The Chicago region is witnessing a surge in demand for specialized facilities like cold storage, data centers and distribution centers. This demand is reshaping the industrial landscape and driving new construction trends to meet the unique needs of various industries. One such project that highlights these changes is the 326,000-square-foot retrofit in Bartlett, Illinois, for RIM Logistics. Meridian Design Build is leading the design/build project, reflecting the increasing preference for custom-built solutions as businesses seek facilities tailored to their operations.
“We’ve seen a move over the last 12 to 18 months towards user-driven/build-to-suit projects,” said Howard Green, Executive Vice President of Meridian Design Build. “In some cases, the move towards build-to-suits is driven by users looking for a new facility in an area with limited speculative inventory.”
Green noted that the trend is particularly pronounced in cold storage and data center facilities, as these require extensive above-standard improvements that make retrofitting existing speculative buildings much more expensive than new construction. Cold storage facilities, for instance, require significant above-standard improvements such as insulation upgrades, vapor barriers, underfloor warming systems, specialized dock equipment, specialized sprinkler systems and a structure capable of supporting roof-mounted refrigeration equipment, according to Green. Data centers, on the other hand, need significantly more power, cooling and data connectivity than typical industrial buildings, which makes new builds more appealing.
“Interest in, as well as development and construction of these ‘specialty’ facilities has increased,” said Trevor Ryor, Vice President of Clayco’s Industrial Business Unit. “While not just in the Chicagoland area, construction of cold storage facilities and data centers is very active right now.”
Ryor attributed this rise to evolving consumer needs, particularly the increasing demand for faster access to stored data, social media platforms and convenient food and beverage products. He also observed how shifts in the distribution market are driving demand for facilities of various sizes.
“The distribution market continues to evolve,” Ryor said. “Since such a drastic slow from recent post-pandemic levels over the past couple of years, it has the perception of being slow.”
While the demand for large, all-under-one-roof distribution centers has slowed, Ryor noted that activity on 250,000-square-foot and smaller sized facilities is active, reflecting a broader shift toward more nimble, adaptable facilities for smaller users. Developers like Clayco and Meridian are not only meeting this rising demand, but also tackling the unique challenges that come with building such facilities.
“If built on a speculative basis, understanding or guessing on assumptions for racking/material handling, floor loading requirements, loads imposed to the roof structure, what type of products will be in the building and how that affects the fire protection and mechanical systems are all considerations in the design,” Ryor said.
To maximize flexibility, he noted that Clayco provides a seven-inch unreinforced floor slab on grade that allows flexible floor loading for a tenant, until specific loading requirements are identified or special storage or material handling requirements are known.
Meanwhile, cold storage and data centers require developers to adopt specialized construction techniques that enhance energy efficiency and sustainability.
“We spend a great deal of time working with our design teams and subcontractors to identify ways to provide the most value to our clients,” Green said.
In the case of cold storage, relatively small investments in items such as increased insulation, higher quality vapor barriers and more efficient refrigeration systems can result in significant operational savings over the building’s life. Similarly, data centers must prioritize energy efficiency, power redundancy and cooling system reliability to ensure smooth and uninterrupted operations.
Despite the success of specialized facility projects, Chicago developers face ongoing challenges in the construction of distribution centers, particularly when it comes to electrical systems.
“The foremost challenge on the construction front continues to be long lead times for electrical switchgear and utility company delays in getting electrical service to new facilities,” Green said.
To address this issue, Meridian has implemented strategies such as placing equipment orders early, purchasing custom-built switchgear from local manufacturers and accommodating temporary generator connections when utility companies are unable to deliver power on time.
In addition to cold storage and data centers, Chicago’s industrial market is also seeing the rise of controlled-environment agriculture (CEA) facilities, particularly in metropolitan areas.
“The Chicago market is a dense metropolitan market, and we are seeing the CEA growers wanting to try and find solutions for cities like Chicago and vertically grow crops in existing buildings to help with supply chain,” said Scott Rahn, Vice President and Market Leader with Clayco’s Consumer Products & Supply Chain.
Clayco’s integrated approach, which emphasizes speed to cultivation, has made it a strong player in the CEA market.
“We treat CEA projects like any fast-track food and beverage project,” Rahn said, explaining that Clayco’s ability to adapt designs quickly around an owner’s growing systems requirements helps accelerate project timelines. “The key to fast-track projects is that the owner has their requirements and understanding of their grow systems figured out so that the design can quickly be done around those requirements.”
The industrial market in Chicago continues to push forward with new projects emerging to meet the evolving needs of tenants. For example, Clayco is currently constructing a 66,552-square-foot Class A warehouse/distribution facility in Franklin Park, Illinois, just southeast of O’Hare Airport.
“With easy access to I-294, distribution to Chicago or any of the surrounding states is a strong attribute,” Ryor said, noting that the facility’s 32-foot clear height and 18 dock positions make it ideal for warehouse distribution or light manufacturing.
Similarly, Meridian’s work for RIM Logistics in Bartlett demonstrates how developers are responding to client needs with innovative solutions. The project’s phased occupancy plan, which includes the integration of a corporate office and customer experience area, has allowed RIM to operate in the facility while design decisions for the office are finalized.
“Although the last 18 to 24 months have been challenging for our clients, it’s been rewarding working on their behalf to provide solutions that result in successful outcomes,” Green said. “We value the relationships that we’ve established over the years and look forward to being a resource for our clients as the real estate landscape presents additional challenges and opportunities in the years ahead.”
