Chicago Industrial Report 3Q 217
There are events throughout history that inevitably cause us to stop and take pause. They are moments that slow time. Moments that illustrate profound change, a clear before and after. Moments that challenge us to come together. It s during such times that we re able to dig deeper, revealing the very best of the human spirit. These past months have brought a sobering share of such events. Friends and neighbors have weathered great storms. Strangers have freely offered outstretched arms to those in need. And family in all its forms has served to unify our nation in a time of remarkable change. In Las Vegas, our strength was manifest in our first responders. As the hurricanes hit our shores, countless stories have come forth to evidence our formidable character and perseverance. As the nation recovers from this recent string of events, there is an assurance which remains in the strength of our economy. The continuing durability of our industrial markets, reflected in this quarter s research report, supports the confidence we have as we move forward. All the best, John Picchiotti Managing Director +1 773 458 1361
Table of Contents Introduction note...2 Chicago Metro...6 Dashboard...8 City of Chicago...1 I-55 Corridor...12 I-57 Corridor...14 I-8 Corridor...16 I-88 Corridor...18 Lake County...2 North Cook County...22 North DuPage...24 North Kane County...26 Northwest Indiana...28 O Hare...3 South Suburbs...32 Southeast Wisconsin...34 West Cook County...36 Industrial Statistics...38
Chicago Industrial Report 3Q 217 Chicago Metro Chicago Metro Map 9 Southwest Wisconsin Walworth 39 Southeast Wisconsin 43 9 Rockford Third quarter leasing volume measured 6.3 million square feet which was 1.3 million square feet lower that last quarter. Sadly the decline was more pronounced when compared to one year ago, down a stunning 4.8 million square feet from the 11.1 million square feet reported. The news is not as bad as it seems Third quarter 217 leasing volume (number of transactions) was on par with one year ago, however today s volume was driven by smaller size transactions whereas one year ago that was dominated by the mega big box user. Astonishingly the South Suburbs reported the highest third quarter leasing volume at 1.1 million square feet followed by the O Hare market which measured 96,9 square feet. Conversely the I-57 Corridor witnessed no new leases. McHenry Lake County 1,156,391,9 (%) 7.6% (%) 8.6% net 2,15,84 net 9,796,298 rental rate ($ psf) $ 4.76 12-mo. dollar change -$.2 North Kane 39 Northwest Cook 9 O Hare I-39 / Dekalb Fox Valley 88 North Cook North Chicago North Dupage West Cook 88 29 South Chicago I-88 Corridor 2 I-55 Corridor 355 South Suburbs 8 8 9 39 User sale activity was fairly consistent during the past nine months of the year: coming in at 3.1 million square feet in the first quarter and 3.3 million square feet for both the second and third quarters of 217. volume one year ago witnessed 4. million square feet sold which was in stark contrast to the first and second quarter 216 volume of 3. million square feet and 2.4 million square feet respectively. Just like leasing volume, the South Suburbs boast the most quarterly user sale volume, measuring 585,6 square feet. The South Chicago market though came in a close second posting 572,7 square feet sold. On the flip side, the Fox Valley I-39, I-55, I-57 and I-8 markets did not report user sale activity. 55 I-8 West Northwest Indiana 57 8 I-8 Corridor I-57 Corridor activity flourishes in the Chicago metropolitan area driven by large deliveries. This quarter 8.8 million square feet was completed, easily surpassing the 5.8 million square feet and the 4.5 million square feet delivered in the first and second quarter. Two buildings greatly contributed to the increase as Core5 completed a 1,26,-square-foot speculative bulk warehouse/distribution facility at 123 E. Laraway Road, Joliet and Venture One Real Estate handed the keys over to Georgia Pacific on a 1,,6-square-foot build-to-suit lease at 23534 Central Avenue University. Additionally Hillwood finished a 992,6 square foot speculative development at 1 E. Millsdale Road, Joliet, and Duke Realty delivered 954,7 square feet of warehouse/distribution space at 1 Duke way, Aurora to Amazon. The pipeline is even more robust as the fourth quarter will see two 1. million square foot build-to-suit lease projects deliver: 1.5 million square feet for a Fortune 5 food company at RidgePort Logistics Center in Wilmington and IKEA will take possession on 1.25 million square feet at Laraway Crossings Business in Joliet. More astonishingly is that there are two 1. million square-foot speculative projects that commenced this quarter: The Opus Group in a joint venture with AEW broke ground on 1.2 million square feet at Rock Creek Logistics Center on Channahon Road in Joliet, while Venture One Real Estate in conjunction with USAA started 1.1 million square feet at Crossroads 55 Corporate on Frontage Road, Channahon. Manufacturing Local Distribution Net New, Net Absorption, Vacancy 3rd Party Logistics Consumer Products Statistics Quarterly net total net direct asking rent (PSF) Warehouse & distribution 621,15,132 8.6% 9.7% 2,925,764 11,632,15 $4.71 13,928,719 17,441,55 Manufacturing 532,884,611 6.3% 7.5% -854,924-1,896,552 $4.89 1,164,58 1,588,746 Special Purpose s 6 Food 2,357,157 6.5% 8.5% 35, 6,7 $. 46,5 1,156,391,9 7.6% 8.6% 2,15,84 9,796,298 $4.76 15,92,777 19,76,31 7
Chicago Q3 217 Dashboard Industrial development This report analyzes all industrial developments under & new deliveries > 3, s.f. New deliveries 19,76,31 25,, 2,, delivered 15,, Completions in-depth leased at delivery (%) speculative at delivery 56.% 1,, 1,556,431 BTS at delivery 8,519,87 Owner-User at delivery 3,49,666 # of properties delivered 5,, 72 rental rate 21 211 212 213 214 215 216 217 Historical deliveries - Top 5 projects delivered to date Building Owner/developer RBA Spec or BTS Delivery date d at delivery (%) Mars/Wrigley I-8 Corridor CenterPoint Properties 1,388,2 BTS Q1 217 1% Core5 DHL I-8 Corridor DHL/Core5 1,26, Speculative Q3 217 % Georgia Pacific BTS I-57 Corridor Venture One Real Estate 1,,56 BTS Q3 217 1% Joliet Logistics I-8 Corridor Hillwood 992,64 Speculative Q3 217 % I-88 Corridor Duke Realty 954,72 BTS Q3 217 1% 12,752,137 7,, 6,, 5,, in-depth 36.7% speculative under 7,26,838 BTS under 5,725,299 Owner-user under # of properties UC rental rate Speculative 8,, pre-leased (%) BTS 9,, 4,, 3,, 2,, 1,, 43 217 218 Upcoming deliveries by year (s.f., excludes ) - Top 5 projects currently under Building Owner/developer RBA Spec or BTS General Mills I-8 Corridor General Mills 1,58,425 BTS Q4 217 1% IKEA 2 I-8 Corridor IKEA 1,25, BTS Q4 217 1% Rock Creek Logistics Center I-8 Corridor The Opus Group/AEW 1,22,14 Speculative Q2 218 % Crossroads 55 Corporate I-8 Corridor Venture One Real Estate 1,,11 Speculative Q2 218 % I-57 Corridor Seefried Industrial Properties/USAA 856,65 BTS Q3 217 1% Amazon BTS 8 Source: JLL Research Delivery date Pre-leased (%) Jones Lang LaSalle IP, Inc. All rights reserved.
