Q4 2014 | INDUSTRIAL
CHICAGO
INDUSTRIAL MARKET OVERVIEW
CONSTRUCTION DELIVERIES RISE
A key indicator of the health of the metropolitan Chicago industrial market is the notable increase
in new construction deliveries witnessed in 2014. Industrial construction deliveries totaled 11.5
million square feet in 2014, a 30.2 percent increase from total 2013 volume. Other statistical
indicators followed suit, as the vacancy rate fell by almost one whole percentage point, leasing
volume increased 2.0 million square feet, and sale volume surpassed 20.0 million square feet
for just the third time since 2000. In addition, net absorption improved by more than 5.5 million
square feet in 2014 versus 2013 results.
VACANCY AND SUPPLY
MARKET INDICATORS
Chicago’s industrial vacancy rate fell by 97 basis points from the year-end 2013 rate of 8.70
percent to 7.73 percent at year-end 2014. This was caused primarily by strong user demand and
a small amount of second generation space returning to the market.
Chicago Metro
2013
2014
VACANCY 8.70%
The Chicago area industrial vacancy rate has not fallen below 8.0 percent since 2001 when it
dipped to ironically 7.73 percent.
7.73%
ABSORPTION 12,760,948
18,301,811
RENTAL RATE $4.11
$4.41
The I-290 North and O’Hare industrial submarkets witnessed a year-over-year vacancy rate
decline of more than 200 basis points from 2013, while vacancy in the Northwest Suburbs and
I-55 Corridor rose more than 100 basis points.
Vacant supply in the metropolitan Chicago industrial market totaled 102.2 million square feet at
the end of 2014, an impressive 12.2-million-square-foot improvement from year-end 2013.
Spaces larger than 300,000 square feet saw a 13.7 percent decline in vacancy supply from totals
reported at year-end 2013.
Market indicators benefited from the fact that only 48.0 million square feet of space returned to
the Chicago industrial market in 2014, the lowest total of the past decade. The 48.0 million
square feet were composed of 5.1 million square feet of speculative development and 42.9
million square feet of second generation space.
HISTORICAL TRENDS
14%
25.0
20.0
12%
15.0
10.0
10%
5.0
8%
0.0
-5.0
6%
-10.0
4%
-15.0
2%
-20.0
-25.0
2008
2009
2010
2011
2012
2013
2014
0%
Vacancy Rate
Square Feet Absorbed (Millions)
Absorption and Vacancy Rates
LEASING AND SALE ACTIVITY
Total 2014 industrial leasing volume edged up from the prior year’s volume of 35.7 million
square feet to 37.7 million square feet in 2014. The 5.6 percent increase was realized primarily
from smaller users in the 10,000- to 25,000-square-foot range.
Big box transactions greater than 300,000 square feet were not as prevalent in 2014 as 14 such
leases were signed compared to 19 transactions consummated in 2013. However, the total
volume of those leases was higher with 8.5 million square feet versus 8.3 million square feet.
Leasing activity in the I-80/Joliet Corridor totaled 4.9 million square feet in 2014, surpassing the
www.colliers.com/chicago
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
2013 total by an impressive 1.7 million square feet. This was followed closely by the Elgin I-90
Corridor, which saw an increase of 1.2 million square feet in 2014. The weakest markets in
terms of year-over-year leasing activity include Central DuPage, which fell 1.3 million square
feet, and the I-55 Corridor which fell 927,700 square feet from 2013 results.
Year-end 2014 sale volume escalated to 20.6 million square feet which represents an impressive
15.5 percent increase from the 17.8 million square feet sold in 2013. All size ranges realized
higher transaction volume, with the big box user sales achieving the highest gain with 8.7 percent
over the prior year’s total.
The 20.6 million square feet sold in 2014 represents the highest volume sold in the past ten
years.
User sale volume was strongest in the South Suburbs as 2.8 million square feet of sale
transactions were completed, accounting for 13.5 percent of all 2014 sale activity in metropolitan
Chicago. However, the I-290 North market sale volume of 2.1 million square feet represented
the largest gain of any Chicago market from one year ago.
ABSORPTION
Heightened user demand drove cumulative 2014 net absorption to 18.3 million square feet. This
was a remarkable 43.4 percent increase from the 12.8 million square feet posted in the prior
year, and the highest net absorption volume achieved since 2005 when 20.0 million square feet
were recorded.
Eight Chicago-area industrial submarkets realized a positive swing in net absorption of more
than 1.0 million square feet from one year ago, with O’Hare market leading the results with 1.9
million square feet. Conversely, net absorption in the Central DuPage and the Northwest
Suburbs dropped more than 1.0 million square feet from the 2013 total.
CONSTRUCTION ACTIVITY
Construction deliveries in 2014 topped out at 11.5 million square feet, a sharp increase from the
8.8 million square feet completed in 2013. More than 6.4 million square feet of all new 2014
deliveries resulted from build-to-suit projects.
Although new construction is on the rise it is still considerably below the height of the market
which reached 21.0 million square feet in 2009.
The Chicago Metropolitan area witnessed 45 new projects started in 2014, with a collective
inventory of 12.6 million square feet. Thirteen construction projects were started in the fourth
quarter alone, which will add 1.5 million square feet to Chicago’s inventory base when completed.
The largest fourth quarter development was started for Niagra Bottling, LLC which commenced
construction on a 377,300-square-foot warehouse/distribution facility at Lakeview Corporate
Park in Pleasant Prairie.
The I-55 Corridor reclaimed the top spot for most construction activity in 2014, as 3.1 million
square feet of new projects were constructed. This marks 27.2 percent of all 2014 construction
activity in the metropolitan Chicago area. No new construction completions occurred in DeKalb
County, Far South Suburbs, McHenry County, and Northwest Indiana.
WHAT TO EXPECT IN 2015
Speculative development will remain strong in 2015. Developers will remain focused on building
multi-tenant product in sizes from 100,000 square feet to 500,000 square feet. We could see
big box development in 2015 if the current pipeline of deals comes to fruition.
Rent growth will continue to rise modestly in Class A. Class B product will also see a slight
uptick in rents in core markets due to limited supply, while Class C product will still see limited
interest.
Low interest rates will continue to draw buyers to the market, however, limited supply will push
up pricing.
P. 2
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
Central DuPage
VACANCY AND SUPPLY
After reaching 8.60 percent in the first quarter of 2014, the vacancy rate in the Central DuPage
submarket receded dramatically throughout the year to a fourth quarter total of 7.35 percent. This
was also a 21-basis-point decline from the fourth quarter 2013 total of 7.56 percent.
At the end of the fourth quarter Central DuPage’s available industrial supply measured 6.2 million
square feet, a modest decrease from the 6.4 million square feet reported vacant at year-end 2013.
Spaces between 30,000 square feet and 60,000 square feet proved to be the most sought-after, as
the available options in that size range dropped from 41 in 2013 to 28 in 2014.
Declining supply has caused a complete absence of available space greater than 350,000 square feet.
MARKET INDICATORS
Central DuPage
2013
CONSTRUCTION
Three build-to-suit developments were completed in 2014 adding 188,000 square feet to Central
DuPage’s inventory base. All three projects represented company expansions, and the largest was a
80,000-square-foot food warehouse for Portillo’s at 350 Rohlwing Road in Addison.
2014
VACANCY 7.56%
7.35%
ABSORPTION 2,165,011
170,709
RENTAL RATE $5.04
$5.21
In 2013 just one speculative development was completed, a 139,000-square-foot property at 201
Gary Avenue at Turnberry Lakes International Business Park in Roselle.
LEASE AND SALE ACTIVITY
Occupier demand was weaker in 2014 as just 2.7 million square feet of lease transactions were
completed. This represents a decline of 1.3 million square feet 4.0 million square feet leased in 2013.
Market conditions in 2013 benefited from two large lease transactions in spaces over 350,000 square
feet. However, the largest lease signed in the Central DuPage market in 2014 was Com2 Computer
Recycling Solutions’ 207,800-square-foot commitment at 500 Kehoe Boulevard in Carol Stream.
HISTORICAL TRENDS
On a positive note, leasing activity witnessed an increase in signed leases in the 60,000 to
100,000-square-foot range, as seven such transactions were completed in 2014 versus just five in
2013.
2.5
14%
2.0
12%
1.5
10%
1.0
0.5
8%
0.0
6%
-0.5
4%
-1.0
2%
-1.5
-2.0
2008
2009
2010
2011
2012
2013
2014
Vacancy Rate
Square Feet Absorbed (Millions)
Absorption and Vacancy Rates
Massive fourth quarter sale activity of 781,600 square feet drove the year-end sale volume to 1.5
million square feet. This was a dramatic 47.1 percent gain from 2013’s results.
User demand was most prevalent in building sales between 10,000 and 60,000 square feet, as 26 of
the 29 sales recorded in 2014 were in this size range.
0%
NET ABSORPTION
Despite strong fourth quarter sale volume the cumulative 2014 net absorption measured just 170,700
square feet, far below the 2.2 million square feet of net absorption reported one year ago.
Central DuPage’s net absorption was negatively impacted by a higher level of space returning to the
market.
TOP 2014 TRANSACTIONS
TENANT/BUYER
SIZE (SF)
ADDRESS
TYPE
Com2 Computer Recycling Solutions
207,758
500 Kehoe Blvd, Carol Stream
Lease
Diamond Marketing Solutions
184,574
900 Kimberly Drive, Carol Stream
Lease
Semblex Corporation
139,720
900 N. Church Road, Elmhurst
Sale
WHAT TO EXPECT IN 2015
Big box users will be driven to the Fox Valley and I-55 Corridor markets due to limited supply in
Central DuPage.
Rents will continue to improve in big box space, however, spaces from 40,000 square feet to 100,000
square feet will remain flat due to abundant supply.
Low interest rates will keep buyers active, but limited supply will drive up pricing which will ultimately
slow down 2015 sales.
P. 3
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
Chicago
VACANCY AND SUPPLY
The Chicago South vacancy rate experienced a sharp decline of 77 basis points from the 2013 level
of 11.17 percent to 10.40 percent in 2014, while Chicago North 2014 vacancy rate of 6.86 percent
closely matched the 6.87 percent posted one year prior. Heightened tenant demand in the Chicago
South market contributed greatly to its declining vacancy rate, while increased buyer activity kept the
Chicago North vacancy from rising.
