Industrial Leasing Picking Up Along I-80
Developers completed 13.1M SF of speculative space in the Interstate 80 Joliet Corridor since 2013, the second most of any submarket in the Chicago region, and with 47% of it leased, the area had fallen somewhat behind tighter submarkets like O’Hare and I-55.
There is 4.3M SF of spec construction across nine buildings underway, according to Avison Young, but there are also signs of strong leasing activity that will help the submarket — which caters to a lot of big-box distributors that deliver products nationwide — achieve a better balance between supply and demand.
IDI Logistics was the latest developer to secure a significant deal. It leased the entire 291K SF building at 4050 Rock Creek Blvd. in Joliet’s Rock Run Business Park to Accuride Corp., a global manufacturer of premium automotive parts. IDI completed the spec building in the fourth quarter of 2018.
Avison Young principals Mike Fonda, Chris Lydon and Chris Tecu, and associate Brian Pomorski, all based in the company’s Chicago office, represented IDI, and Accuride was represented by Mohr Partners’ Mark Urbanowicz and Matt Burton.
The manufacturer will consolidate two of its Chicago-area facilities, in Batavia and Naperville, into the new building.
“Since January 2019, there has been an uptick in leasing activity in the 200K SF to 300K SF range in the Interstate 80 Corridor, which currently has nine buildings under construction, totaling 4.3M SF,” Lydon said. “Aside from the IDI Logistics transaction, there have been seven other transactions in the market in that size range by tenants including Touchpoint, NGL, Novo, Saddle Creek, Automann, Mack Trucks Inc. and Home Depot.”
Spec buildings like this may be popular with users because they have advanced features not found in older product. For example, 4050 Rock Creek Blvd. has 36-foot clear height ceilings and Ductilcrete floor slab in the warehouse area that IDI Logistics said eliminates up to 75% of the typical joints and thus increases load capacity and reduces joint maintenance.
“The tenant had several options in the Interstate 80 Corridor and this one rose to the top quickly, given the building’s location near an important Interstate 80 interchange and its design, which allows for a highly efficient distribution flow,” Lydon said.
Still, other portions of the submarket have been slower.
“The larger tenants, leasing 500K SF or more, have not been as active in the marketplace as the users in the 200K to 400K SF segment. We need to see some of the larger blocks of space get absorbed during this cycle.”
Until that happens, the vacancies will hamper new development.
“Developers are selective as to what they’re going to bring to market. We don’t believe we’ll see any big-box development spec projects take place in the marketplace until a few of the existing big-box buildings have been leased,” Lydon said.