Industrial remains king as the northwest portion of the Chicago metro area saw some interesting movement in the first quarter of the year. According to Newmark Knight Frank’s industrial submarket reports, the O’Hare, North/Central DuPage and I-90/Elgin submarkets each saw mostly positive metrics and a high volume of transactions.
An interesting contrast between the three submarkets is their vacancy rates. O’Hare’s vacancy crept up to 5.2 percent, an increase from the 4.8 percent of Q1 2017 (though down slightly from the 5.5 percent of last quarter). After increasing throughout the year last year, North/Central DuPage’s vacancy leveled off at 6.4 percent—the same figure one year prior. And while the Elgin/I-90 submarket has a relatively larger vacancy rate of 10.6 percent, that is down significantly from the 13 percent of the first quarter of 2017.
Transaction in the O’Hare submarket include Brennan Investment Group’s acquisition of the 85-acre Busse Farm in Elk Grove Village, which the group plans to develop into a high tech industrial park and data center. In the largest lease of the quarter, 4C Logistics renewed for 117,000 square feet at 921 Ardmore Avenue in Itasca. For new leases, the largest of the quarter was welding equipment manufacturer, ESAB Group, leasing 62,000 square feet from Ivanhoe Cambridge in Bensenville.
Investors remain active in the O’Hare submarket. Industrial sales totaled over $45 million in the first quarter of 2018, nearly double the activity in the first quarter of 2017. The largest sale of the quarter came in mid-January with SK Realty Management’s 304,000-square-foot acquisition of 425 E. Algonquin Road in Arlington Heights, which it acquired in a portfolio acquisition from ML Realty.
After experiencing negative absorption to finish 2017, the North/Central DuPage submarket began 2018 with 713,581 square feet of absorption—its highest level since 2012. Vacancy decreased 85 basis points as a result of this positive absorption combined with the lack of new construction deliveries in the quarter.
Tenants continue to view Bartlett’s Brewster Creek Business Park as an attractive location. Three out of the four largest lease transactions in the North/Central DuPage submarket have occurred in this business park since 2017, including Winhere Brake Parts which recently expanded to over 200,000 square feet. Rana Meal Solutions has a 326,652-square-foot, build-to-suit production facility under construction in Brewster Creek as well.
The largest lease was Leslie’s Poolmart renewing for 125,000 square feet in West Chicago from Colony Northstar. Batavia-based aerosol can manufacturer DS Containers was involved in the largest user sale as the company purchased its 550,095-square-foot facility, also in West Chicago, from CenterPoint Properties.
For a seventh straight quarter, the Elgin/I-90 market recorded positive absorption of nearly 277,000 square feet. As a result, vacancy decreased by 90 basis points to 10.6 percent, the lowest recorded vacancy in the submarket since the third quarter of 2015 .
In the largest lease of the quarter, Marketing Alternatives expanded to 118,000 square feet at 2550 Northwest Parkway in Elgin. Tellworks Communication leased 75,000 square feet from Brookfield Logistics Properties at 1385 Madeline Lane in Elgin, bringing the six-year-old property to full occupancy.
High Street Realty acquired 84,000 square feet at 1765 Holmes Road in Elgin and are currently in the process of renovating the facility. There were no new speculative developments that broke ground in the quarter, however Haumiller’s 50,000-square-foot build-to-suit manufacturing facility in South Elgin finished construction.