Over the past 10 years—a time of renaissance for warehouse and distribution space—Chicago’s far South Side received less than 2 percent of the new industrial development that came to the wider metro. But the area’s prospects may be looking up.
That meager development over the last decade adds up to about 2.3 million square feet. One indication that the South Side is on the rise is that half of that was delivered since the start of 2017, according to Newmark Knight Frank’s 3rd Quarter Industrial Market report for Chicago.
Though Chicago’s South Side and south suburbs have largely been lagging in the race, there may now be wind at their back. Consider, for example, the new location that Prologis developed for wholesale food distributor 86 Food Service at 1400 W. 43rd Street in Chicago. The project team included Krusinski Construction Company as the general contractor, Cornerstone Architects as the architect and Grivas-Krause Associates as the structural engineer.
The project included cold storage refrigeration, freezers and a retail component to better serve 86 Food Service’s grocery and restaurant customer base on site with the convenience of quick check-out lanes and next-day delivery options. Additional features include 7,500 square feet of office space, 50 new car stalls, one drive-in door and 32-foot clear height.
Marina Crossings—a joint venture between MAT Limited Partnership and institutional investors advised by J.P. Morgan Asset Management—delivered in Q4 of 2018 and offers state-of-the-art industrial amenities including 32-foot ceilings, cross docking and ample car and trailer parking. The 35-acre property is rail served and is just off the I-55 Stevenson Expressway, the area’s strongest-performing industrial submarket.
The 633,059-square-foot facility was quick to find a tenant: First Logistics. In a deal brokered by Cushman & Wakefield and Midwest Commercial Real Estate, the 3PL firm recently expanded their presence to 439,754 square feet at what is the city of Chicago’s largest speculative industrial building since 1905.
There were plenty of investment sales among the city’s industrial buildings, too. Cabot Properties bought the three-year-old, 219,000-square-foot FedEx warehouse at 1901 W. 29th Street from Scannell Properties for $236 per square foot. Prologis spent $32.9 million acquiring 929 and 955 W. Cermak Road from Deutsche AWM; the two buildings total 211,000 square feet. Lineage Logistics purchased 2357 S. Wood Street as part of a three-building portfolio, with the Wood Street property alone fetching $303 per square foot.
The south suburbs are starting to see some action as well. Earlier this year, Logistics Property Company acquired 102 acres of land in Country Club Hills, Illinois. Located at the convergence of I-57 and I-80, the project provides excellent access to two highly trafficked thoroughfares serving Chicago and the Midwest.
The industrial development site is one of the largest undeveloped contiguous properties in Cook County. The development headed there, which has been named LogiPark 57-80, will comprise 1.4 million square feet across four buildings. The parcel, which floundered for years after a failed bid to construct an outlet mall, is 25 miles from downtown Chicago, five miles from Canadian National’s Chicago Intermodal in Harvey, Illinois and is located within an Opportunity Zone.
Tenants are showing a commitment to the south suburbs as well. For example, Midwest Industrial Funds’ 95,515-square-foot property at 17005-17045 S. Wallace Avenue in South Holland, Illinois is now fully leased following two recent transactions. Condit Exhibits renewed their lease on 78,916 square feet while new occupier Power Distributing inked a new lease on 16,599 square feet. Lee & Associates and Cawley Commercial brokered the deals.
Among the new Chicago inventory, robust transaction activity has ratcheted up the value of the close-in product, according to Newmark Knight Frank data. Between 2010 to 2019, industrial building sales within the city rose from $24 to $76 per square foot—an increase of 216 percent. The sale prices of similar product elsewhere in the metro only grew by 51 percent over the same time period.