Chicago Industrial Report 3Q 217 City of Chicago City of Chicago Map 2 Glenview 14 Niles Skokie Evanston 155,385,957 (%) 7.% (%) 8.6% net -1,27,33 net -346,781 rental rate ($ psf) $ 6.2 12-mo. dollar change -$.56 Net New, Net Absorption, Vacancy Eleven new leases totaling 446,36 square feet were signed in the city of Chicago during the third quarter,down slightly from the 689,925 square feet recorded in quarter two. The largest lease was a Southside deal between Concept Laboratories, Inc and landlord Westmount Realty Capital LLC for 83,91 square feet of warehouse at 444 W. Ann Lurie Pl. The most notable deal in the North Chicago was a 52,65-square-foot lease signed by an undisclosed tenant in a manufacturing building owned by Del Rey Tortilleria at 521 W.Grand Ave. Chicago s rate for both markets climbed from the prior quarter due to large blocks of space re-entering the market. In North Chicago, climbed 111 basis points to 7.7 percent, while the South Chicago market was less severe,rising 14 basis points to 6.53 percent. Asking rents also trended downward in both markets, as North Chicago asking net rent fell eleven cents to $7.73 per square foot net, where as South Chicago asking rents declined from $5.93 per square foot net to $5.14 per square foot net. 2 Rosemont Schiller Franklin Melrose 38 Hodgkins Oak 29 Berwyn McCook 14 Bridgeview Fulton Market Cicero 55 Bedford 9 Pilsen Stockyards Goose Island Chicago 2 9 User sale activity remained steady in quarter three with eight trades totaling 628,59 square feet, in contrast to investment activity which was down to two sales totaling 54,64 square feet from 1 million square feet last quarter. The most noteworthy trade of the quarter was a build-tosuit sale in the South Chicago submarket. LaBodega, Ltd., an importer of specialty products from Mexico, closed on 156, square feet warehouse at 246 S. Wood St. The building, developed by a partnership between Clarius Partners LLC and Wanxiang America Corporation, traded at $127 per square foot. Orland Tinley Alsip 57 Blue Island South Holland Whiting Hammond Outside of the 156,-square-foot LaBodega build-to-suit in Pilsen, there were no notable new industrial deliveries in Chicago. Of the 717, square feet under, there are no scheduled by year-end 217, as all three active projects are build-to-suit in nature. Additionally, 62, square feet of new industrial product has been delivered in the city to-date this year. Manufacturing Local Distribution Assembly Auto Plastics Recent s Comparables (sorted by square feet) Buyer Seller Location City Size Date Price PSF Farpoint Fellowship Ministsry Baptist Church 8522 S. Lafayette Ave. Chicago 23, 7/217 $26.9 La Bodega, Ltd. Clarius Partners LLC, Wanxiang 242 S. Wood St. Chicago 156, 9/217 $127.33 America Corporation Unknown Unknown 271-2743 W. 36th Pl. Chicago 14, 8/217 $12.14 Recent Comparables (sorted by square feet) Tenant Type Location City Size Concept Laboratories, Inc. New 444 W. Ann Lurie Pl. Chicago 83,91 Grand Worldwide Logistics New 14-144 E. 97th Pl. Chicago 79,343 Undisclosesd New 521 W.Grand Ave. Chicago 52,65 Statistics Quarterly net total net direct asking rent (PSF) Warehouse & distribution 54,29,68 6.6% 8.2% 42,55 1,88,568 $4.58 14,5 1,24,226 Manufacturing 11,227,559 7.2% 8.8% -1,312,88-2,574,13 $6.76 576,581 Special Purpose 128,79.%.% $. s 155,385,957 7.% 8.6% -1,27,33-693,562 $6.2 717,81 1,24,226 1 11
Chicago Industrial Report 3Q 217 I-55 Corridor I-55 Corridor Map 85,566,766 (%) 1.7% (%) 12.1% net -143,41 net 678,117 rental rate ($ psf) $ 4.69 12-mo. dollar change -$.5 Net New, Net Absorption, Vacancy Vacancy stands at 1.65 percent in the I-55 corridor, which is nearly three full percentage points above the overall market average. While is not yet a long-term concern due to the robust market velocity, demand has taken a pause, as quarterly was in the red by 143, square feet. Overall, the submarket has posted 678, square feet of, when in past years, I-55 would account for at least three to four million square feet, or 2 25 percent of the total market. Currently, net asking rents stand at $4.69 per square foot, which is flat from yearend 216. The largest new lease transaction signed this quarter was Menasha Packaging committing to a 27,-square-foot cold storage facility at 55 N. Frontage Road in Bolingbrook. The building is owned by TA Associates, and Menasha will be handling product for Kraft Foods. The Class A building had spent a long time on the market due to lower velocity for cold storage users; however, the lease rate was in the double digits. In Romeoville, LeSaint Logistics committed to an early renewal for 347, square feet at 86 868 W. Crossroads way. In addition, RJW Transport renewed their 27,-square-foot full-building lease at 7 Gateway, which is visible from I-55, with Prologis. Sandwich 3 Sugar Grove Montgomery Yorkville Aurora Oswego Plainfield 34 Lisle Naperville 59 Bolingbrook Romeoville 55 Bolingbrook 355 Woodridge 355 Lockport Burr Ridge Orland 6 The largest sale in the third quarter was a three-building complex that Principal Investors sold at 124, 121 and 1216 Werch Drive, at the Woodridge Commerce Center, to William Harris Investors (WHI) for $12,4,65. The small bay facilities, totaling 146,848 square feet, are 89-percent leased to 22 tenants. 52 8 Joliet New Lenox 2.2 million square feet of new space has been delivered in the submarket thus far in 217, mostly on a speculative basis. The largest vacant speculative project to date is Panattoni s 787,-square-foot facility at 111 Airport Road in Romeoville, which is an outlier due to the sheer size, because the majority of the new product being delivered falls between 1, to 3, square feet. There is 1.3 million square feet of space currently under, although developers may pump the brakes as we head into the winter with hopes that some of the new speculative product becomes leased before 218 s season begins. Recent s Comparables (sorted by square feet) Buyer Seller Location City Size Date Price PSF William Harris Investors Principal Financial Group 1216 Werch Dr. Woodridge 72,82 8/217 $81.98 William Harris Investors Principal Financial Group 121 Werch Dr. Woodridge 48,566 8/217 $81.98 Brennan Investment Group, LLC Barnett Capital Ltd 737 Oakridge Dr. Romeoville 32,5 9/217 $76.92 William Harris Investors Principal Financial Group 124 Werch Dr. Woodridge 25,482 8/217 $81.98 Recent Comparables (sorted by square feet) Tenant Type Location City Size Menasha Packaging New 55 N. Frontage Rd. Bolingbrook 269,556 Main Freight Inc. New 56 Remington Blvd. Bolingbrook 148,924 Clark Distribution Systems Inc. Renewal 2145 Internationale Pkwy. Woodridge 57,525 Project Cure New 135 Argonne Woods Dr. Woodridge 5, Manufacturing Local Distribution 3rd Party Logistics Consumer Products Food E-Commerce Statistics Quarterly Q4 total net total net direct asking rent (PSF) Warehouse & distribution 73,267,544 11.2% 12.6% -125,14 1,99,169 $4.54 1,259,622 2,16,869 Manufacturing 12,245,22 7.2% 9.3% -17,937-435,252 $6.43 18,25 Special Purpose 54,2.%.% 14,2 $. s 85,566,766 1.7% 12.1% -143,41 678,117 $4.69 1,277,872 2,16,869 12 13