Chicago North’s vacant supply has fallen steadily from the all-time high of 7.4 million square feet in
2009 to 6.1 million square feet in 2014. Chicago South’s available supply also improved considerably,
dropping more than 600,000 square feet from 2013’s volume to 8.7 million square feet. This market’s
all-time high of 11.8 million square feet occurred in 2011.
MARKET INDICATORS
Chicago North
ABSORPTION -243,653
-449,188
RENTAL RATE $5.49
$8.37
CONSTRUCTION ACTIVITY
Both Chicago markets were witness to new construction completions in 2014 for the first time since
2011. In Chicago North, New World Van Lines moved into a 30,000-square-foot facility at 5875 N.
Rogers, while two build-to-suit projects were completed in Chicago South that added 136,600 square
feet to its inventory base. The largest development was University of Chicago’s 86,600-square-foot
warehouse at 5225 S. Cottage Grove, a McShane Construction development.
2014
Method Products started construction on a 150,000-square-foot build-to-suit at 720 E. 111th Street
and Vienna Beef is adding a 12,000-square-foot addition on its plant at 1000 W. Pershing Road in the
historic Stockyard Business Park.
2013
2014
VACANCY 6.87%
-
6.86%
Chicago South
2013
VACANCY 11.17%
In Chicago North, four obsolete buildings were demolished, eliminating 552,000 square feet of
inventory while in Chicago South four buildings totaling 215,000 square feet were razed. Seven of
these tear-downs will be redeveloped for alternative uses.
10.40%
ABSORPTION 1,127,180
359,395
RENTAL RATE $3.82
$4.33
LEASING AND SALE ACTIVITY
Chicago North leasing activity measured 481,200 square feet, up 49 percent 2013’s total of 322,800
square feet. Chicago South’s volume of 1.7 million square feet marked a significant increase from
the 1.4 million square feet leased in 2013.
2014 tenant demand in Chicago North was driven by smaller users, whereas the increase in Chicago
South’s volume was balanced in all size ranges.
HISTORICAL TRENDS
Strong user demand for both Chicago markets during 2014 resulted in sale volume that exceeded 1.0
million square feet for the second consecutive year. Sale activity measured 1.9 million square feet in
Chicago North market, which surpassed 2013 level by 48.9 percent. The Chicago South 2014 volume
reached 1.7 million square feet, slightly lower than the 1.8 million square feet sold in the prior year.
Absorption and Vacancy Rates
1.5
10%
1.0
9%
8%
0.5
7%
0.0
6%
-0.5
5%
-1.0
4%
3%
-1.5
2%
-2.0
-2.5
Vacancy Rate
Square Feet Absorbed (Millions)
Chicago North
1%
2008
2009
2010
2011
2012
2013
2014
0%
TOP 2014 TRANSACTIONS
4.0
16%
3.0
14%
2.0
12%
1.0
10%
0.0
8%
-1.0
6%
-2.0
4%
-3.0
2%
P. 4
2008
2009
2010
2011
2012
2013
2014
| COLLIERS INTERNATIONAL
0%
Vacancy Rate
Square Feet Absorbed (Millions)
Chicago South
-4.0
NET ABSORPTION
Net absorption in Chicago South measured only 359,400 square feet, down from 1.1 million square
feet in 2013. Absorption was negative in Chicago North for the fourth consecutive year, reaching
negative 449,200 square feet in 2014, down from negative 243,700 square feet in 2013.
TENANT/BUYER
SIZE (SF)
ADDRESS
TYPE
Affordable Moving Company
377,378
4500 W. Armitage Avenue
Sale
CLA Comm Major, LLC
359,374
1819 N. Major Avenue
Sale
QTS Realty Trust
327,000
2800 S. Ashland Avenue
Sale
WHAT TO EXPECT IN 2015
Buyers will be active in the market but should expect to pay more in 2015 due to limited supply.
Tremendous demand for land in prime areas of Chicago will push land values to historically high
levels in 2015. Strong occupier demand in the Chicago South market has generated developer interest
that could result in speculative construction in 2015.
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
Elgin/I-90 Corridor
VACANCY AND SUPPLY
An increase in tenant activity pushed the Elgin/I-90 Corridor vacancy rate down a remarkable 148
basis points from the year-end 2013 rate of 13.23 percent to the year-end 2014 rate of 11.75 percent.
The vacant industrial supply in the Elgin/I-90 Corridor measured 3.5 million square feet at the end of
2014, which was a 10.9 percent decrease from the 2013 year-end total of 3.8 million square feet.
Strong user demand throughout the year was the primary factor in the improvement.
CONSTRUCTION ACTIVITY
Four buildings were completed in 2014 adding 440,064 square feet to Elgin/I-90 Corridor’s inventory
base. Bridge Development Partners completed a 225,200-square-foot speculative warehouse
distribution facility at 2750 Alft Lane in Elgin’s Randall Crossings Business Park in the first quarter.
Three constructions projects were completed in the third quarter. World Richman Corporation built
a 108,307-square-foot multi-tenant speculative facility at 2725 Alft Lane at the Randall Crossings
Business Park in Elgin, Cargo Equipment Corporation took occupancy of a 40,052-square-foot buildto-suit sale building at 13700 George Bush Court in Huntley and Newhaven Display International
moved into a 26,500-square-foot build-to-suit sale at 2661 Galvin Drive in Elgin.
