By John Jordan
CHICAGO—Bolstered by strong leasing activity, the industrial vacancy rate for the Chicago region in the third quarter dropped to 4.9%, besting the 19-year record low of 5% recorded set in the second quarter of this year.
According to a report released by Cushman & Wakefield, third-quarter leasing activity totaled 25.9 million square feet, nearly half of which was concentrated in the Interstate 55 and Interstate 80 corridors, as well as southeast Wisconsin.
The average asking net rent in the Chicago region remained essentially unchanged from the second quarter, at $5.42-per-square-foot, above the year-earlier figure of $5.34-per-square-foot. The region scored the 35th consecutive quarter of positive absorption at 6.8 million square feet.
“As we head into the final months of 2019, signs point to yet another year of growth for Chicago-area industrial activity,” says Jason West, vice chair, on Cushman & Wakefield’s Chicago industrial team. “Firms like Crate & Barrel, which recently reported that nearly half of its sales are now online, continue to drive demand for large-scale distribution centers with easy access to consumers.”
He adds, “We’ve already seen more of these big-box deals in 2019 than during the same period last year, and with several others expected to close by year’s end, we’re confident in the market’s ability to absorb the new supply.”
In the report, Cushman & Wakefield states that eight new big-box leases of more than 500,000 square feet were executed in the first three quarters of 2019, compared with four for the same period in 2018. Additional transactions expected to close in the fourth quarter will likely keep big-box leasing volume ahead of last year’s levels, according to the report.
“Many of these big-box users are increasingly exploring how automation can improve their bottom line, which helps explain the need for larger buildings with increased power loads, higher ceilings, expanded loading and trailer parking and other features that are not only in demand, but expected,” West says.
Construction activity remained strong across the market in the third quarter, with year-over-year completions totaling 14.8 million square feet, a 56.5% increase from third-quarter 2018. An additional 17.8 million square feet is under construction, nearly 60% of which is being built on a speculative basis, Cushman & Wakefield reports.
By: Steve Zalusky
Mount Prospect will put an additional $200,000 into the 20 West development for public improvements.
Mount Prospect has already committed $2 million in incentives to the $23.5 million mixed-use project, which includes 73 luxury apartment and a two-story restaurant, at 20 W. Northwest Hwy. The funding comes from the Prospect and Main tax increment financing district.
The village board amended its redevelopment agreement with the developer, 20 West LLC, to authorize the expenditure Tuesday after Public Works Director Sean Dorsey told trustees plans have changed since the village approved the deal in March 2018.
"Some of the quantities and, in fact, some of the specifications and some of the materials are different at this point in time. As a consequence, there is a greater expense," Dorsey said. That includes $152,000 for more brick pavers, which will be clay-fired as opposed to the concrete the village is accustomed to using.
"One thing that we have noticed of late is early failure of the concrete pavers. That is, the salts and chlorides have eaten away at the concrete pavers, causing them to fail," Dorsey said while holding a deteriorated brick.
Given the amount of plowing and salt usage expected, the clay-fired brick solution is more effective, he said.
The brick pavers, Dorsey said, will help with stormwater control by holding back the first inch of rainfall before it percolates into the ground.
The village also will spend an extra $32,000 to change the location of a water main connection and increase the size of pipes for better flow, as a benefit for fire protection, he said.
Trustees were more agreeable to the changes because they came at the request of the village rather than the developer.
"If it was the builder that decided to do this on his own, I wouldn't think I would give it to him," Trustee William Grossi said. "But if it's the village saying we want this, we want more pavers, we want a different kind of pavers, it's justifiable in my eyes."
Chris Coleman of the Wingspan Development Group, speaking on behalf of 20 West LLC, said the development is expected to open in November.
Chris Coleman, VP of Development at Wingspan, periodically shares his thoughts and observations on property development news.