Chicago Industrial Report 3Q 217 I-57 Corridor I-57 Corridor Map 8 Joliet 3 Matteson University Sauk Village Schererville 31,997,854 (%) 8.% (%) 8.6% net 269,788 net 769,684 rental rate ($ psf) $ 3.48 12-mo. dollar change -$.34 Net New, Net Absorption, Vacancy The 32-million-square-foot I-57 Industrial holds a rate of just over eight percent. While this is slightly above the market average, it is not alarming due to the lower velocity typically seen in far south suburban Will County. In addition, many of the large occupiers here, like Solo Cup and Clorox, operate under long-term leases. A highlight is that the I-57 corridor has posted higher annual net than the I-55 market, with nearly 77, square feet compared to 678, square feet in I-55 market. Third quarter net has clocked in at just under 27, square feet. Asking rental rates stand at $3.48 per square foot net, which marks just a four-cent change from the second quarter. In other news, Exeter Property Group is close to a lease for the former World Kitchen distribution center in Monee. Exeter completed substantial renovations to the Class A 71,-square-foot building, which has struggled to find a tenant since it was acquired for $31 per square foot two years ago. This space is the largest second-generation in the market. Also, just to the north, Clorox is planning to lease additional distribution space in the market in close proximity to their 1.35-million-square-foot facility. Channahon 55 Elwood Wilmington Kankakee Monee 57 Peotone Manteno Lowell The I-57 Corridor boasts one of the largest single-tenant investment trades this quarter at 1,,56 square feet where Venture One Real Estate sold its recently completed build-to-suit for Georgia Pacific in University. The total value of the property at 23534 S. Central Avenue was approximately $53 million, which equates to $52.85 per square foot. CBREI bought the property on behalf of a German-based client. The biggest news in the submarket is that Amazon is nearing completion of a large 856,-square-foot fulfillment center in Monee, just west of I-57. While initial hiring has commenced, it is expected that they will have to pull workers from far south suburban Cook County and Northwest Indiana to keep the facility running during peak season. USAA will own the building after Seefried Properties completes the project in the fourth quarter. Manufacturing Regional Distribution Packaging 3rd Party Logistics Food E-Commerce Recent s Comparables (sorted by square feet) Buyer Seller Location City Size Date Price PSF CBRE Global Investors, Bayerische Venture One Real Estate 23534 S. Central Ave. University 1,,56 8/217 $52.85 Versorgungskammer (BVK) Undisclosed Olivieri Brothers Inc. 7-71 S. Center Rd. Frankfort 22,6 9/217 $54.78 Undisclosed Olivieri Brothers Inc. 712-722 S. Center Rd. Frankfort 18,2 9/217 $56.34 Undisclosed Olivieri Brothers Inc. 75-754 S. Center Rd. Frankfort 9,3 9/217 $181.35 Statistics Quarterly net total net direct asking rent (PSF) Warehouse & distribution 22,82,535 9.7% 1.6% 341,888 716,524 $3.45 856,65 1,395,6 Manufacturing 9,639,414 2.8% 2.8% -72,1 53,16 $6. Special Purpose 275,95 55.3% 55.3% $. s 31,997,854 8.% 8.6% 269,788 769,684 $3.48 856,65 1,395,6 14 15
Chicago Industrial Report 3Q 217 I-8 Corridor I-8 Corridor Map Montgomery Bolingbrook Woodridge 84,55,16 (%) 8.2% (%) 9.4% net 287,787 net 4,164,68 rental rate ($ psf) $4.32 12-mo. dollar change -$.1 Net New, Net Absorption, Vacancy Leasing velocity in the I-8 Corridor appeared somewhat diminished in the third quarter following an impressive burst of activity earlier this spring. Six new leases, totaling 265,258 square feet, were signed in contrast to 1.4 million square feet in quarter two. A lease by Kellogg s in a Teachers Insurance & Annuity Association of America-owned building in Joliet accounted for the bulk of new leasing activity. The cereal company secured 192,39 square feet at 1695-171 Crossroads Dr. on a two-year term. Approximately 4.1 million square feet has been absorbed to date this year in I-8 Corridor, with an average foot print of 144,592 square feet. Weaker tenant demand, coupled with several large speculative deliveries (with no pre-leasing activity), drove the third-quarter rate to 8.24 percent, a stunning 282-basis-point increase from the previous quarter. Although vacancies climbed, asking rents surpassed the prior quarter rate of $3.75 net, rising to $4.32 per square foot net. Rents were impacted by new speculative deliveries. Sandwich Marseilles Seneca 6 Yorkville 52 Morris Minooka Plainfield Channahon 55 8 Elwood Romeoville Wilmington Joliet 355 Lockport Orland 6 New Lenox s activity also waned in quarter three with no user sales and just a single notable investment transaction. Gramercy acquired a 282,-square-foot Class A warehouse at 231 Ellis Ct, New Lenox from Hillwood as part of a 19-property national portfolio. The building traded at $64 per square foot, allocated, compared to the $48 per square foot that Hillwood paid for the building in December 216. 55 Approximately 2.8 million square feet of new industrial product was delivered in I-8 Corridor at the close of quarter three, bringing year-to-date deliveries to 7.8 million square feet. Three speculative developments accounted for over 2 million square feet of this quarter s, including Chicago s largest speculative deliveries of the year: a 1,26,-square-foot warehouse developed by Core5 at 123 E. Laraway Rd in Joliet and a 922,64-square-foot delivery by Hillwood at 1 E. Millsdale Rd. Three new speculative projects broke ground in quarter three, including another million-square-foot speculative project being developed by Venture One at 2411S Frontage Rd in Channahon. Additionally, 4.4 million square feet is slated for delivery by year-end, including five build-tosuit projects totaling 3.3 million square feet. Retail Regional Distribution Dwight Consumer Products Food Kankakee E-Commerce Recent s Comparables (sorted by square feet) Buyer Seller Location City Size Date Price PSF Gramercy Hillwood 231 Ellis Ct. New Lenox 282, 8/217 $64 (allocated) Recent Comparables (sorted by square feet) Tenant Type Location City Size Ecolab New 41 Rock Creek Blvd. Joliet 116,31 Chicago Tribune Company New 1851-18551 Graphic Ct. Tinley 23,423 Sunbelt New 17511-17515 Duvan Dr. Tinley 18,75 Statistics Quarterly net total net direct asking rent (PSF) Warehouse & distribution 68,334,53 8.% 8.5% 286,139 3,973,98 $4.2 7,356,27 7,145,77 Manufacturing 16,24,87 9.5% 12.9% 1,648 179,47 $5.15 255,996 22,812 Special Purpose 146,57.%.% 11,5 $. 11,5 s 84,55,16 8.2% 9.4% 287,787 4,164,68 $4.32 7,612,266 7,36,82 16 17
