling, adequate loading docks, and ample parking. As a result of these hard to find specifications, potential buyers “throw in the towel” on being a buyer and simply settle on leasing an available space.

Element Bars’ Miller says his company is a leading contract manufacturer of protein and nutrition bars that can meet the growing demand of both emerging brands and larger, multinational customers. “The Washtenaw Avenue property serves our needs but I would have been happier to buy a facility. Maybe for our next expansion.”

The newly leased property, on Chicago’s west side of town, is owned by affiliates of Rosemont based Brit Properties. Brit Properties’ Partner Joel Friedland says “I’m glad to have Element Bars join our list of local, national, and international industrial tenants. But I understand that Mr. Miller would have strongly preferred to relocate into an owner-occupied facility if he could have found a suitable alternative.” Friedland adds, “as another example, we own a desirable stand-alone building available for lease in DuPage County and have received over twenty serious inquiries from potential buyers. Those companies have discovered they are unable to find a decent property for sale.”

Watch Miller on Shark Tank Below: