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E-Commerce Driving Demand For Chicago Industrial — And A Wave Of Spec Development

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The Chicago industrial market is hotter than ever, fueled by the demand of e-commerce and other logistics providers for new space. That is driving development, including a fair amount of spec.

Franklin Park #2 CNT 10701 Seymour
10601-10701 Seymour Ave., Franklin Park

"We're seeing the demand for industrial development remain pretty consistent as compared to years past," Morgan/Harbour Executive Vice President and partner Ben Warriner said. 

Morgan/Harbour recently built two spec warehouse facilities for CenterPoint Properties at 10601-10701 Seymour Ave. in Franklin Park, totaling 560K SF in the CenterPoint Logistics Center O’Hare.

"The bigger issues our clients are facing are finding land sites in the key geographical markets in the Chicago market that can accommodate that demand," he said.

Warriner said the e-commerce boom continues to press the limits for the building's design to maximize square footage not only horizontally but also vertically.  

"We have to work with our clients and design partners to find new ways to construct these buildings, to put them in the best position to capitalize on market demands," Warriner said.

Twelve metro Chicago industrial properties were delivered during the second quarter totaling 5M SF, of which 3.9M SF was within the Interstate 80 Corridor, according to Avison Young. Submarkets seeing the most activity are the I-80 and I-55 corridors, O’Hare and South Chicago. 

Besides 10601-10701 Seymour Ave., spec properties delivered in Q2 included the Opus Group's 1.2M SF 3300 Channahon Road, USAA Real Estate's 1M SF 24101 South Frontage Road and First Industrial Realty Trust's 355K SF Route 6 & Houbolt Road, all in the I-80 Corridor.

E-commerce package, Amazon return

Overall, Chicago was a top target for industrial and logistics leasing activity in the first half of 2018, completing 11 deals for 6.8M SF of such leases, trailing only California’s Inland Empire (where deals totaled 11.6M SF) and Atlanta (7M SF in deals), and tying Pennsylvania’s I-78/I-81 corridor, according to a new report by CBRE.

“Chicago continues to be a vital market for the industrial supply chain,” CBRE Executive Vice President Traci Buckingham Payette said. “E-commerce and logistics firms are driving the majority of this activity."

In July, for example, Kane Is Able, a third-party logistics warehousing, transportation and supply chain specialist, leased a nearly 327K SF distribution facility at Heritage Crossing, 14630 South 147th Court in Lockport, a property owned by ML Realty Partners.

Third-party logistics firms like Kane Is Able are expecting to continue growing. ML Realty Partners Vice President Patrick Shannon said the facility's location in the Heritage Crossing master-planned development was an important consideration for Kane Is Able, since that location can accommodate the company's operational growth.  

Other recent large industrial leases in metro Chicago have included HD Supply, which took 588K SF at 525 Northwest Ave. in Northlake; Glanbia, a food company, which leased 452K SF at 1100 Orchard Gateway in North Aurora; and Dart, a foam product manufacturer, which leased 429K SF at 300 North Mitchell Road, also in North Aurora.