Why Industrial Spec Will Work
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|Next week is the groundbreaking for the 1M SF spec Building #1 of Clarius Park Joliet, one of the larger developments under way in metro Chicago. So now might be a good time to ask Clarius Partners managing principal Kevin Matzke, "Are you sure you want to do this?" He is, and here's why: During 2006 and 2007, he tells us, there were seven new industrial buildings over 750k SF developed in the I-80 corridor. This year there were none (until now) and there’s only one block of space in the submarket over 750k SF—and it’s second-generation space that Kevin expects will be absorbed by the time Clarius finishes construction of Building #1 early next year.|
|Missing supply isn’t the only important factor driving the I-80 industrial market. Demand is growing. “There’s clearly room for more spec projects, especially with more than a handful of 750k SF to 1M SF industrial users actively searching for space in the corridor,” Kevin says. “This market typically sees about 3M SF of gross absorption each year.” Barring unforeseen economic turbulence, trends should favor landlords more going forward—or at least the market won’t favor tenants the way it has over the past five years, he predicts.|