Guest Blogger – Terry Grapenthin
Chicago’s south I-55 corridor has seen some drastic improvement in industrial leasing since the beginning of 2011. With all submarkets in Chicago there are certain pockets of size ranges that seem to be attracting the most activity. The market’s smaller product (Under 50,000 SF) seems to have the highest volume of transactions and most tenants and deals are being made in core, class A product. 2011 lease deals from 15-50,000 SF exceeded all of the lease deals in that same size range from 2008-2010. We are seeing continued velocity in that size range and expect rent growth due to a diminishing supply to accommodate. The larger sites and spaces are not being ignored either as I-55 saw improving companies absorbing more space and a lack of supply in some demanded some BTS activity. There were multiple long-term lease deals done with Samsung (650,000 SF), Scotts Lawn (350,000 SF), and a build-to-suit for Edward Don (362,500 SF). There were 2 land sales exceeding 40 acres with both FedEx Ground and Dayton Freight in which both will be constructing facilities in 2012. Finally, (and probably the most exciting thing that 2011’s success has resulted in) is I-55 developers are discussing executing some spec development to service these holes in the market. It is expected that Ryan Companies will be going up with a 500,000 SF industrial building in Boldt Park, and Pizzuti is in deep discussions to go spec with another 650,000 SF cross docked facility in Pinnacle, both in Romeoville, IL. If the leasing activity continues and we see the rent growth we all expect to see in these size ranges, more spec development will follow at the end of 2012/early 2013.
Thanks to Terry Grapenthin at my company for participating as my guest blogger!