MARKET INDICATORS
Elgin/I-90 Corridor
2013
2014
VACANCY 13.23%
11.75%
ABSORPTION -331,444
753,238
RENTAL RATE $4.86
$5.14
Duke Realty Corporation broke ground on a 757,100-sqaure-foot build-to-suit lease warehouse/
distribution facility for Weber Stephens Products Company. Once completed this will be the secondlargest facility completed in the Elgin/I-90 Corridor.
LEASING AND SALE ACTIVITY
Tenant demand was strongest in the third quarter as 1.3 million square feet of lease transactions were
completed, largely due to the Weber Stephens Products Company build-to-suit lease. This catapulted
the 2014 year-end leasing total to 2.3 million square feet, which more than doubled the 2013 volume
of 1.0 million square feet.
HISTORICAL TRENDS
1.0
14%
0.8
12%
0.6
0.4
10%
0.2
8%
0.0
-0.2
6%
-0.4
4%
-0.6
2%
-0.8
-1.0
2008
2009
2010
2011
2012
2013
2014
0%
Vacancy Rate
Square Feet Absorbed (Millions)
Absorption and Vacancy Rates
Sale volume measured an impressive 741,000 square feet in 2014, eclipsing the 2013 volume of
416,809 square feet. One transaction greatly contributed to heightened 2014 sale volume. JIT
Packaging recently moved into a 407,400-square-foot manufacturing plant at 1717 Gifford Road in
Elgin.
NET ABSORPTION
Tremendous user demand in the Elgin/I-90 Corridor during 2014 resulted in the year-end net
absorption of 753,238 square feet, a vast improvement from the negative 331,444 square feet
reported in 2013.
TOP 2014 TRANSACTIONS
TENANT/BUYER
SIZE (SF)
ADDRESS
TYPE
Weber-Stephen Products
757,120
Oak Creek Parkway, Huntley
Lease
JIT Packaging
407,400
1717 Gifford Road, Elgin
Sale
Weber-Stephen Products
250,828
2500 Northwest Parkway, Elgin
Lease
WHAT TO EXPECT IN 2015
There will continue to be high demand from developers seeking industrial land for future development.
Prices and lease rates will stay consistent to 2014 levels.
Elgin will continue to attract users in the home improvement industry.
P. 5
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
Fox Valley
VACANCY AND SUPPLY
Fox Valley’s vacancy rate measured 6.83 percent at the end of 2014 which was down 43 percentage
points from the level recorded one year ago. Strong buyer demand was a key contributor to Fox
Valley’s improved vacancy rate.
Fox Valley’s vacancy rate has not fallen below 7.0 percent since the first quarter of 2000 when a
vacancy rate of 6.92 percent was reported.
The recent completion of two speculative developments added 754,100 square feet to Fox Valley’s
available supply, bringing the year-end available supply to 6.3 million square feet. Fox Valley’s yearover-year vacant supply has fallen dramatically from the all-time high of 13.5 million square feet
reported in 2009.
MARKET INDICATORS
Fox Valley
2013
CONSTRUCTION ACTIVITY
2014 construction activity in Fox Valley consisted of two build-to-suits totaling 403,300 square feet
and two speculative projects totaling 754,100 square feet. These projects pushed 2014 construction
volume to 1.2 million square feet, easily surpassing the 421,100 square feet built in 2013.
2014
VACANCY 7.26%
6.83%
ABSORPTION 1,553,644
1,336,341
RENTAL RATE $4.20
$4.40
Fox Valley’s construction activity has not experienced volume in excess of 1.0 million square feet
since 2009.
The largest speculative development completed in 2014 was a joint venture The Opus Group and
USAA, resulting in a new 604,600-square-foot property at 1200 Orchard Gateway Boulevard in
North Aurora. Additionally, O’Reilly Auto Parts moved into a 363,700-square-foot build-to-suit sale
property at 543 Frontenac Court in Naperville.
Four projects totaling 656,100 square feet are currently underway. The largest project is Liberty
Property Trust’s 429,800-square-foot bulk warehouse/distribution facility at 300 Mitchell Road.
HISTORICAL TRENDS
5.0
16%
4.0
14%
3.0
12%
2.0
10%
1.0
8%
0.0
6%
-1.0
4%
-2.0
2%
-3.0
2008
2009
2010
2011
2012
2013
2014
0%
Vacancy Rate
Square Feet Absorbed (Millions)
Absorption and Vacancy Rates
LEASING AND SALE ACTIVITY
Leasing volume in Fox Valley fell from the 2013 year-end volume of 2.8 million square feet to 2.1
million square feet in 2014, the second lowest total in this submarket in the past 10 years. 2013
volume was driven by larger users while 2014 tenant demand was strongest in spaces between
10,000 to 30,000 square feet.
Heightened demand in the first and fourth quarters of 2014 drove Fox Valley’s sale activity to 1.4
million square feet. This doubled the 2013 year-end volume of 716,100 square feet.