Chicago Industrial Report 3Q 217 I-88 Corridor I-88 Corridor Map Elm 355 Elburn 62,518,18 (%) 5.% (%) 6.3% net 1,289,35 net 1,733,812 rental rate ($ psf) $ 4.35 12-mo. dollar change -$.15 Net New, Net Absorption, Vacancy Geneva 88 Kaneville XPO Logistics leased 247,36 square feet from DCT Industrial Trust, which pushed third-quarter leasing volume to 327,872 square feet, easily surpassing the 177,97 square feet leased last quarter. The balance of the I-88 market transactions, though, were less stout as the next-largest transaction was completed by SGA Holdings Inc. which leased 36,36 square feet at 151-155 Frontenac Road, Naperville. The uptick in occupier demand had a positive impact on I-88 s rate, which dropped 62 basis points from the prior quarter to 5. percent. The I-88 market also benefitted from nominal second-generation space returning, as the largest space released was 56,956 square feet at 235-261 Airport Road, North Aurora. Asking net rents came in at $4.35 per square foot, closely matching the $4.74 per square foot net recorded last quarter. This compares favorably to rents posted one year ago, which were $4.5 per square foot net. Warrenville Batavia 56 North Aurora 3 Sugar Grove Lisle Naperville Aurora 59 Oswego Montgomery Bolingbrook Duke Realty delivered a 954,72-square-foot build-to-suit lease for Amazon at Butterfield Corporate, Aurora. This is Amazon s second building in the park. Two new speculative developments commenced in Naperville this quarter, as Northern Builders has started on 169,25 square feet at 1748 Jefferson Avenue and Molto Properties broke ground on 14,957 square feet at 2119 Fisher Drive. Additionally, Nutrivo, LLC commenced this quarter on a 93,-squarefoot addition at 1785 Edgelawn Drive in Aurora. Seller Location City Size Date Price PSF IPT Panattoni Company 966 Corporate Blvd. Aurora 238,64 7/217 $83.82 Agellan Commercial REIT Berkowitz Enterprises Inc. 3 buildings on Heartland Drive, part of an 8-bldg. portfolio in Chicago Sugar Grove 16,953 7/217 $12.17 avg. Ivanhoe Cambridge 81 Frontenac Rd. Naperville 49,95 7/217 $75.86 18 Location City Size XPO Logistics New 2176 Diehl Rd. Aurora 247,36 SGA Holdings, Inc. New 151-155 Frontenac Rd. Naperville 36,36 Junior Ninja Warrior New 212 Corporate Ln. Naperville 13,662 Local Distribution Packaging Food Auto Statistics Warehouse & distribution 39,541,817 5.6% 6.4% 1,139,666 Manufacturing 22,851,861 4.% 6.1% 149,684 Special Purpose Recent Comparables (sorted by square feet) Romeoville Manufacturing Buyer Type Yorkville Sandwich Recent s Comparables (sorted by square feet) Tenant 355 34 One significant investment sale occurred this quarter when Panattoni Company sold a 238,64-square-foot, 65-percent occupied, newly developed warehouse/distribution facility at 966 Corporate Blvd in Aurora. The buyer, IPT, bought it for just under $84. per square foot, which equates to a healthy stabilized cap rate of 5.25 percent. The balance of the investment sales were in smaller buildings, as four of the five sales were in buildings under 5, square feet. TPG Capital LP 83 88 38 s Quarterly net total net direct asking rent (PSF) 1,61,852 $4.26 367,27 954,72 131,96 $4.85 124,34.%.% $. 62,518,18 5.% 6.3% 1,289,35 1,733,812 $4.35 367,27 954,72 19
Chicago Industrial Report 3Q 217 Lake County 67,593,813 (%) 6.4% (%) 8.4% net 592,21 net 1,59,76 rental rate ($ psf) $ 5.93 12-mo. dollar change $.42 Net New, Net Absorption, Vacancy Lake County leasing volume tapered off this quarter, despite witnessing the most quarterly transactions (thirteen) signed during the first nine months of the year, measuring 47,98 square feet. While this represents the smallest quarterly volume year-to-date, it was strong enough to have a positive impact on Lake County s rate. The third-quarter rate was 6.41 percent, dropping a stunning 77 basis points from the second-quarter level. Two size ranges witnessed the bulk of third-quarter volume: 1, square feet to 2, square feet (six transactions) and 5, square feet to 1, square feet (four transactions). A couple of deals to note include Eagle Foods leasing 98,151 square feet at 2431 Delany Road, Waukegan filling HSA s 218,5-square-foot speculative building and Overture, LLC taking 43,84 square feet at 13825 Business Center Drive in Green Oaks from New York Life Insurance. The largest renewal transaction captured during the quarter was by Diamond Fulfillment Services, which will remain in 9,79 square feet at 1951 Norman Drive, Waukegan. Lake County Map Antioch 12 12 6 173 Grayslake 45 137 Libertyville WISCONSIN ILLINOIS Gurnee Waukegan North Chicago 41 Zion Bridge Partners, LLC sold their recently completed speculative development at Bridge Pont North in Waukegan to Bentall Kennedy. The 626,848-square-foot asset is occupied by Amazon. of this Class A Asset is $82. per square foot. Bentall Kennedy also has under contract Bridges second speculative building in the park, a 4,758-square-foot bulk warehouse/distribution facility to be delivered in the fourth quarter. This space has a lease pending on roughly 25 percent of the building. Additionally, a sale/leaseback by Peer Bearing, which sold their two-building 293,9-square-foot manufacturing facility at 22-23 Norman Drive, Waukegan to Nova Scotia Pension Services Corporation. The sale price was $29,25, or $99.52 per square foot. Another Lake County occupier expands their footprint. This quarter, Nypro (a Jabil Company) completed a 78,154-square-foot expansion at 955 Tri-State way in Gurnee. The healthcare equipment manufacturer is expected to hire 6 additional employees who will fill the newly expanded 169,154-square-foot building. Bridge s recent success at Bridge Point North, Waukegan has the Chicago-based developer contemplating building three more speculative projects. The buildings drawn up are 153,92 square feet, 228, square feet and 544,429 square feet. 14 