What To Do When You're Fully Leased
It's on to the next one for Duke Realty Corp, which just inked two leases absorbing the remaining space in its 10.9M SF Chicago-area industrial portfolio. (Now they've got some free time to pursue their acting careers.)
Actually, they're sticking to real estate with spec and build-to-suits near transport hubs, SVP Steve Schnur tells us. Duke completed some build-to-suits this past year, and already has plans to expand its 178k SF Northlake III building by 52k SF to meet the needs of tenants Grand Warehouse and Distribution Corp. They're considering a spec project in the I-55 submarket (to start early next year), he hints, while closely monitoring demand and supply. "There's a lot of talk about new construction, but relative to the size of the market, it's not a ton," he says, noting that Duke only builds in infill locations, rather than risking it in the "next farm field." (We all saw Field of Dreams, so we know the potential those sites have.)
With build-to-suits, Steve's seeing strong rail-driven activity in the food sector and among retailers, as e-commerce and same-day delivery cause their supply chains to evolve and move closer to population centers. (We can't be kept waiting for our Star Wars collectibles.) Duke's latest leases, totaling 213k SF, include 88k SF to Metro Air Services (NGKF's Brian Carrol repped the tenant and Colliers' David Bercu, Jonathan Kohn, and Tom Rodeno repped Duke) at O'Hare Distribution Center in Franklin Park and a 125k SF lease to Hub One Logistics (JLL's Kris Bjorson repped the tenant and C&W's Jason West and Sean Henrick repped Duke) in Crossroads 2 (below) in Romeoville. Duke VP Susan Bergdoll also repped Duke in the transactions.
A long-term holder as a REIT, Duke is always looking for more opportunities to recycle or upgrade the portfolio, Steve says. Acquisitions are tough with all the capital competing for Class-A, but Duke is willing to go up the risk spectrum and buy with vacancy at the right newer facility. The biggest hurdle ahead remains the economy. "We're a direct function of people's consumption and confidence," Steve tells us, but Chicago will always be in the mix of company's supply chains thanks to its location, population, and diverse economy. Outside the office, Steve's proud of his little league football team, the mighty nine-year-old Hinsdale Falcons, who made it to the Superbowl and fought valiantly in a tough luck game.