NET ABSORPTION
Escalating sale volume resulted in a positive 1.3 million square feet of net absorption for Fox Valley
this year. However, this marked a 14.0-percent decline from the 2013 total of 1.6 million square feet.
Fox Valley has witnessed positive year-end net absorption for five consecutive years.
TOP 2014 TRANSACTIONS
TENANT/BUYER
SIZE (SF)
ADDRESS
TYPE
O’Reilly Auto Parts
363,711
543 Frontenac Court, Naperville
Sale
Infinity Logistics
202,991
1111 W. Harvester Road, West Chicago
Lease
Tri-Ring American Corporation
152,859
820 Frontenac Drive, Naperville
Sale
WHAT TO EXPECT IN 2015
Big Box users from neighboring Central DuPage will be drawn to Fox Valley due to lack of product.
Speculative developers will be drawn to Fox Valley, however limited development opportunities will
force them west of the Orchard Road.
A diverging diamond interchange has commenced construction on I-88 at Route 59 which should
alleviate traffic congestion that surpasses 50,000 vehicles each day. The project is scheduled to be
completed by the fall of 2015.
P. 6
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
I-290 North
VACANCY AND SUPPLY
I-290 North’s vacancy rate achieved a remarkable reduction of 244 basis points from the year-end
2013 level of 10.51 percent to 8.07 percent in 2014. This decline also represents the largest yearover-year improvement of any Chicago market.
The vacant industrial supply at the end of the fourth quarter measured 6.1 million square feet, down
an impressive 1.8 million square feet from the 8.0 million square feet reported vacant in 2013. The
reduction in available space was encountered in all size ranges with the 100,000 to 200,000-squarefoot range experiencing the largest reduction. Available options of that size dropped from 13 in 2013
to just six in 2014.
MARKET INDICATORS
The I-290 North market currently has five vacancies above 350,000 square feet. However, there
were only five total sale or lease transactions completed in that size range since 2000.
I-290 North
2013
2014
VACANCY 10.51%
CONSTRUCTION ACTIVITY
The I-290 North market realized its first construction delivery in five years in 2014. Duke Realty
Corporation completed a 51,900-square-foot addition to a building at 599 Northwest Avenue in
Northlake as a result of the tenant’s expansion needs.
8.07%
ABSORPTION 56,746
1,521,890
RENTAL RATE $3.24
$4.21
There are no new developments underway in the I-290 North but there are rumors of a new
speculative project south of O’Hare International Airport.
The only active development in I-290 North is the elimination of buildings from the market. In 2014,
two buildings totaling 63,400 square feet were razed with the intent of replacing them with nonindustrial development – a trend that will continue in this mature market.
LEASING AND SALE ACTIVITY
I-290 North 2014 leasing volume totaled 1.3 million square feet, consistent with the five-year average
in the market, but far below the all-time high of 2.1 million square feet leased in 2013.
HISTORICAL TRENDS
2.0
14%
1.0
12%
0.0
10%
-1.0
8%
-2.0
6%
-3.0
4%
-4.0
2%
-5.0
2008
2009
2010
2011
2012
2013
2014
0%
Vacancy Rate
Square Feet Absorbed (Millions)
Absorption and Vacancy Rates
I-290 North’s sale volume escalated to 2.1 million square feet in 2014, more that tripling the 665,700
square feet sold in 2013 and marking the highest sale volume in this market in the past 10 years. The
increase in user demand was due to increased activity from large users. Four sales were recorded
in buildings over 100,000 square feet while there was only one such sale in 2013.
NET ABSORPTION
After registering positive net absorption of only 56,700 square feet in 2013, historic sale volume
elevated net absorption to 1.5 million square feet in 2014. This represents the third consecutive year
of positive net absorption, erasing four prior years of negative marks.
TOP 2014 TRANSACTIONS
TENANT/BUYER
SIZE (SF)
ADDRESS
TYPE
Honey-Can-Do
468,734
5300 St. Charles Road, Berkeley
Sale
Coregistics
262,000
3501 County Line Road, Franklin Park
Lease
Edsal Manufacturing
218,749
5600 Proviso Drive, Berkeley
Sale
WHAT TO EXPECT IN 2015
Developer interest to develop speculative product will be heightened in 2015, however, pricing could
prove an impediment.
Demand for buildings for sale will remain strong but will buyers be eager to buy less functional
product at current pricing levels.
Newer product will continue to be the desired choice, yet pricing will draw some users to Class B
product.
P. 7
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
I-290 South
VACANCY AND SUPPLY
I-290 South’s vacancy rate fluctuated greatly in 2014, from a high of 7.0 percent in the first quarter
to a low of 5.10 percent in the third quarter, and ending the year at 6.78 percent. This was attributed
to the large gains from user demand in the second and third quarters.
Although I-290 South’s vacancy rate jumped to 6.78 percent in the fourth quarter, it was still 43 basis
points lower than the 2013 year-end total of 7.26 percent.
Available space measured 3.1 million square feet at the end of the fourth quarter, down slightly from
the 3.3 million square feet reported in the year prior. The largest improvement in I-290 South’s
vacancy supply was in the 100,000- to 200,000-square-foot rage, dropping from 10 options in 2013
to 5 options in 2014.
