Suburban Spec Construction Continuing At Robust Pace
Premier Design + Build Group broke ground on a 219K SF speculative warehouse in the Chicago region’s Interstate 55 Corridor. Known as Fountain Square Facility 5, it will be the final development of the Fountain Square Commerce Center, an industrial park in southwest suburban Bolingbrook that Bridge Development Partners acquired in November.
It is an auspicious time to break ground. The Chicago region’s vacancy rate dropped to a 19-year low of 5% midyear, down from 5.5% in the first quarter and 6.3% a year earlier, according to Cushman & Wakefield. Net absorption totaled 2.8M SF in the second quarter, the 34th consecutive quarter this key indicator remained positive.
“E-commerce, logistics, food and beverage, and other industries continue to drive development, sales and leasing activity,” said David Friedland, executive director and Chicago Industrial Group leader for Cushman & Wakefield.
Builders delivered more than 7.5M SF through the second quarter, up 36.2% year over year. Much of the completed inventory was built on a speculative basis, and Cushman & Wakefield projects new supply to total 19.8M SF for all of 2019, above the 11.6M SF completed in 2018.
Although the owners of new megadevelopments, ones of more than 500K SF, have recently experienced some trouble filling up their giant boxes, tenants have lined up for smaller properties like Fountain Square Facility 5.
Chicago-area leasing activity totaled 13.6M SF in the second quarter, with the I-55 Corridor, Southern Fox Valley and Southeast Wisconsin submarkets accounting for nearly 43% of the transactions, according to Cushman & Wakefield.
“The seemingly insatiable demand for industrial space is being driven in large part by the broader shift in supply chains, with a growing focus on last-mile logistics, particularly in centrally located population centers like Chicago,” Friedland said.
Premier will manage design-build services for Fountain Square Building 5, which it plans to complete in March. The firm's Jason Spataro will serve as project manager and Rich Pozzi will serve as site superintendent, working with Senior Vice President and Midwest market leader Michael Long and Senior Vice President of Field Operations Ronald Nelsen.
Premier is teaming with Cornerstone Architects Ltd. for architectural design services and SPACECO and Structural Resources Inc. for engineering services on the project.