CRE MARKETPLACE (pg.18): ARCHITECTS/DESIGN-BUILD FIRMS ASSET/PROPERTY MANAGEMENT FIRMS BROKERAGE FIRMS DEVELOPERS EDCs VOL.32 NO.2
THE LEADING NEWS SOURCE FOR INDUSTRIAL REAL ESTATE PROFESSIONALS & USERS
MARCH/APRIL 2022
No construction? No problem for I-88 Corridor amid robust leasing activity
By Peter Doughty, Senior Associate, Doughty Industrial Group, Marcus & Millichap
D
emand for industrial real estate climbed to new highs in 2021, with net absorption in the Chicago area shattering its previous record, even as developers added more inventory than ever to the market.
While newly developed buildings continue to command premium rents – the average asking rate rose to a 20year high of $6.35 per square foot in 2021, according to the Marcus & Millichap corporate research report – existing buildings are also bursting at the seams as users across industries look to expand their footprints amid
fierce competition for space. Investors are also outbidding each other, with some opting for deals outside of Cook County where the tax situation is more favorable. One geographic area of particular interest to investors is the I-88 Corridor, spanning from Chicago’s western suburbs of Lisle and Naperville through to the Aurora and North Aurora areas. Robust leasing activity coupled with limited new construction drove the vacancy rate down in 2021, with larger spaces in especially short supply. Long term, vacancy is expected to remain low I-88 (continued on page 12)
PRSRT STD U.S. Postage
PAID
CHICAGO, IL PERMIT NO. 3223
Tenant interest in new-construction warehouse space soars, but availability might be scarce
By Mia Goulart, CIP Staff Writer
T
he imbalance between supply and demand in the national industrial sector is driving interest in new-construction facilities, which are in short supply, according to Newmark’s Industrial Insights Report. A survey of major industrial markets found that speculative construction deliveries fell significantly in 2021 because of COVID-19 labor disruptions, but demand did not fall, decreasing the length of time between warehouse delivery and stabilization. CONSTRUCTION (continued on page 8)
Reimagine What’s Possible CenterPoint Properties is recognized as an innovator in the investment, development, and management of industrial real estate. Let our team help reimagine what’s possible and give you the competitive edge you need to succeed.
centerpoint.com
M A R C H/APRIL 20 2 2 C HICAGO INDUS T R I A L P R OP E RT I E S
3
CONTENTS PUBLISHER Mark Menzies menzies@rejournals.com 708.622.0074 STAFF WRITER Mia Goulart mia.goulart@rejournals.com
VICE PRESIDENT OF SALES Frank E. Biondo Frank.biondo@rejournals.com CLASSIFIED DIRECTOR Susan Mickey smickey@rejournals.com
ADVERTISING SUPPORT VICE PRESIDENT OF SALES & MW Hayley Meyers CONFERENCE SERIES MANAGER hayley.meyers@rejournals.com Ernie Abood eabood@rejournals.com DIRECTOR, NATIONAL EVENTS & MARKETING VICE PRESIDENT OF SALES Alyssa Gawlinski Marianne Grierson agawlinski@rejournals.com mgrierson@rejournals.com
Chicago Industrial Properties® (ISSN 1546-377X) is published bi-monthly for $59 per year by Real Estate Publishing Corporation, 1010 Lake St Suite 210, Oak Park, IL 60301. Contact the subscription department at 312.933.8559 to subscribe. © 2022 by Real Estate Publishing Corporation. All rights reserved. No part of this publication can be reproduced or transmitted in any form or by any means, electronic or mechanical including photocopying, recording or by any information storage or retrieval system.
1
No construction? No problem for I-88 Corridor amid robust leasing activity Demand for industrial real estate climbed to new highs in 2021, with net absorption in the Chicago area shattering its previous record.
1
Tenant interest in new-construction warehouse space soars, but availability might be scarce The imbalance between supply and demand in the national industrial sector is driving interest in new-construction facilities, which are in short supply, according to Newmark’s Industrial Insights Report.
4
Grocery déjà vu? Empty shelves might mirror 2020, but there are promising signs of improvement If
you’ve taken a recent trip to your local Trader Joe's or Whole Foods, you might notice some empty store shelves and rising prices. And it’s not just big names that are experiencing rising prices and food shortages, nor is it a simple fix.
6 10
Warehouse Leasing Wars: Chicago demand drives competition The unprecedented demand for Chicago’s Class-A space has sparked a frenzy. International Women’s Day: Obstacles and opportunities, according to Duke Realty’s Susan Bergdoll Growing a career in any field is difficult. For a woman in a predominantly male industry like CRE, it comes with unique challenges.
14
Industrial unstoppable in 2022? Maybe Industrial, though, still seems to be marching on with record numbers — especially in Chicago. But could trouble be lurking in the shadows?
16 18
Under 4 percent vacancy rate for the first time ever: U.S. industrial market enjoyed record-breaking year in 2021 CRE MARKETPLACE ARCHITECTS/DESIGN-BUILD FIRMS • ASSET/PROPERTY MANAGEMENT FIRMS • BROKERAGE FIRMS • DEVELOPERS •EDCs
2022 EDITORIAL BOARD Jeanne Rogers
Arthur J. Rogers & Co.
Corey Chase Newmark
Jerry Rotunno Associated Bank
Joe Pomerenke
Arco/Murray National Construction Company, Inc
Dan Fogarty
Becknell Industrial
Steve Schnur Duke Realty
Richard Prokup
Committed to the
First Industrial Realty Trust Inc.
Success of Your Project
Ron Behm
Colliers International
Adam Roth NAI Hiffman
We create highly-functional and Abt Electronics Expansion Glenview, IL
sustainable facilities, with ingenuity and integrity.
Mike Yungerman Opus Group
Glen Missner
The Missner Group
9500 W. Bryn Mawr Avenue, Suite 200 Rosemont, IL 60018 www.mcshaneconstruction.com
C H I CAG O I N D US T R I A L P R O P E RT I E S M A R C H / A P R I L 2 0 2 2
4
Grocery déjà vu? Empty shelves might mirror 2020, but there are promising signs of improvement By Mia Goulart, CIP Staff Writer
I
f you’ve taken a recent trip to your local Trader Joe's or Whole Foods, you might notice some empty store shelves and rising prices. And it’s not just big names that are experiencing rising prices and food shortages, nor is it a simple fix. Are we slowly returning to early pandemic days of grocery hoarding? The good news? Probably not. A recent report by Avison Young finds promising signs of improvement in the grocery world. We talked with Avison Young Capital Markets Leader Erik Foster about the complex issues impacting our food and grocery supply chains today, as well as the role industrial real estate plays in a grocery company’s ability to deliver goods. Could you talk about the factors that are contributing to the shortages we’re seeing now? Erik Foster: What we’re continuing to see in the supply chain, and especially in food, is congestion. The supply chains are in a state of flux. The producers of food are having trouble getting it to the manufacturers, and the manufacturers are having trouble getting it to the consumer. There are also employment issues, which are contributing to both the manufacturing and the distribution of that food. It’s not just one thing. It’s a very wholistic problem around food and how it gets produced and then delivered to the consumer. The supply chain continues to be stretched. So it’s still a tail-end pandemic issue? Foster: It is. What’s also starting to impact the consumer is inflation. We’re seeing prices spike. I do believe that the suppliers of food and the end product are retooling how they work. Hopefully the issue will start to alleviate itself as the pandemic wanes, but it is still an issue.
"It’s not just one thing. It’s a very wholistic problem around food and how it gets produced and then delivered to the consumer. The supply chain continues to be stretched."
Do you think things will get worse before they get better? Foster: From an industrial distribution standpoint, I think that our point of view allows us to see signs of hope that people are solving for the larger issue. I believe the worst of it is behind us.
started to see these shortages creep up as these factors that we talked about earlier started to impact the supply chains down the line.
Are the factors contributing to these shortages in 2022 the same as those in 2020?
How difficult it is today for grocery stores to attract labor? Are they struggling to find enough workers?
Foster: Yes, they are. In 2020, food manufacturers and processors were still moving through existing inventory and making their way through. We then
Foster: They are. Those types of jobs are in high demand right now. We’re seeing what people are calling The Great Resignation, and many people are leaving
the workforce. That is impacting both white- and blue-collar jobs. The grocery store retailer is having the same issue as the warehouse distribution facility and the pork or protein producer in Wisconsin. It’s the same issue up and down the continuum. What do you think is the main reason for these workforce shortages? Foster: It’s the demand that’s being put on those who are hiring, and it’s the
lack of people, since they have left the workforce. When looking for an employer, people are looking for jobs that don’t require them to go into a facility. Many people are enjoying working from home. We are hearing about all of these things with clients and owners of real estate, and all of it is affecting the supply chain. Do you foresee it evening out, and how soon? Foster: We believe that industrial will still be a highly sought-after product by both tenants and investors in real estate. You have high demand by tenants, constraints on delivery of new product, and historically good fundamentals that are in favor of landlords. These three things are going to continue for the foreseeable future, and I would estimate it to be well over 12 months. Possibly 24. How that impacts employees within these facilities and the tenants, I think is yet to be determined.
+
+
+
+
+
+
+
+
+
C H I CAG O I N D US T R I A L P R O P E RT I E S M A R C H / A P R I L 2 0 2 2
6
Warehouse Leasing Wars: Chicago demand drives competition By Mia Goulart, CIP Staff Writer
Too many tenants, too little space. The unprecedented demand for Chicago’s Class-A space has sparked a frenzy. Space is being leased as fast as it’s advertised, causing a trickle-down effect to Class-B and C, according to Marcus & Millichap. Why? Increased needs of e-commerce companies and other businesses looking to expand their space to store and ship supply, mostly. While the issue isn’t specific to the Midwest, Chicagoland seems to be feeling a brunt of it for many reasons. We spoke with Senior Associate Tyler Sharp about the metro’s booming demand. What are some of the reasons behind the demand for new warehouses? Tyler Sharp: What we’ve seen is due to the shift in e-commerce and companies needing to be in larger metros. If you look around Greater Chicago, you see a lot of growth around I-55 and I-88 near Aurora. As Baby Boomers continue to get older, you’re seeing more and more of our generation buy things online, and you need warehousing for that. The second reason has to do with the supply chain. We’ve seen people look at leasing shorter term space to bring in more inventory because it’s hard to get. The lead times are extremely long. If they have enough cash on hand to bring in more inventory, they can do it at a lower cost and cut down on lead times.
"As Baby Boomers continue to get older, you’re seeing more and more
Is the Midwest in demand because of its central location?
of our generation buy things online,
Sharp: That would be my reasoning. It has to do with transportation. Chicago is No. 1 in the U.S. in rail tonnage, which has been a very desirable alternative to OTR shipping. With transportation and gas costs rising, shipping by rail has become an option for companies. You see a lot of that growth in the Midwest because of its good access, central location, and alternative modes of transportation—air, rail and water. In cities not quite as large as Chicago, like St. Louis and Kansas City, we’re seeing a lot of growth for similar reasons.
and you need warehousing for that."
When tenants are looking at new warehouse space, what kind of amenities are they looking for? Sharp: Clear height is a big one. Class-A is typically going to be 28-foot clear heights and up. Class-B is in the low-20s. That’s a big drawback for some tenants because they don’t have the ability to stack. Others are ease of access, location, turnaround radius and extra acreage for parking. Outside storage is in very high demand as well, and that comes with the shift of trying to bring in more inventory.
Do you think the boost in e-commerce that occurred during the pandemic, and which gave yet another boost to the industrial market, will continue as COVID19 cases continue to fall and life returns to a more normal state? Sharp: It will. I think you’ll see a steady increase. The older generations used to go grocery shopping, but during the pandemic they bought online, and a lot of times, they’re still buying online for ease of purchase. And that’s what the younger generation has come to know. You’ll have experiential buying, but for the most part, your large, bulk product will still be supplied and purchased through e-commerce, and you see that continue the demand for industrial.
Is this increased demand for warehouse space causing any challenges for companies looking for warehouse space? Sharp: Yes. If you’re looking at building a new development in a colder climate city, you must have insulated concrete panels to build, but there are supply shortages. There are three main producers of these panels in Chicago, and they’re all backlogged by what developers have been quoted 16 months. A lot of tenants can’t wait that long to move into buildings, so we’ve seen an uptick in Class-B and C product. On the investment and sales side, a lot of our investors are willing to now move away from Class-A product and invest in Class-B and C because they’re seeing rent growth in those properties. Maybe not quite as much as you would in a Class-A,
but still significant rent growth. That’s a trend you’ll continue to see until the economics of supply and demand works itself out. There’s probably a two-to-three-year window until there’s enough supply of industrial space to meet the demand. That’s also led to rent increase. If tenants wanted to leave right now, there’s nowhere for them to go. It’s really a landlord’s market. Are we seeing a lot of speculative warehouse construction today across the country? Sharp: Yes. You’re seeing it in not only major primary markets across the country, but even secondary markets. And there’s so much new capital in the market chasing that. The demand for investment properties is way outweighing the supply, and in industrial specifically, we’ve seen that come from various sources. A lot of people are trying to get into the industry, and a lot of the deals we’ve sold have been a mix of traditional industrial investors, new capital sources and other non-industrial groups new to the industry. As you continue to see that, the demand for industrial will continue up. The demand is outpacing inflation, and you’ll continue to see that, not only from tenants, but also from investors.
Think Beyond the Build. MIDWEST MARKET PREMIER's years of experience in the large-scale industrial market enables unmatched expertise. Whether a ground-up speculative facility, build-to-suit, or tenant buildout, we work with developers and end users to find solutions, save costs and exceed expectations on a massive scale.
pdbgroup.com
C H I CAG O I N D US T R I A L P R O P E RT I E S M A R C H / A P R I L 2 0 2 2
8
to half-a-billion square feet underway in the fourth quarter of 2021— the most on record. Speculative warehouses account for about 77 percent of that volume, in line with the five-year average share.
CONSTRUCTION (continued from page 1)
In fact, demand for modern warehouse space to improve supply chain efficiency and meet ever-changing consumption habits has never been higher, especially from third-party logistics, consumer goods and e-commerce companies, which represented the bulk of new-construction leasing. Design specs for these warehouses are consistent across the country, and developers have recognized occupier needs, allowing tenants to lease space and move in immediately, contributing to quicker lease times and increased competition between tenants. The report found that the speculative lease-up period in Chicago has decreased by roughly two months each year since 2017 for industrial deliveries, down to an average of 1.2 months until full stabilization in 2021. Additionally, leasing at larger Chicago properties has proven increasingly competitive since 2015. Ninety-two percent of speculative properties of about 500,000 square feet have stabilized, compared to 90 percent of all delivered
industrial properties above 100,000 square feet. The average time until such properties are stabilized is 5.2 months, half a month shorter than the average time it takes Chicago speculative indus-
trial building above 100,000 square feet to reach the same milestone. Lofty construction costs did little to affect the construction pipeline, rising
But as disruptions subside and speculative deliveries increase, Newmark says experts anticipate the average lease-up period to gradually increase over the next couple of years as tenants are presented with more options. Tenants with movein requirements this year will face a continuing environment of scarcity and competition in most markets, as supply chain and labor challenges continually impact delivery timelines.
C H I CAG O I N D US T R I A L P R O P E RT I E S M A R C H / A P R I L 2 0 2 2
10
International Women’s Day: Obstacles and opportunities, according to Duke Realty’s Susan Bergdoll By Mia Goulart, CIP Staff Writer
G
How do you these hurdles?
rowing a career in any field is difficult. For a woman in a predominantly male industry like CRE, it comes with unique challenges.
Bergdoll: Again, I don’t think there are hurdles, only opportunities.
But as some might view womanhood as an obstacle, Susan Bergdoll, SVP and regional leader for Duke Realty’s Chicago, Minneapolis and Indianapolis markets, views it through a lens of opportunity.
Are you seeing an increase in the number of women entering the CRE business? Bergdoll: When I started in this business 25 years ago, I felt I was the token female in the industrial real estate industry, and it was a lonely place to be. I see more women entering the field in all types of positions. Thanks to organizations like iWire and CREW, women are getting the support of a network of women who all want to see more women succeed in this industry.
We celebrated International Women’s Day by highlighting Susan’s empowering perspective.
Thanks to organizations like iWire and
Why do you think there aren’t more women in this business?
CREW, women
Bergdoll: Women may have a misconception that it’s a male-dominated industry with no room for women. However, I found that it is a welcoming industry for women. I have found plenty of growth opportunity and Duke Realty and industry organizations have mentorship programs to help women in this business.
are getting the support of a network of women who all
What do you enjoy most about CRE?
want to see more
Bergdoll: What I love most about commercial real estate is the variety in my day and helping my clients. The real estate business is really the people business—helping people solve problems. Developing trusting relationships with brokers, tenants and others is key to solving those problems.
women succeed in this industry." What led you to a career in CRE? Susan Bergdoll: Fresh out of college, I took a job working for the Mayor of Indianapolis. During the two years I was there, I had the pleasure of meeting Tom Hefner, the then CEO of Duke Realty. As I looked to transition away from politics and working for the government, my dad encouraged me to establish a career rather than find another job. That’s when I contacted Tom who said,
overcome
“Come on out. Not sure what we’ll do with you, but my philosophy is to hire good people when you find them.” That’s how I landed at Duke Realty. It was here that I developed my career in this industry. What hurdles do you face working in a career still largely dominated by men? Bergdoll: I really don’t feel like there are hurdles in this business, right now.
I choose to see opportunities afforded to me as a female. People remember you when you’re different. Consider this: Potential tenants may tour eight warehouses that all look the same. If that tenant prospect only remembers the building because the person who showed them the building was a woman, and it helps close the deal, then I’ll take it.
What advice would you give to other women interested in entering the field? Bergdoll: It’s advice that I live by—stay true to yourself and your brand. I chose this field knowing what it was like, so I never expected the industry to acquiesce to me. I adapted my behavior to fit in with the industry while still being true to myself.
C H I CAG O I N D US T R I A L P R O P E RT I E S M A R C H / A P R I L 2 0 2 2
12
I-88 (continued from page 1)
even as a handful of speculative developments come online. The submarket’s quality stock of existing warehouses has proven attractive to buyers looking for lower costs of entry. Location. Location. Location. Beyond offering an address outside of Cook County, where higher property taxes have deterred some investors, particularly in the wake of recent reassessments, the I-88 Corridor is desirable from a locational standpoint due to its deep labor pool and proximity to several major expressways. E-commerce and third-party logistics users can easily service the Chicago metro. At the same time, logistics companies have several routes they can take to reach destinations throughout Illinois and adjacent states including Indiana and Wisconsin. As transportation costs continue to climb, the accessibility afforded by submarkets like the I-88 Corridor will become increasingly attractive to industrial tenants, supporting underlying property values. High Demand = High Returns Lower entry costs and higher first-year returns relative to the metro average
"The I-88 Corridor is desirable from a locational standpoint due to its deep labor pool and proximity to several major expressways."
have attracted investors – including local buyers – to the I-88 Corridor. Buyers here have shown preference for older warehouses under 100,000 square feet due to the ability to purchase below replace-
ment costs. In 2021, these assets traded at an average of $88 per square foot, with cap rates averaging in the low-8% range, according to CoStar data, whereas similar product traded lower at $70 per square foot in 2020. Whether it’s a local mom-and-pop operation looking for 5,000 square feet or a national tenant in need of 50,000 square
feet or more, many existing warehouses can be modernized to suit the needs of today’s tenants at much lower costs than building new. The adaptability of these structures for small- and mid-size users essentially makes the tenant pool endless, and more investors have taken notice. Out-of-state buyers, in particular, are showing great interest in the I-88 Cor-
FOR SALE OR LEASE
M A R C H/APRIL 20 2 2 C HICAGO INDUS T R I A L P R OP E RT I E S
Peter Doughty
13
sometimes as part of a larger portfolio acquisition.
tenants, including Home Depot and KIA Motors.
A 79,462-square-foot warehouse/flex facility in Lombard that I sold in late 2021 is a microcosm of these trends. Built in 1985, the Class B building is located just north of the I-88 and I-355 interchange – with easy access to O’Hare and Midway airports – and contains a quality tenant base of both regional and national credit
The fully leased property garnered eight offers in the first 12 days of marketing, ultimately selling at list price of $10.25 million, representing a 7.46% cap. The I-88 Corridor’s strong performance heading into 2022 shows that while demand for newly constructed big-box
warehouses is stronger than ever, existing B and C assets have a small but mighty role to play in the success of the local industrial market, both today and in the future. Peter Doughty, Senior Associate, Marcus & Millichap can be reached at peter.doughty@marcusmillichap.com
Think of us for your next City of Chicago project...
"High material costs and delays caused by global supply chain disruption have made existing warehouses all the more desirable in the eyes of investors." ridor and Chicago in general due to the region’s higher yields relative to coastal markets. Many are surprised to find deals trading in the 7% to 8% cap rate range compared to a 4% to 5% range for similar product on the coasts. Supply Chain Gain High material costs and delays caused by global supply chain disruption have made existing warehouses all the more desirable in the eyes of investors. For speculative developments, just getting the materials needed to begin construction may take upwards of 12 months. With the cost of borrowing still historically low and demand for space only expected to increase – especially if newer inventory is slower to come online – investors are targeting deals in submarkets like the I-88 Corridor where they can immediately begin capitalizing on rent growth,
UNDER CONSTRUCTION... Commerce Park Chicago Building B
Chicago, IL - 602,545 SF ARCHITECT: StudioNorth Architecture CIVIL ENGINEER: Jacob & Hefner Associates
DESIGN BUILD · GENERAL CONTRACTING CONSTRUCTION MANAGEMENT Please contact us for any upcoming project needs! 847.374.9200 · www.meridiandb.com
C H I CAG O I N D US T R I A L P R O P E RT I E S M A R C H / A P R I L 2 0 2 2
14
Industrial unstoppable in 2022? Maybe By Mia Goulart, CIP Staff Writer
W
e’ve said it before. Issues like supply chain backlogs, labor shortages and the continued consequences of COVID-19 continue to dampen the surge in consumer demand. And another worry seems to be looming.
rupted; delivery and occupancy are simply being delayed.” Events between Russia and Ukraine are worth considering, too. Things have yet to simmer down, adding yet another layer of uncertainty to the market. Besides its effect on U.S. inflation, a lot depends on the length of “geo-political turbulence,” according to LightBox. And it’s too early to determine the lasting economic consequences.
Inflation. Industrial, though, still seems to be marching on with record numbers — especially in Chicago. But could trouble be lurking in the shadows?
“Some players may adopt a waitand-see policy or pull out of the market completely, which reduces demand-side competition and could lead to somewhat softer pricing,” said Kasselman. “On the other hand, alternative institutional investments are likely to underperform as a result of such turbulence, which could end up boding well for an influx of new real estate capital seeking better returns.”
Rising inflation is not preventing investment activity, but it is prompting investors to reexamine projections and revise expectations for profitability, according to LightBox’s 2022 Q1 RCM Investor Sentiment Report. Inflation has risen from 2.6% in March of 2021 to 5.4% from June through September of 2021 to 7.5% at the end of January 2022. LightBox found inflation to be No. 3 in terms of highest concern. Interest rates are up there, too. Higher inflation and growing interest rates comes with large-scale concerns. Inflation will impact buying power. Commodity prices are increasing. Slower delivery times are extending deadlines. Shortages are being felt
across the U.S. All of this will influence capital markets activity, and LightBox confirmed that these economic headwinds will likely affect capital access points. Because of this, CRG SVP Workplace Strategy Geoffrey Kasselman said there
might be a decline in new construction deliveries in the second half of the year. “Strong demand and less supply being delivered means that if you need to occupy space at the end of 2022 you may be slugging it out for the best available options. Demand for space is uninter-
The Industrial Boom has continued, however — despite all variables — because of e-commerce. Population growth is spilling into secondary markets, and developers continue to follow the outward trend, their work, ensuring, in some cases, one-hour delivery to consumers. LightBox found that sales reached $389.9 billion between 2019 and 2021.
Curiosity. Clarity. Results.
Empowering real estate owners, developers and investors to dream bigger and accomplish more — time and again. ■ Streamline, grow and protect real estate investments
■ Infuse technology to help deliver profitability
■ Leverage market conditions
■ Outsource financial management responsibilities
■ Reduce tax exposure
■ Manage unanticipated change
wipfli.com/real-estate
C H I CAG O I N D US T R I A L P R O P E RT I E S M A R C H / A P R I L 2 0 2 2
16
Under 4 percent vacancy rate for the first time ever: U.S. industrial market enjoyed recordbreaking year in 2021 By Dan Rafter, CIP Staff Writer
A
n exceptionally high note. That’s how 2021 ended for the U.S. industrial market, according to the latest research from JLL. According to JLL’s most recent U.S. Industrial Outlook report, this sector saw record-setting rent growth in 2021 and soaring net absorption. And vacancy rates? They fell to miniscule levels. The numbers tell the story. According to JLL, industrial tenents signed leases for 122 million square feet in the fourth quarter of last year. Industrial rents rose to $7.11 a square foot during the same quarter. That continues a long trend: JLL reported that industrial rents have grown by 11.3 percent since the fourth quarter of 2020. Absorption stats were impressive, too. More than 141.8 million square feet of industrial space was absorbed in the U.S.market in the fourth quarter, according to JLL. This was just the continuation of a boom year for the industrial sector. JLL said that year-end net absorption totals exceeded 496.3 million square feet.
"Developers completed nearly 89 million square feet of new industrial product in the fourth quarter of last year and 304 million square feet throughout the entire year." Overall, net absorption in the industrial space increased by more than 81 percent on a year-over-year basis.
in 2019, while 3PL companies leased 41 percent more space during the same time period.
And for the first time in history, the vacancy rate for industrial real estate dropped below the 4 percent threshold, with this rate falling to 3.8 percent in the fourth quarter.
Overall tenants leased more than 500 million square feet of industrial space in 2021. This is the first time tenants have also cracked the 500-million-square-feet mark.
Who leased the most industrial space in 2021? JLL said that logistics and distribution companies leased 46 percent more industrial space last year than they did
Not surprisingly, developers have been busy, too. JLL reported that developers completed nearly 89 million square feet of new industrial product in the fourth
quarter of last year and 304 million square feet throughout the entire year. Nearly two-third of the industrial buildings that these developers delivered last year was preleased, up from 45 percent in 2020 and 50 percent in 2019. Investors haven’t been shy, either, about taking advantage of the U.S. industrial boom. According to JLL, investors sunk $143 billion in industrial facilities in 2021. That shatters the previous annual total from 2019 by 32 percent. In the fourth quarter of last year alone, U.S. industrial investment activity hit $59 billion, good enough for an all-time quarterly record. And for the rest of this year? JLL says that the demand for industrial space that the country saw in 2021 is expected to continue this year. JLL predicts that industrial rents will rise as demand outpaces supply. JLL also said that industrial vacancy rates might fall again this year if the availability of industrial space continues to shrink and net absorption keeps rising.
CHICAGO 19TH ANNUAL
CIP INDUSTRIAL
summit
april 28, 2022
Scan to Register Now!
HYATT LODGE 2815 JORIE BLVD., OAK BROOK, IL Hybrid Event 8 am to noon 7:30 am breakfast and networking
The factors driving the industrial market
C H I CAG O I N D US T R I A L P R O P E RT I E S M A R C H / A P R I L 2 0 2 2
18
CIP MARKETPLACE ARCHITECTS/DESIGN-BUILD FIRMS
BROKERAGE FIRMS
LAMAR JOHNSON COLLABORATIVE
BARBERMURPHY
35 E. Wacker Drive, Ste. 1300 Chicago, IL 60601 P: 312.429.0400 Key Contact: Lamar Johnson, FAIA, LEED AP 2199 Innerbelt Business Center Drive St. Louis, MO 63114 P: 314.429.1010 Key Contact: Chip Crawford, PLA, FASLA, LEED GA Website: theljc.com Services Provided: Lamar Johnson Collaborative provides architecture, interior design, landscape architecture, urban planning, and urban design. Company Profile: Lamar Johnson Collaborative is a full-service design and architecture firm committed to enhancing the quality of the human experience and to improving how design and architecture can impact each individual’s emotional being. By harnessing the power of integrated design, including architecture, interior design, landscape architecture, urban planning, urban design and engineering, the company achieves its clients’ goals and aspirations. Notable/Recent Projects: 448 N LaSalle, Horizon Therapeutics, Triangle Square, 24 E Washington, T-Rex Lobby Renovation & Art Installation, POPCourts!, Mark Anthony Brewing, Katherine Ward Burg Memorial Garden, EDGE @ WEST, Northwestern Medicine Mokena Medical Office Building, St. Louis County Library – Lynn Beckwith, Jr. Administrative Building and Ladue Branch, Wildhorse Village Mixed Use Development.
ASSET/PROPERTY MANAGEMENT FIRMS
CENTERPOINT PROPERTIES
1808 Swift Drive Oak Brook, IL 60523 P: 630.586.8000 Website: centerpoint.com Key Contacts: Bob Chapman, Chief Executive Officer; bchapman@centerpoint.com; Nate Rexroth, Executive Vice President, Asset Management; nrexroth@centerpoint.com Services Provided: CenterPoint Properties is an innovator in the investment, development and management of industrial real estate and multimodal transportation infrastructure. CenterPoint acquires, develops, redevelops, manages, leases and sells state-of-the-art warehouse, distribution and manufacturing facilities near major transportation nodes. Our experts focus on rail and port-proximate distribution infrastructure assets. Company Profile: CenterPoint Properties continuously reimagines what’s possible by creating ingenious solutions to the most complex industrial property, logistics and supply chain problems. With an agile team, substantial access to capital and industry-leading expertise, we provide our customers with a competitive edge and ensure their success — no matter how great the challenge.
FRIEDMAN REAL ESTATE
34975 W. Twelve Mile Road Farmington Hills, MI 48331 P: 888.848.1671 Website: friedmanrealestate.com Key Contacts: David B. Friedman, President/CEO; Gary Goodman, Sr. Managing Director-Brokerage Services Services Provided: Friedman offers a full range of real estate services including commercial and multifamily property and asset management, tenant and landlord representation, investment and loan sale advisory, space planning, design and construction and a unique platform of lenderfocused bankruptcy, receivership and distressed asset services. All services are provided inhouse, though a single point of contact, which guarantees that clients receive the most timely and efficient service available in the marketplace. Company Profile: Founded in 1987, Friedman Real Estate is one of the largest privately held commercial real estate organizations in the nation; currently managing over 15M SF of commercial space and more than 15,000 apartment homes located throughout the country. Friedman’s commercial brokerage team has over 800 current listings with $20 billion in closed transactions. Notable Transactions/Clients: • Hovis Light Industry Park – Dekalb • Poplar Creek Office Plaza – Hoffman Estates • 801 North Route 83 – Bensenville • Crystal lake Office – Crystal Lake • Broadway Village – Pekin • National Railway Equipment – Dixmoor • Daycare Building – Bolingbrook • Freeport Shopko – Freeport
1173 Fortune Blvd. Shiloh, IL 62269 Commercial Real Estate Solutions P: 618.277.4400 | F: 618.277.4407 Website: www.barbermurphy.com Key Contacts: Wayne Barber, Jr., SIOR, Principal, Wayne@barbermurphy.com; Paul Murphy, Managing Broker, Principal, Paul@barbermurphy.com; Steve Zuber, SIOR, CCIM, Principal, Steve@barbermurphy.com; Collin Fischer, CCIM, Principal, CollinF@barbermurphy.com Services Provided: BARBERMURPHY is a full service Commercial Real Estate firm offering their clients on the ground market knowledge and experience in the disposition and acquisition of commercial, industrial, land, retail, and investment properties. Company Profile: BARBERMURPHY is the largest Commercial Real Estate firm focusing on downstate Illinois and St. Louis. Our growing firm has 19 Licensed Brokers and more than 500 exclusive listings. Mission Statement: Achieving total client satisfaction through exceptional people providing the best possible Commercial Real Estate Solutions.
CATON COMMERCIAL REAL ESTATE GROUP DOLAN & MURPHY TEAM
765 Orchard Avenue Aurora, IL 60506 P: 630.801.8800 Website: CatonCommercial.com Key Contact: Brian K. Dolan Commercial Broker, BK.DolanMurphyTeam@CatonCommercial.com Services Provided: The professional team of commercial real estate brokers on the Dolan & Murphy Team of Caton Commercial Real Estate represent the interests of landlords, tenants, investors and property owners with strong roots in Aurora, IL and the surrounding suburbs. The brokers of this dynamic team handle a wide range of commercial real estate transactions, specializing in industrial, land sales, development and investment sales. Company Profile: The Dolan & Murphy Team joined the Caton Commercial Real Estate Group in January of 2021 leveraging their brokerage expertise and client relationships as a collaborative group. The Dolan & Murphy Team has a long legacy and has been transacting in commercial real estate since 1965; providing trusted advisory and intelligent solutions that drive wealth creation for clients through third party brokerage transactions and value creation through skilled property management services. Notable Transactions/Clients: Lease of 230,979 SF warehouse at 900 Knell Rd in Montgomery; Sale of Valley Green Golf Course in North Aurora to OPUS, Sale of Oberweis Property in North Aurora (Randall & Ice Cream Dr) to Transwestern.