MARKET INDICATORS
I-290 South
2013
CONSTRUCTION ACTIVITY
Four buildings totaling 1.2 million square feet were completed in the I-290 South market in 2014, the
highest construction volume of the past 10 years. No new developments were reported in 2013.
2014
VACANCY 7.26%
6.78%
ABSORPTION -506,929
1,285,280
RENTAL RATE $3.78
$4.50
All four new construction projects took place in McCook. The largest build-to-suit project was
completed by Freeman Decorating which built a 365,400-square-foot property at 8201 W. 47th
Street, while the largest speculative project was DP Partners’ 351,900-square-foot project at 8601 W,
47th Street.
Bridge Development Partners, LLC commenced construction on a 226,200-square-foot speculative
development at 8401 Riverside Drive, also in McCook. The building is scheduled for completion in the
spring of 2015.
LEASING AND SALE ACTIVITY
Leasing volume ended 2014 at 882,200 square feet, down slightly from the 920,700 square feet
leased for in 2013. Although lower than 2013 volume, the 882,200 square feet leased surpassed the
historical average of 796,900 square feet.
HISTORICAL TRENDS
2.0
12%
1.5
10%
1.0
8%
0.5
6%
0.0
4%
-0.5
2%
-1.0
-1.5
2008
2009
2010
2011
2012
2013
2014
0%
Vacancy Rate
Square Feet Absorbed (Millions)
Absorption and Vacancy Rates
Tenant demand in 2014 witnessed increased activity from users in the 30,000- to 60,000-squarefoot range, which posted six lease transactions in 2014 versus just one in 2013.
The I-290 South market posted a 92.8 percent gain in its cumulative sale volume, reaching an
impressive 1.7 million square feet in 2014 after just 423,600 square feet of sale transactions in 2013.
The increase in activity was due to heightened transaction volume rather than one large sale.
NET ABSORPTION
Heightened sale activity greatly influenced the year-end net absorption of 1.3 million square feet. This
represents an astonishing swing of more than 1.8 million square feet from the negative 506,900
square feet posted in 2013.
This is only the second time since 2000 that I-290 South’s year-end, cumulative net absorption
surpassed 1.0 million square feet.
TOP 2014 TRANSACTIONS
TENANT/BUYER
SIZE (SF)
ADDRESS
TYPE
Star Plastics & Rubber
293,750
2801 S. 25th Avenue, Broadview
Sale
Undisclosed
200,000
5622 W. 51st Street, Forest View
Lease
Golden State Foods
152,670
8901 W. 47th Street, McCook
Sold
WHAT TO EXPECT IN 2015
Redevelopment will continue but will be limited due to pricing constraints.
The recent completion of 662,700 square feet of speculative product will have a impact on second
generation space as tenants will be driven to modern, efficient space.
The limited supply of buildings for sale will put upward pressure on pricing in 2015.
P. 8
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
I-55 Corridor
VACANCY AND SUPPLY
The vacancy rate in the I-55 Corridor escalated more than one whole percentage point from the yearend 2013 rate of 9.83 percent to 10.86 percent in 2014. An excessive amount of second generation
space coupled with 1.8 million square feet of recently completed speculative projects was too much
for user demand to overcome.
I-55 Corridor’s vacant industrial supply reached 8.4 million square feet. This was a 1.1-millionsquare-foot increase from one year prior. However, this is far from the market’s all-time high of 12.9
million square feet registered in the third quarter of 2010.
Big box users have six options over 350,000 square feet, double the options offered in 2013.
MARKET INDICATORS
CONSTRUCTION ACTIVITY
After registering only 410,400 square feet of new construction in 2013, the I-55 Corridor experienced
an explosion of new construction deliveries in 2014, as 3.1 million square feet of projects were
completed. This total is competing with the peak of the market, which occurred in 2004 when 6.6
million square feet of new construction occurred.
I-55 Corridor
2013
2014
VACANCY 9.83%
10.86%
ABSORPTION 275,617
1,736,307
RENTAL RATE $5.08
$5.07
-
Two large speculative developments totaling 1.8 million square feet were completed in the I-55
Corridor in 2014, which surpassed the 1.3 million square feet of build-to-suit completions. Pizzuti
Company built 672,100 square feet at Pinnacle Business Center in Romeoville and IDI Gazeley finished
602,800 square feet at Bolingbrook Corporate Center West.
Industrial development will continue as there are 10 new projects totaling 2.2 million square feet
currently underway in various stages of development (three build-to-suit and seven speculative).
The I-55 Corridor witnessed the rare demolition of two buildings in 2014. Duke Realty Corporation
razed a 101,700-square-foot facility at 1350 Lakeside in Romeoville and immediately started
construction on 324,100-square-foot speculative project. Also, MacNeil Automotive tore down a
119,000-square-foot property at 501 S. Woodcreek in Bolingbrook for a new planned facility.
HISTORICAL TRENDS
3.0
18%
16%
2.5
14%
2.0
12%
10%
1.5
8%
1.0
6%
4%
0.5
0.0
2%
2008
2009
2010
2011
2012
2013
2014
0%
Vacancy Rate
Square Feet Absorbed (Millions)
Absorption and Vacancy Rates
LEASING AND SALE ACTIVITY
I-55 Corridor year-end leasing volume measured 4.7 million square feet in 2014, which was down
16.4 percent from one year prior. Less big box users in the market were the primary culprit as five
users signed leases in space over 200,000 square feet in 2014 versus seven in 2013.