Lake Zurich Barrington Palatine 12 21 Vernon Hills Buffalo Grove Wheeling Arlington Heights 2 Lake Bluff 41 Northbrook Glenview Winnetka Wilmette Recent s Comparables (sorted by square feet) Buyer Seller Location City Size Date Price PSF Bentall Kennedy Bridge Partners, LLC 175 Bridge Dr. Waukegan 626,848 9/217 $82. Manufacturing Healthcare Pharmaceutical Medical Instruments Food Nova Scotia Pension Services Corp Peer Bearing 22-23 Norman Dr. Waukegan 293,9 9/217 $99.52 ML Realty Partners UBS 5 Bond St. Lincolnshire 7,957 7/217 $76.81 Winix Inc. CenterPoint Properties 22 N Fairway Dr. Vernon Hills 68,279 7/217 $6. Brennan Investment Group, LLC Barnett Capital Ltd 21 Kelley Ct. Libertyville 46,612 9/217 $54.71 Statistics Quarterly net total net direct asking rent (PSF) Warehouse & distribution 36,44,741 8.7% 1.9% 297,42 612,915 $5.53 636,89 Recent Comparables (sorted by square feet) Tenant Type Location City Size Eagle Foods New 2431 Delany Rd. Waukegan 98,151 Manufacturing 31,435,795 3.8% 5.5% 2,799 446,161 $6.92 21,128 Special Purpose 113,277.%.% $. s 67,593,813 6.4% 8.4% 592,21 1,59,76 $5.93 636,89 21,128 Diamond Fulfullment Services Renewal 1951 Norman Dr. Waukegan 9,79 Derse Exhibits Renewal 35-3696 Bur Wood Dr. Waukegan 9,615 2 Corpak Medsystems Inc. Renewal 11 Asbury Dr. Buffalo Grove 74,24 21
Chicago Industrial Report 3Q 217 North Cook County North Cook County Map 22 48,274,463 (%) 5.% (%) 5.9% net -22,128 net 2,772 rental rate (nnn) $ 5.71 12-mo. dollar change $.12 Net New, Net Absorption, Vacancy in the North Cook County submarket remains low at five percent, reflecting the health of the north shore suburbs. Quarterly net was in the negative at 22, square feet, but year-to-date stands at 295, square feet. The current asking net rents are $5.99 per square foot for warehouse/distribution space and $5.34 per square foot for manufacturing space, much of which is of an older, lessefficient vintage. In Skokie, Edler Warehousing took 131, square feet of space on sublease from Woodward at 73 Linder Avenue. The building is owned by ML Realty Partners. In Northbrook, Datamax agreed to a new lease for 19,6 square feet at 3215-3225 Commercial Avenue. Also in the sublease market, AreoDirect took 21, square feet of manufacturing space at 5-7 Messer Drive in Wheeling. In the North Cook County submarket, four buildings traded as part of a large-scale, 157-building, national portfolio between Evergreen Industrial and Ivanhoe Cambridge. The largest 34 W. Lake Avenue in Glenview, a 121,225 square-foot asset was valued at $4.6 million, or $38 per square foot. This portfolio also included 355 & 365 Woodhead Drive and 1852-1854 Elmdale Avenue. These buildings were previously owned by Prologis. In user sales, Care One Pharmacy Solutions acquired a 3,-square-foot building for just under $5 per square foot at 755 N. Oak Avenue, Niles from Swiss Precision Machining. In Skokie, Hillwood Properties has launched a new speculative building at 361 W. Howard Street. The 236,912-square-foot facility will feature 32-foot-clear ceilings. New speculative redevelopment projects in the infill North Suburbs have been successful over the past 36 months; however, Molto s project on Lehigh Avenue in Niles, which delivered this spring, has yet to secure a tenant. Recent s Comparables (sorted by square feet) Buyer Seller Location City Size Date Price PSF Ivanhoe Cambridge TPG Capital LP 34-345 W Lake Ave. Glenview 121,225 7/217 $ 38.31 Ivanhoe Cambridge TPG Capital LP 355-36 Woodhead Dr. Northbrook 68,244 7/217 $ 45.47 Ivanhoe Cambridge TPG Capital LP 1852-1854 Elmdale Ave. Glenview 54,884 7/217 $ 38.31 Ivanhoe Cambridge TPG Capital LP 365 Woodhead Dr. Northbrook 38,5 7/217 $ 4.18 Care One Pharmacy Services, LLC Swiss Precision Machining, Inc. 755 N Oak Ave. Niles 29,88 9/217 $ 49.87 Recent Comparables (sorted by square feet) Tenant Type Location City Size Edler Warehousing New 73-74 Linder Ave. Skokie 13,893 AreoDirect New 5-7 Messner Dr. Wheeling 2,96 Datamax New 3215-3225 Commercial Ave. Northbrook 19,6 Statistics 29 Arlington Heights 9 Elk Grove Village Itasca 12 Wood Dale Vernon Hills Buffalo Grove 83 21 Wheeling Des Plaines Bensenville Manufacturing Pharmaceutical Air Freight 3rd Party Logistics Food Medical Instruments Northbrook 2 41 14 Rosemont Schiller Glenview Quarterly net Winnetka total net direct asking rent (PSF) Warehouse & distribution 15,615,756 7.4% 8.8% -144,147 126,459 $5.99 51,736 135,65 Manufacturing 32,585,433 3.8% 4.4% 122,19 168,313 $5.34 Special Purpose 73,274.%.% $. s 48,274,463 5.% 5.9% -22,128 2,772 $5.71 51,736 135,65 Niles Skokie 14 Wilmette Evanston 23
Chicago Industrial Report 3Q 217 North DuPage North DuPage Map 81,515,18 (%) 7.8% (%) 8.1% net -369,158 net -586,61 rental rate ($ psf) $ 5.12 12-mo. dollar change -$.15 Net New, Net Absorption, Vacancy 2 Carol Stream Bensenville Addison Elmhurst Lombard 38 38 Warrenville Batavia Schiller 2 56 88 Downers 83 Grove Lisle Agellan Commercial REIT acquired an eight-building Chicago portfolio for $28 million from Berkowitz Enterprises, with two North DuPage assets: 28, square feet at 22 Bloomingdale Road in Glendale Heights and 6, square feet at 123-1236 Hardt Circle in Bartlett. As part of a 2-building portfolio sale from Barnett Capital Ltd to Brennan Investment Group, LLC, a 6,-square-foot asset at 97 Lombard Road in Lombard traded for nearly $49 per square foot. In the Brewster Creek Business in Bartlett, Ridge has commenced on their second speculative project in the park of 186, square feet. On the western boundary of the market, two more speculative industrial projects are planned. The Missner Group is working on re-zoning 495 W. North Avenue/26W22 North Avenue from retail to Industrial. Right down the street, Conor Commercial is planning a project at North Avenue and Morton Road in unincorporated Winfield. Recent s Comparables (sorted by square feet) Bolingbrook Naperville Aurora 59 Oswego Bolingbrook Manufacturing Burr Ridge 355 34 Local Distribution Woodridge Medical Food Consumer Products Buyer Seller Location City Size Date Price PSF Glass House, LLC IDEX Corporation 832 N Industrial Dr. Elmhurst 9,214 7/217 $56.52 Agellan Commercial REIT Berkowitz Enterprises Inc. 123-1236 Hardt Cir. Bartlett 6,248 7/217 $7.9 Statistics Brennan Investment Group, LLC Barnett Capital Ltd 97 N Lombard Rd. Lombard 59,85 9/217 $48.47 Property Property type type Center Ice Arena, LLC Highland Athletics LLC 1 N 45 Highland Ave. Glen Ellyn 56, 7/217 $55.83 Warehouse & distribution 48,383,797 9.8% 1.