NAI HIFFMAN
One Oakbrook Terrace, Suite 400 Oakbrook Terrace, IL 60181 P: 630.932.1234 | F: 630.932.7258 Website: hiffman.com Key Contacts: Dave Petersen, CEO, dpetersen@hiffman.com; Michael Flynn, COO, mflynn@hiffman.com Company Profile: NAI Hiffman is the largest independent real estate services firm in the Midwest, providing leasing, property management, tenant representation, capital markets project services, research, and marketing services for institutional and private owners and occupiers of commercial real estate. NAI Hiffman currently leases and manages over 100.5 million square feet, encompassing more than 800 properties in 28 states. With more than 200 employees, NAI Hiffman is the Chicago-area representative for NAI Global, the world’s largest managed network of real estate service providers, with more than 6,000 local market professionals managing more than 1.15 billion square feet of property. NAI Global has more than 375 offices strategically located throughout North America, Latin America, Europe and Asia Pacific. For more information, please visit hiffman.com
PW COMMERCIAL REAL ESTATE
8725 W. Higgins Road, Ste. 800 Chicago, IL 60631 P: 773.714.9300 | F: 773.714.8253 Website: painewetzel.com Key Contacts: Jerry Sullivan, Principal, sullivan@painewetzel.com; Ed Wabick, Principal, ewabick@painewetzel.com Services Provided: Real Estate Strategy with dependable results in Brokerage, Consulting, TenantAdvisory, Corporate Services, Property Management, Development, Strategic Planning, Research and Construction Management. Company Profile: PW has been a leader in industrial, office and investment real estate since 1975. We pride ourselves on offering unparalleled brokerage services and superior market expertise to attain your real estate and business goals.
M A R C H/APRIL 20 2 2 C HICAGO INDUS T R I A L P R OP E RT I E S
19 LAKE COUNTY, INDIANA ECONOMIC ALLIANCE (LCEA)
DEVELOPERS CENTERPOINT PROPERTIES
1808 Swift Drive Oak Brook, IL 60523 P: 630.586.8000 Website: centerpoint.com Key Contacts: Bob Chapman, Chief Executive Officer, bchapman@centerpoint.com; Michael Murphy, Chief Development Officer, mmurphy@centerpoint.com Services Provided: CenterPoint Properties is an innovator in the investment, development and management of industrial real estate and multimodal transportation infrastructure. CenterPoint acquires, develops, redevelops, manages, leases and sells state-of-the-art warehouse, distribution and manufacturing facilities near major transportation nodes. Our experts focus on rail and port-proximate distribution infrastructure assets. Company Profile: CenterPoint Properties continuously reimagines what’s possible by creating ingenious solutions to the most complex industrial property, logistics and supply chain problems. With an agile team, substantial access to capital and industry-leading expertise, we provide our customers with a competitive edge and ensure their success — no matter how great the challenge.
CONOR COMMERCIAL REAL ESTATE
9500 W. Bryn Mawr Avenue, Suite 200 Rosemont, IL 60018 P: 847.692.8700 | F: 847.292.4313 Website: conor.com Key Contacts: David J. Friedman, President, dfriedman@conor.com; Brian Quigley, Executive Vice President, bquigley@conor.com Services Provided: Conor Commercial identifies and implements the most suitable commercial real estate strategy to yield increased returns for each real estate opportunity. With offices and seasoned real estate professionals strategically located throughout the country, the firm provides the experience and resources needed to develop and stabilize real estate developments that maximize positive returns to investors and partners. Company Profile: Conor Commercial Real Estate is the integrated real estate development firm of The McShane Companies headquartered in suburban Chicago, Illinois with regional offices located in Dallas, Houston, Irvine and Phoenix. The firm is active on a local, regional and national basis in the development of master-planned industrial and office parks, multifamily properties, medical office developments and builttosuit projects for lease or purchase.
CRG
35 E. Wacker Drive, Ste. 1300 Chicago, IL 60601 P: 312-658-0747 2199 Innerbelt Business Drive St. Louis, MO 63114 P: 314-429-5100 Key Contacts: Shawn Clark, President clarks@realcrg.com; Chris McKee, Chief Development Officer, mckeec@realcrg.com Website: www.realcrg.com Services Provided: Development, Site Selection, Site Planning & Cost Analysis, Engagement & Entitlements, Incentive Discovery & Negotiation, Financing, Development Management, Leasing & Administration, Asset Management and Investment Management. Company Profile: CRG is a privately held national real estate development and investment firm that has developed more than 10,000 acres of land and delivered over 210 million square feet of commercial, industrial, institutional and multifamily assets exceeding $13 billion in value. CRG leverages a powerful North American platform with local market expertise and offices in Atlanta, Chicago, Seattle, Southern California, St. Louis, Philadelphia and Phoenix. CRG’s philosophy of developing for the future and anticipating the enhanced needs of next-generation users led to the creation of its industrial brand, The Cubes, and its multifamily brand, Chapter. For more information, visit CRG’s website at www.realcrg.com.
