BIGGER IS BETTER
Samsung's 650k SF lease in Romeoville and Electrolux's 495k SF deal in Minooka reflect strong demand for big industrial buildings, says Colliers SVP Charles Canale (right, with colleague, mentor, friend, and multi-tasker Vernon Schultz.) He tells us that in Chi-land’s 1.3B SF industrial inventory, large-building supply is dwindling. Overall, he expects a year-end vacancy near 11%. At the end of Q3, net absorption was 2.3M SF on 12M SF of leasing and sales, and big-box net rents were edging up toward $2.95/SF. (It's not the historic peak of $3.25/SF but certainly above the ‘09 trough of $2.35/SF, he says). The I-55, I-88, and I-80 corridors are especially active, he adds.
No rest for the weary: Here's Ronald Behm, principal in the industrial advisory group, crunching before the holiday. Charles says rents on bulk distribution product may surpass $3/SF sometime next year—approaching rents that justify spec development. Chicago is becoming more of a consolidation hub for distribution, as the large population and modern intermodal transportation centers (e.g. Elwood and Joliet) are attracting users like Electrolux, which did a partial relo from Indianapolis. Chicago’s big competitors: the port markets of Ontario/California (Inland Empire) and NY/NJ. (But we've totally got them beat in the furthest-distance-to-the-ocean competition.) Charles says all three giant industrial centers are experiencing good tenant demand, shrinking vacancies, and rising rents.