% -337,728-117,652 $4.97 287, 913,3 Manufacturing 33,118,621 4.9% 5.5% -31,43-468,49 $5.92 5, 67,8 Recent Comparables (sorted by square feet) 24 83 29 355 Geneva Rosemont Wood Dale Glendale Heights West Chicago Itasca Bloomingdale Saint Charles Des Plaines Elk Grove Village Hanover Bartlett 9 29 Schaumburg 59 Current across the 81.5-million-square-foot North DuPage submarket clocks in at 7.77 percent, which is up by almost a full percentage point from second quarter. Absorption has been down significantly and stands at negative 586, year-to-date after posting negative 512, square feet in the second quarter and another negative 369, square feet in quarter three. Rental rates stand at $5.12 per square foot net, which is above the overall Chicago market average due to the more modern quality buildings and strong demographics in DuPage County. The submarket s most-significant lease in the third quarter, and one of the largest across metro Chicago, was Vanguard Logistics committing to a long-term renewal with DCT Industrial for 44, square feet at 25 Gary Avenue in Carol Stream. In Roselle, Office Depot completed a new lease for 79, square feet at 155 Central Avenue. The retailer also occupies a 385,-square-foot facility at 55-585 Kehoe Boulevard, Carol Stream. In Carol Stream, electronics distributor Ingram Micro has also expanded their footprint in the market. They leased just over 1, square feet of space at 135 E. Elk Trail in a building owned by Liberty Property Trust. Hoffman Estates Tenant Type Location City Size Grunt Style, LLC Relocation 64-68 Center Ave. Carol Stream 11,96 Schneider New 123-127 Elk Trl. Carol Stream 11,9 Ingram Micro, Inc. New 135-195 Elk Trl. Carol Stream 1,89 Office Depot New 155-159 Central Ave. Roselle 78,865 Special Purpose s Quarterly Q4 totalnet net total totalnet net direct direct asking asking rent rent (PSF) (PSF) 12,69.%.% $. 81,515,18 7.8% 8.1% -369,158-586,61 $5.12 337, 98,83 25
Chicago Industrial Report 3Q 217 North Kane County North Kane County Map 31,413,615 (%) 9.2% (%) 9.4% net 33,938 net 656,59 rental rate ($ psf) $ 5.7 12-mo. dollar change $.11 Net New, Net Absorption, Vacancy Cary Occupier demand swelled in the third quarter to 245,437 square feet which was more than twice as much volume as the 114,684 leased in the second quarter. This also influenced the third quarter rate which measured 9.25 percent, down 97 basis points from the prior quarter. Tenant desire continues to be in Class A as six of the eight transactions consummated this quarter where in Class A product. Of note include United Food Group s renewal in 8,127 square feet at 1925 Holmes Road, Elgin and Nepsa taking 61,2 square feet at 136 Madeline Lane, also in Elgin. Shrinking vacancies is a welcome site for the North Kane County market but, we do not expect to see any new speculative development to break ground any time soon. There is, however, one build-to-suit project that commenced this quarter. Haumiller Engineering has hired Krusinski Construction Company to build a 57,-square-foot manufacturing facility in South Elgin. The building should be available for occupancy by the end of the year. Recent s Comparables (sorted by square feet) Buyer Seller Location City Size Date Price PSF FNT Capital Partners Interstate Partners LLC/ Westminister Real Estate 2 Bldgs. in Prairie Business Gilberts 33,451 8/217 $77. AIC Ventures Master Molded Products Corporation 1 Davis Rd. Elgin 84,1 7/217 $63.2 MKD Electric Elgin Property LLC 259 Alft Ln. Elgin 72,928 7/217 $74.73 Huntley 9 Gilberts Burlington 2 Carpentersville West Dundee Elgin Hoffman Estates 59 47 Schaumburg South Elgin Hanover Bartlett Sycamore 2 Manufacturing Local Distribution Packaging Assembly Consumer Products Statistics Recent Comparables (sorted by square feet) 26 Genoa Barrington Algonquin Third quarter asking net rents were $5.7 per square foot. Rents have consistently hovered around $5. per square foot since the first quarter of 216. Investor appetite remains strong for Class A product in North Kane County. This quarter a two-building package, totaling 33,5 square feet at Prairie Business in Gilberts was sold by Interstate Partners LLC/ Westminister Real Estate to FNT Capital Partners for $77. per square foot, which equates to a cap rate of 6.87 percent. The assets were fully stabilized, securing seven tenants ranging in size from 34, to 67, square feet. The largest user sale during the quarter was procured by MKD Electric which purchased a 72,928-square-foot warehouse/ distribution facility at 259 Alft Lane in Elgin from Elgin Property LLC for $74.73 per square foot. The building had a tenant in 18, square feet who will remain in the facility. 14 Tenant Type Location City Size United Food Group Renewal 1925 Holmes Rd. Elgin 8,127 Nepsa New 136 Madeline Ln. Elgin 61,2 Illinois Wholesale Cash Register Corp. New 278-27 Spectrum Dr. Elgin 49,26 Property Property type type Warehouse & distribution 16,393,62 14.3% 14.6% 271,732 63,412 $5.13 341,43 Manufacturing 15,7,353 3.8% 3.8% 32,26 53,178 $4.7 57, 23,4 Special Purpose s Quarterly Q4 totalnet net total totalnet net direct direct asking asking rent rent (PSF) (PSF) 13,2.%.% $. 31,413,615 9.2% 9.4% 33,938 656,59 $5.7 57, 364,83 27
Chicago Industrial Report 3Q 217 Northwest Indiana Northwest Indiana Map Whiting East Chicago 31,17,473 (%) 9.9% (%) 1.2% net -312,25 net -37,163 rental rate (nnn) $ 3.53 12-mo. dollar change $.7 Net New, Net Absorbtion, Vacancy Only one new lease was signed during the quarter, measuring 31,119 square feet, which was less than half the volume reported in the secondquarter volume of 8,28 square feet. Tenant demand typically is limited in the Northwest Indiana submarket due to a shallow base of tenants looking in the area. Minimal leasing activity during the quarter also had an adverse effect on Northwest Indiana s rate, which escalated 124 basis points from the prior quarter to 9.9 percent. Moreover, a 351,-square-foot crane was returned to the market at 3 Philadelphia Street in La Porte that also contributed to the spike in third quarter s. The third-quarter net asking rate was $3.53 per square foot, which was dramatically lower than the second-quarter rental rate of $3.64 per square foot. 8 Lansing Hammond Gary Munster Sauk Village Merrillville Schererville Crown Point 12 Portage Hobart Lake County Porter County 3 2 Valparaiso Lowell A building at 1741 165th Street in Hammond was sold as part of an 11-building, multi-state portfolio sale totaling 2.5 million square feet, selling for $1,,/$39.39 per square foot. Brennan Investment