Amazon Keeps Up Leasing Spree, Sustaining Chicago's Industrial Market
Amazon just leased two new last-mile industrial buildings totaling nearly 600K SF in west suburban Cicero, according to Colliers International principal Matthew Stauber.
It's another sign the internet behemoth is doing more than any other firm to keep the local industrial sector afloat during the crisis.
The new tenant — Amazon was not named in official statements of the leases — will use both buildings, known as BridgePoint 290 Buildings I and II, located at 1400 South Laramie Ave., to fulfill last-mile e-commerce orders, according to NAI Hiffman’s Mark Moran, who along with Steve Connolly and Brett Tomfohrde, represented owner Cabot Properties in the deal. The tenant was represented locally by Jason West, vice chair of the Chicago office of Cushman & Wakefield.
The two buildings total 575K SF and are less than 8 miles from downtown Chicago.
“We saw the potential in this location six years ago, when we first did an analysis of it for an earlier owner,” Moran said. “It offers quick access to a Chicago customer base and a strong local labor pool, both of which are attractive to this tenant and other e-commerce players wanting proximity to major population centers.”
Cabot bought the 33-acre site in 2018 from Bridge Development Partners, which by 2019 completed construction of the two buildings, one with 343K SF and the other with 232K SF. Both have 36-foot clear ceiling heights.
Many Chicago-area industrial firms recently terminated leases or downsized. But e-commerce companies kept expanding to serve homebound consumers, according to Colliers International's Q2 report. That helped fuel about 14M SF of new leasing activity in Q2, roughly equal to the 14.6M SF in Q1. That meant instead of recording negative absorption, the region saw 354K SF of positive absorption for the last quarter.
And Amazon is leading all of its competitors.
“Amazon.com was the difference maker during the second quarter of 2020,” according to Colliers. “The e-commerce giant committed to an astounding 11M SF in 10 buildings. Amazon.com inked 7.2M SF in new leases during the period, accounting for 51% of the total new leasing volume recorded in the quarter.”
Colliers International expects the local submarket around Cicero to fare particularly well. It was one of just six submarkets to see its vacancy rate drop in Q2, sinking from 3.85% to 3.68%. That’s the lowest of any in the Chicago metro area, and the long-term outlook is solid.
“Home to long-term manufacturing companies and owner-users, the I-290 South submarket is expected to weather the impacts of the pandemic and economic reaction well,” Colliers said. “While the vacancy rate will likely increase, the fact that it will start near historical lows should help.”