As the mid-point of 2016 approaches, Chicago’s industrial market continues to benefit from strong user demand, especially in distribution and warehousing sectors. This is particularly true in the I-55 corridor, where developers are pushing the geographic boundaries to find land for new buildings.
This submarket has long been a mainstay of big box users locating in Joliet, Bolingbrook and Romeoville to tap into Chicago’s high caliber labor force, strong distribution network and proximity to large population centers. With vacancy rates low and demand still going strong, large users are increasingly more challenged to find suitable spaces – or land for development – along I-55 and surrounding transportation routes.
Where Will and Grundy counties meet is the most viable big-box location within the Chicago Metro area. There is immediate access to America’s second longest transcontinental highway, I-80 and to I-55, which connects the Gulf of Mexico to the Great Lakes. Further differentiating this area is the proximity to the largest concentration of rail/intermodal capability in the US. These rail sites include CenterPoint’s 3,600-acre facility in Joliet, the 785-acre Union Pacific-Joliet Intermodal Terminal in Joliet, and BNSF’s 621-acre Logistics Park in Elwood.
Avison Young’s Q1 2016 stats showed that the I-80 East Corridor, I-55 Corridor and the I-88 Corridor submarkets continue to record the most product under construction, with a combined 6.7 million square feet.
The I-55 corridor appeals to a mix of users including durable goods, consumer packagers, food distributers, and e-commerce related retail users.
Three of the top five industrial leases completed in the first quarter of 2016 were in the I-80 and I-55 corridors. They include Reviva Logistics (718,761 square feet), Jacobson Companies (507,187 square feet) and LG Electronics (363,224 square feet).
Additionally, there are several significant corporate build-to-suits, including two different facilities totaling 2.5 million square feet that IKEA is developing as Midwest distribution centers in Joliet. Other notable activity includes the expansion of the 1.7 million square foot complex for Michelin Tires; the recently announced 678,000-square-foot Batory Foods build-to-suit at RidgePort Logistics Center in Wilmington; and build-to-suits for Mars Candy, Saddle Creek Logistics and Cadence Premier Logistics that are poised to add about 2.6 million square feet. In addition, Best Buy recently announced a 600,000-square-foot-plus distribution center in Bolingbrook.
Not to be overlooked is Amazon that will have its first Illinois warehouse in Joliet, bringing 1,500 jobs into a 475,000-square-foot facility in Laraway Crossings Business Park.
The strength of the market, as depicted by this volume of activity, is pushing developers outward from the traditional Bolingbrook and Romeoville locations to Channahon and Minooka, near the I-55 connection with I-80.
The largest development recently announced is the 2,200-acre land site located at the Brisbin Road interchange on I-80 in Morris, Channahon and Joliet, Illinois. Avison Young is working with the land owners, Five Star Land Company, LLC and Tabler Road Investments, LLC, to market the land as a super-regional industrial park zoned for manufacturing and distribution. The site also can accommodate heavy industrial and rail serviced uses.
This development reflects manufacturers’ and distributors’ increasing need for rail and intermodal, as well as conventional road distribution. It also represents a counterbalance to recent trends in the industrial market for “in-fill” developments—land parcels that may be no more than 50 acres that are suitable for a smaller number of buildings.
Looking ahead to year-end, many developers are predicting a 12 to 24-month window of continued strong activity. Big box users will have to get creative, though, in order to find space to fit their needs, as large land parcels in established corridors are difficult to find.