Group LLC, along with Arch Street Capital Advisors, purchased these assets from Wildamere Capital Management. The local asset, totaling 141,86 square feet, was valued at $36.82 per square foot. Three user sales were also reported in the third quarter, totaling 88,696 square feet, significantly higher than the second-quarter volume of 28,91 square feet. The third quarter witnessed one speculative delivery as Weiss Entities completed an 8,-square-foot warehouse/distribution facility at 22 Memorial way, Valparaiso. The building boasts 32-foot-clear heights, 3 exterior docks and 1 drive-in door. This is the second speculative project completed this year. Manufacturing Distribution Service Auto Food Steel Recent s Comparables (sorted by square feet) Buyer Seller Location City Size Date Price PSF Brennan Investment Group, LLC, Wildamere Capital 1741 165th St. Hammond 141,86 9/217 $36.82 Arch Street Capital Advisors Management Private Individual Undisclosed 6639-6641 Columbia Hammond 5,8 9/217 $1.64 Winjamin Inc. Undisclosed 475 Roosevelt St. Gary 27,896 8/217 N/A Recent Comparables (sorted by square feet) Tenant Type Location City Size Undisclosed New lease 6575 Daniel Burnham Dr. Portage 31,119 Rogers Company Renewal 16-1648 Northwind Pkwy. Hobart 18,271 Statistics Quarterly net total net direct asking rent (PSF) Warehouse & distribution 9,837,55 12.9% 14.% 69,15 62,123 $3.98 182, 254,4 Manufacturing 21,269,968 8.5% 8.5% -381,22-432,286 $3.5 Special Purpose.%.% $. s 31,17,473 9.9% 1.2% -312,25-37,163 $3.53 182, 254,4 28 29
Chicago Industrial Report 3Q 217 O Hare 93,954,546 (%) 5.5% (%) 6.6% net 1,391,867 net 227,797 rental rate (nnn) $ 5.88 12-mo. dollar change $.12 Net New, Net Absorption, Vacancy The O Hare submarket remains one of the healthiest and most robust markets in Chicago, as stands at 5.46 percent. Absorption of 1.4 million square feet in the third quarter puts O Hare in first place for the most recorded across Chicago s 2 submarkets. However, year-to-date, only stands at 227,797 square feet. The largest new lease signed in the robust O Hare market over the summer was by All Tile Inc, which leased a 27,7-square-foot Class A facility at 855 N. Wood Dale Road in Wood Dale. Also, PODS committed to a renewal for 91,198 square feet with Prologis at 112-114 N. Ellis Street in Bensenville. With connectivity to the cargo ramps, intermodal facilities and highways, logistics and trucking firms continue to remain active around O Hare, as evidenced by the following two renewals in Bensenville: Geanto s Trucking renewed 3, square feet at 63-65 Supreme Drive and Central States Trucking renewed 34, square feet at 472-482 Thomas Drive. Investment and user sale activity continues to be active in the O Hare market, as the strong transportation connections and diversity of product here attract a wide range of buyers. Bridge Partners sold four recently completed speculative projects located in the infill markets of O Hare/West Cook totaling 491,1 square feet. Morgan Stanley purchased the assets for a combined $69 million. In Elk Grove Village, a 15,52-square-foot Class A building at 171 Nicholas traded for $22.7 million, or $151 per square foot. As part of a 157-property national portfolio sale between Evergreen Industrial Properties and Ivanhoe Cambridge, several O Hare assets traded hands, the largest of which was a 469,492-square-foot Class B asset at 7-854 Golf Lane in Bensenville; the allocated price was $24.1 million, or $51.44 per square foot, and the largest tenant in the space is Bradford Group Exchange. Also, a 26,-square-foot building at 231 Lunt Avenue in Elk Grove Village sold for $13.4 million, or $51 per square foot. Two other assets in Itasca, 9-95 Hollywood and 75 Expressway Drive, were also included in the portfolio. In one of the largest user sales in the market, Prologis disposed of a 313,-square-foot Class B asset at 6 Eagle Drive in Bensenville to AmTab Manufacturing for $42 per square foot. O Hare Map 2 29 355 Arlington Heights Addison Lombard 9 Elk Grove Village Itasca Wood Dale 29 83 Elmhurst 12 Des Plaines Bensenville 2 North Lake Rosemont Schiller Franklin Melrose 38 Glenview 14 29 Niles Oak Berwyn Currently, several developers, including Liberty, DRG and Seefried, have active projects going up in the O Hare market for a total of 426, square feet. In Franklin, just east of the airport, Bridge Partners has taken down a 48-acre site along the Tri-State Tollway. They have preliminary drawings for three buildings that will add 6, square feet of, which could be delivered in late 218. 3 Recent s Comparables (sorted by square feet) Buyer Seller Location City Size Date Price PSF Ivanhoe Cambridge TPG Capital LP 7-854 Golf Ln. Bensenville 469,492 7/217 $5.12 AmTab Manufacturing Prologis 6 Eagle Dr. Bensenville 313,12 9/217 $42. Ivanhoe Cambridge TPG Capital LP 231 Lunt Ave. Elk Grove 255,414 7/217 $51.2 Ivanhoe Cambridge TPG Capital LP 75 Expressway Dr. Itasca 222,244 7/217 $5.11 Recent Comparables (sorted by square feet) Tenant Type Location City Size All Tile Inc. Relocation 855 N. Wood Dale Rd. Wood Dale 27,721 Hegele Logistics Relocation 11 Mittel Dr. Wood Dale 17,74 International Paper Company New 15 E. Oakton St. Des Plaines 1,227 Value City Furniture New 1475 E. Thorndale Ave. Itasca 57,143 Manufacturing Local Distribution Packaging Food Air Freight Statistics Property type Quarterly Q4 total net total net direct direct asking asking rent rent (PSF) Warehouse & distribution 56,173,287 6.4% 7.7% 692,139-26, $5.9 426,96 661, Manufacturing 37,752,244 4.1% 5.% 699,728 487,891 $5.85 175,982 Special Purpose 29,15.%.% $. s 93,954,546 5.5% 6.6% 1,391,867 227,797 $5.88 426,96 836,982 31