EDCs
ECONOMIC ALLIANCE OF KANKAKEE COUNTY
200 E. Court St., Suite 507 Kankakee, IL 60901 P1: 815.935.1177 | P2: 815.355.4159 OF KANKAKEE COUNTY Website: kankakeecountyed.org Key Contacts: Timothy Nugent, President/CEO, tnugent@kankakeecountyed.org; Angela Morrey, Director, Marketing & Business Attraction, amorrey@kankakeecountyed.org Services/Demographic Info: The Economic Alliance of Kankakee County is a 501c6 public/private partnership tasked with retaining industry within and recruiting industry to the Greater Chicago community of Kankakee County, Illinois. The Alliance leverages a number of business intelligence tools, providing current property availability, market data and other information on demand. Incentives: Based on location, projects may be able to take advantage of one or more of the following: Enterprise Zone, New Markets Tax Credits, Historic Tax Credits, Opportunity Zone financing, Tax Increment Financing, C-PACE financing and Special Service Area/Business District incentives. Recent CRE Activity: Multiple county-wide investments in 2021 including CSL Behring's $83+ million, Rise Baking's $34 million and Nucor Steel's $8 million; 23 major investment projects and 350+ NEW jobs created. $1.6 billion in CRE investment activity in five years, Riverfront & Court Street TIF districts in Kankakee.
ECONOMIC ALLIANCE
440 W. 84th Drive Merrillville, IN 46410 P: 219.756.4317 Website: LCEA.us Key Contacts: Karen Lauerman, President & CEO, klauerman@LCEA.us; Don Koliboski, VP Economic Development, dkoliboski@LCEA.us Services Provided: The LCEA team provides economic development and site selection assistance; business expansion services; community connections with decision makers/elected officials; workforce analysis, demographics, cost comparisons and other critical information. Company Profile: LCEA is the Lake County Indiana Economic Development Organization representing 20+ communities just minutes away from Chicago. It is the one resource for developers, site consultants and company executives considering relocation or expansion opportunities in Lake County, Indiana.
MICHIGAN CITY ECONOMIC DEVELOPMENT CORPORATION
Two Cadence Park Plaza Michigan City, IN 46360 P: 219.873.1211 Website: www.edcmc.com Key Contacts: Clarence Hulse, Executive Director, chulse@edcmc.com Services/Demographic Info: Michigan City has recognized $1.5 Billion in capital investment over the last 8 years, with more deals - $300 Million Multi-family projects on the horizon. We are located on Lake Michigan with easy access to I-94, I-80 and we are 1 hour drive East of Chicago. Michigan City is home to 32,000 residents with 5.6 Million visitors annually. Incentives: Waterfront Opportunity Zone, 3 TIF Districts, Facade Improvement Program, Taxbased Incentives, Start Up Assistance, and Workforce Training Funds. Recent CRE Activity: Double Track project ($500 Millions), Luxury 140 Apartment and Townhomes Complex, Waterfront Condominiums 150 Units, 32 Single Family Homes, SullairHitachi Expansion – 80,000 SF ($33 Millions), Shell-Criterion Expansion ($34 Millions), GAF Expansion – 200,000 SF ($30 Millions), Marbach Manufacturing Relocation, and 30 Independent Restaurants in our Downtown.
MONTGOMERY ECONOMIC DEVELOPMENT CORPORATION
200 Webster Montgomery, IL 60538 P: 630.897.6748 | P2: 815.703.1338 Website: Montgomery-illinois.org Key Contact: Charlene Coulombe CEcD EDFP, Executive Director, char@montgomery-illinois.org Services/Demographic Info: Montgomery, Illinois is home to over 18,000 residents, and nestled between The City of Aurora and Naperville, putting us in the center of a huge diverse labor pool. The community also continues to grow in the industrial and distribution market with daytime job counts exceeding any community of our size. Incentives: The Village has several designated TIF Districts which can assist in infrastructure costs. The community also has a series of programs including Small Business Loans & Grants. Recent CRE Activity: Montgomery has a huge redevelopment project underway. Reich Brothers purchased the Caterpillar site and is currently redeveloping the 350 acre site. Caterpillar still employs over 500 employees in the facility and there have been several signed deals. Three new restaurants have opened in addition to a new apartment complex on Route 30 & 34. Montgomery provides a business friendly environment and has certified and professional staff to guide you through the development process
NAPERVILLE DEVELOPMENT PARTNERSHIP
22 E. Chicago Ave., Ste. 205 Naperville, IL 60540 P: 630.305.7701 Website: www.Naper.org Key Contact: Christine D. Jeffries, President, CJeffries@Naper.org Services Provided: The Naperville Development Partnership promotes the City of Naperville and its many businesses. Whether you are an existing business looking to relocate or a new company, we will take the time to show you what Naperville has to offer. Company Profile: The Naperville Development Partnership is a public / private economic development organization that promotes business interest in the City of Naperville. Our mission is to enhance the economic vitality of Naperville and maintain its outstanding quality of life. This is achieved through the retention and expansion of existing businesses as well as attracting new business to the community.
FOR ADVERTISING OPPORTUNITIES IN THIS SECTION, PLEASE CONTACT SUSAN MICKEY AT SMICKEY@REJOURNALS.COM OR 773.575.9030
We’ve got Chicago covered Fashion Outlets, Rosemont
Audi, Highland Park
LLION sqft
160 MILLION sqft
nstallation Knoch Knolls Nature Center,of roofing installation Naperville
160
160
stallation
square feet of roofing installation
ILLION
LION
MILLION
Zurich HQ, Schaumburg
sq ft
nsta l lat ion
160 MILLION
sq ft
of roof i ng i nsta l lat ion
SullivanRoofing.com 847.908.1000 IL License Number 104-011830