The sale of a 642,900-square-foot facility at 1300 Naperville Road in Romeoville captured 46 percent
of all 2014 sale volume which measured 1.4 million square feet. The buyer, Magid Glove and Safety,
relocated from Chicago. This transaction alone exceeded 2013 sale volume of 522,800 square feet.
NET ABSORPTION
I-55 Corridor’s 2014 net absorption of 1.7 million square feet was a significant improvement from
2013’s year-end volume of 275,600 square feet. This was the result of heightened user demand
during the first half of 2014.
TOP 2014 TRANSACTIONS
TENANT/BUYER
SIZE (SF)
ADDRESS
TYPE
Lease
Ferrara Pan Candy
747,152
901 Carlow Drive, Bolingbrook
Midwest Warehouse & Distribution System, Inc.
650,494
1450 Remington Boulevard, Bolingbrook
Lease
Magid Glove and Safety, LLC
642,852
1300 Naperville Road, Romeoville
Sale
WHAT TO EXPECT IN 2015
Tenants will continue to be driven to new product, which is not good news for owners of second
generation vacancies.
Landlords will look to secure long-term leases and will be less likely to sign short term deals in 2015.
Class A product in spaces under 50,000 square feet will see a spike in rents as supply is limited,
while rents for big box product will be flat due to ample supply.
P. 9
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
I-80/Joliet Corridor
VACANCY AND SUPPLY
The I-80/Joliet Corridor’s vacancy rate continued to improve, dropping 141 basis points from the 2013
total of 10.68 to 9.27 percent in 2014. An increase in activity from big box users was the primary
cause of this sizable decline.
This marks the first time that the I-80/Joliet Corridor’s year-end vacancy rate has fallen below 10.0
percent in the last ten years.
Available supply declined by almost 1.0 million square feet from the 2013 level of 7.6 million square
feet to 6.8 million square feet in the fourth quarter of 2014. This is less than half the 14.1 million
square feet reported available during the height of the recession in 2009.
MARKET INDICATORS
CONSTRUCTION ACTIVITY
Construction completions in 2014 measured 1.9 million square feet, a sharp decline from the 4.3
million square feet reported one year ago. Build-to-suit deliveries captured 54.9 percent of all
completions in 2014.
I-80/Joliet Corridor
2013
2014
VACANCY 10.68%
9.27%
ABSORPTION 3,708,904
2,738,204
RENTAL RATE $3.47
$3.47
-
The pipeline for new projects remains strong in the I-80/Joliet Corridor. Four buildings broke ground
in 2014 which will add 2.3 million square feet to I-80/Joliet Corridor’s inventory base. The most
notable project is Michelin Tire’s 1.7 million-square-foot, three-building build-to-suit project to be
constructed by Ridge Property Trust at RidgePort Logistics Center in Wilmington. Additionally ML
Realty Partners commenced construction on a 512,000-square-foot speculative project at Heritage
Commerce Center in Lockport.
HISTORICAL TRENDS
25%
4.0
3.5
20%
3.0
2.5
15%
2.0
10%
1.5
1.0
5%
0.5
2008
2009
2010
2011
2012
2013
2014
0%
Vacancy Rate
Square Feet Absorbed (Millions)
Absorption and Vacancy Rates
0.0
Although build-to-suit developments posted the majority of all 2014 deliveries, the largest building
completed was a 752,000-square-foot speculative warehouse/distribution facility at 21215 SW
Frontage Road in Shorewood. The developer, Clarion Partners successfully secured a tenant for the
whole building.
LEASING AND SALE ACTIVITY
The Michelin Tire lease of 1.7 million square feet drove 2014 leasing volume to 4.9 million square feet,
which was a remarkable increase from year-end 2013 volume of 3.2 million square feet.
Although 2014 leasing volume increased over 2013 totals, it was achieved through 10 less transactions.
I-80/Joliet Corridor’s sale volume totaled 763,400 square feet, far below the 1.7 million square feet
sold in 2013. Activity was primarily driven by smaller sales while 2013 volume was heavily weighted
from users buying facilities over 100,000 square feet.
NET ABSORPTION
Net absorption declined 26.2 percent in 2014 but still registered an impressive 2.7 million square feet
– the second-highest year end total of all market - due to brisk leasing activity.
TOP 2014 TRANSACTIONS
TENANT/BUYER
SIZE (SF)
ADDRESS
TYPE
Michelin Tire
1,700,000
RidgePort Logistics Center, Wilmington
Lease
IKEA
849,691
501 Internationale Parkway, Minooka
Lease
Bob’s Discount Furniture
751,966
21215 SW. Frontage Road, Shorewood
Lease
WHAT TO EXPECT IN 2015
The recent absorption of large blocks of space in the I-80/Joliet Corridor could draw new speculative
development in 2015.
The I-80/Joliet Corridor market will continue to draw large scale development projects as it has the
most options of shovel-ready sites of any Chicago area market.