Chicago Industrial Report 3Q 217 South Suburbs South Suburbs Map 84,738,564 (%) 4.8% (%) 6.4% net 1,255,153 net 1,83,322 rental rate ($ psf) $ 3.76 12-mo. dollar change -$.64 Net New, Net Absorption, Vacancy One large sublease was absorbed in the third quarter, driving leasing volume to 751,25 square feet. Astonishingly, this surpassed leasing activity in the first and second quarter combined. Richwill Enterprises Inc. leased 378, square feet, formerly occupied by Berry Plastics at 575 W. 118th Street, Alsip. Berry Plastics sold the facility to W.P. Carey as a sale/leaseback in 23. The aforementioned transaction had a major impact on the South Suburbs third-quarter rate, which declined a shocking 148 basis points to 4.84 percent. Another lease to note was procured by First Logistics, which renewed its lease with DRA Advisors in 263,84 square feet at 11859 S. Central Avenue, Alsip. The 3PL firm also took down an additional 184, square feet at 134 S. Pulaski Road in Alsip. Investor interest remains strong for Class B assets in the South Suburbs market. This quarter, Ivanhoe Cambridge purchased a national industrial portfolio of 168 properties totaling 16 million square feet that included two assets in the South Suburbs: 59-5151 W. 122nd St., Alsip, totaling 123,986 square feet, selling at $35.15 per square foot and 11-112 Virginia, Chicago Ridge, totaling 6,464 square feet, sold for $32. per square foot. Additionally, Cabot Properties, Inc. purchased from Adu Dhabi Investment Authority a 156,-square-foot asset for $36.22 per square foot. User demand was extremely strong this quarter, as two 1,-square-foot plus manufacturing buildings traded hands. Auto1 Car Sport purchased a 157,8-square-foot facility at 35 Burr Oak Avenue in Blue Island, while Universal Scrap Metal acquired 115,211 square feet at 13527 S. Halsted Street in Riverdale. Interestingly, both buildings sold for under $1. per square foot. 83 55 Burr Ridge New Lenox Hodgkins Orland 6 2 Tinley 3 Bedford Bridgeview 2 Alsip 57 Blue Island Matteson South Holland Chicago Heights University Lansing 9 8 Whiting Sauk Village Hammond Munster Schererville The third-quarter asking rental rate was $3.76 per square foot net. Rents have remained under $4. per square foot net for the fourth consecutive quarter. In comparison, last quarter s rent was $3.93 per square foot net. Although there are no new industrial developments in the pipeline, the vastly improved rate could draw some interest in speculative development in the future. Manufacturing Local Distribution Assembly Auto Plastics Recent s Comparables (sorted by square feet) Buyer Seller Location City Size Date Price PSF Ivanhoe Cambridge TPG Capital, LLC Multi-Property Alsip/Chicago Ridge 184,45 7/217 $34.12 Rex Carton Company Transwestern Investment Group 74-742 Richards Rd. Bridgeview 161,74 9/217 $42.13 Universal Scrap Metals Comax Enterprises 13527 S. Hasted St. Riverside 157,8 7/217 $9.51 Recent Comparables (sorted by square feet) Tenant Type Location City Size Nexus Distribution Renewal 651 W. 73rd St. Bedford 36,552 Accord Carton Company New 1181 S. Central Ave. Alsip 284,356 Nexus Distribution New 6558 W. 73rd St. Bedford 75,939 Tibor Machine Renewal 74 W. 1th Pl. Bridgeview 71,325 Statistics Quarterly net total net direct asking rent (PSF) Warehouse & distribution 4,186,428 5.4% 7.6% 56,164 48,596 $3.83 Manufacturing 43,384,56 4.4% 5.3% 6,989 674,726 $3.37 7, Special Purpose 1,167,63.%.% $. s 84,738,564 4.8% 6.4% 1,255,153 1,83,322 $3.76 7, 32 33
Chicago Industrial Report 3Q 217 Southeast Wisconsin 55,513,388 (%) 5.6% (%) 6.3% net 668,769 net 1,99,747 rental rate ($ psf) $ 4.42 12-mo. dollar change $.1 Net New, Net Absorption, Vacancy The largest lease transaction inked in the third quarter in the Southeast Wisconsin submarket was Johnson Health Tech committing to a 29,151-square-foot new lease at 1333 Grandview way in Sturtevant. In Pleasant Prairie, American Girl signed a short-term lease for 5, square feet in the Jelly Belly distribution center at 11 Jelly Belly Lane. Vacancy has climbed 35 basis points from the 5.26 percent reported in the second quarter to 5.61 percent. The increase in is not surprising due to the robust speculative pipeline in the market. Absorption is healthy with 668,769 square feet posted in the third quarter and 1.1 million square feet recorded year-to-date. Asking rental rates in Southeast Wisconsin were $4.42 per square foot net, which is higher than the other Chicago-area big box markets. As part of an 11-building national portfolio, Brennan Investment Group, LLC, in partnership with Arch Street Capital, acquired a 136,286-square-foot building at 3545 Nicholson Road in Franksville. The building is occupied by Midland Packaging and Display, and the allocated pricing was just over $31 per square foot. In Racine, KJJ Real Estate, LLC acquired a 29,-squarefoot metal panel manufacturing plant from Treasures Media for just under $3 million at 2745 Chicory Road. In news, Uline has completed their third build-to-suit project in the Southeast Wisconsin market. This structure totals 88, square feet at 1258 38th Street in Kenosha. The shipping and packaging materials distribution firm now occupies nearly 3. million square feet in the area. Just down the street, in the Lakeview Business, CenterPoint Properties is putting the finishing touches on a 417,384-square-foot warehouse/ distribution facility scheduled to be delivered in the fourth quarter. The announcement by Foxconn to come to Racine County has grabbed headlines across the country. Industrial investors are cautiously optimistic, as the state of Wisconsin doled out a massive $2.85 billion subsidy to the Taiwanese conglomerate. The company is planning on constructing a manufacturing plant in or around Sturtevant that will build liquid crystal display (LCD) screens for Apple products. In the short-term, Foxconn is looking for temporary industrial space in the market to begin building up their infrastructure and local workforce; however, on the Illinois side of the border, this could lead to increased demand in Lake County and Chicago s north shore. Another concern among industrial occupiers is that the company will cannibalize the existing workforce and exacerbate a labor shortage. Southeast Wisconsin Map Lake Geneva 12 Mukwonago Burlington 5 Waterford WISCONSIN ILLINOIS Racine County Kenosha County 83 Franklin Manufacturing Local Distribution Consumer Products Food Packaging E-Commerce 45 45 Kenosha Oak Creek Mt Pleasant Sturtevant Somens Pleasant Prairie Racine 34 Recent s Comparables (sorted by square feet) Buyer Seller Location City Size Date Price PSF Skipper Marine Corporation First Midwest Bank 921 Wilmot Rd. Pleasant Prairie 363,468 9/217 $15.34 Community Care Organization Riley Construction Company 5614 52nd St. Kenosha 21,568 7/217 $36.83 Recent Comparables (sorted by square feet) Tenant Type Location City Size Johnson Health Tech North America New 1333 Grandview Pkwy. Sturtevant 29,151 American Girl New 11 Jelly Belly Ln. Pleasant Prairie 5, Undisclosed New 191 Chicory Rd. Mount Pleasant 16, Statistics Quarterly net total net direct asking rent (PSF) Warehouse & distribution 3,88,254 6.7% 6.7% 992,767 1,62,915 $4.54 1,382,769 1,682,955 Manufacturing 24,626,51 4.3% 5.8% -358,998-538,168 $3.4 8,5 Special Purpose 78,624.%.% 35, 35, $. 35, s 55,513,388 5.6% 6.3% 668,769 1,99,747 $4.42 1,382,769 1,798,455 35