P. 10
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
Lake County
VACANCY AND SUPPLY
The vacancy rate in Lake County witnessed a sizeable improvement in 2014, falling 54 basis points
from 10.54 percent in 2013 to the 2014 year-end rate of 10.00 percent. This represents the lowest
year-over-year vacancy rate reported in Lake County market since 2007 when it dropped to 8.53
percent.
Lake County’s vacant supply measured 7.0 million square feet, a healthy decline from the 7.5 million
square feet reported one year ago. This was largely the result of robust leasing activity.
Lake County has significant vacancy in the 200,000- to 350,000-square-foot range with seven
vacant options. Based on current absorption trends, this equates to a 2.5-year supply.
MARKET INDICATORS
CONSTRUCTION ACTIVITY
Just one build-to-suit project was completed in 2014 totaling 22,000 square feet. Schneider Graphics,
Inc. took possession of a manufacturing plant at 885 Telser Road in Lake Zurich. Construction
projects totaling 520,800 square feet were built in 2013.
Lake County
2013
2014
VACANCY 10.54%
10.00%
ABSORPTION 609,201
-72,140
RENTAL RATE $5.17
$5.19
Three new speculative projects are currently underway. IDI Gazeley is building a 454,300-squarefoot facility at ACC Logistics Center in Antioch while Bridge Development Partners, LLC broke ground
on a 406,220-square-foot two-building development at Bridgepoint 94 Corporate Park in Libertyville.
Speculative development in Lake County hasn’t experienced this level of new construction activity
since 2008 when four big box facilities 740,500 square feet were built.
LEASING AND SALE ACTIVITY
The Lake County’s 2014 leasing volume reached 2.3 million square feet, an impressive 30 percent
rise in leasing activity from the 1.7 million square feet leased in 2013. Two leases were inked in spaces
over 200,000 square feet, while no transactions were recorded in that size range in 2013.
HISTORICAL TRENDS
2.0
16%
1.5
14%
1.0
12%
0.5
10%
0.0
8%
-0.5
6%
-1.0
4%
-1.5
2%
-2.0
2008
2009
2010
2011
2012
2013
2014
0%
Tenant demand in 2014 was strongest in spaces between 10,000 square feet and 60,000 square feet
as 47 such transactions were recorded in 2014 just 27 in 2013.
Vacancy Rate
Square Feet Absorbed (Millions)
Absorption and Vacancy Rates
Despite an increase in the number of sale transactions, Lake County’s total sale volume of 699,000
square feet represented a 20.3 percent decline from the 838,900 square feet sold in 2013. The
largest sale transaction in 2013 was a 304,600-square-foot building while the largest sale in 2014
was an 85,400-square-foot facility at 27944 N. Bradley Road in Libertyville purchased by Croda, LLC.
NET ABSORPTION
Despite heightened tenant demand, Lake County net absorption fell to negative 72,100 square feet in
2014 partially due to the elimination of a 450,000-square-foot manufacturing plant in Libertyville. In
2013, net absorption measured 609,200 square feet.
The last time Lake County’s year-over-year volume reported negative results was in 2010 when
negative 847,100 square feet were reported.
TOP 2014 TRANSACTIONS
TENANT/BUYER
SIZE (SF)
ADDRESS
TYPE
Flextronics
362,969
700 Corporate Grove Drive, Buffalo Grove
Lease
Hearthware Home Products
253,141
1755 Butterfield Road, Libertyville
Lease
Woodland Foods
161,816
3818 W. Grandville Avenue, Gurnee
Lease
WHAT TO EXPECT IN 2015
Recent land plays in neighboring Southeast Wisconsin could drive more tenants out of Illinois.
The three speculative projects under construction will attract the current deals in the market making
second generation space less desirable in 2015.
High-end manufacturing growth will spur build-to-suit activity in Lake County next year.
P. 11
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
North Suburbs
VACANCY AND SUPPLY
North Suburb’s vacancy rate dropped to an extremely tight 5.36 percent in 2014, down from the yearend 2013 mark of 6.48 percent. An uptick in leasing and sale activity contributed to the decline in in
North Suburbs’ vacancy rate.
The last time North Suburbs vacancy rate fell below 6.0 percent was in the third quarter of 2001
when a rate of 4.87 percent was reported.
The available supply at the end of 2014 measured 3.0 million square feet, an 18.4-percent decrease
from the 3.7 million square feet registered vacant in 2013.
MARKET INDICATORS
There are no vacant options above 200,000 square feet in the North Suburbs, which has been the
case for the past 24 months.
North Suburbs
2013
2014
VACANCY 6.48%
CONSTRUCTION ACTIVITY
Speculative development was reintroduced to the North Suburbs market in 2014. Panattoni
Development Company completed a 150,100-square-foot warehouse/distribution project at North
Shore Industrial Center at 7711 Gross Point Road, Skokie. This represents the first speculative
development to occur in the North Suburbs since the fourth quarter of 2007 when a 234,700-squarefoot facility was constructed at 6300 W. Howard Street in Niles.
5.36%
ABSORPTION -182,913
-202,347
RENTAL RATE $4.71
$5.18
One large scale build-to-suit is underway in Niles. FedEx is building a 306,400-square-foot
distribution center on a 34-acre site formerly home to WW Grainger. The building is scheduled for
completion in the summer of 2015.
Three buildings were demolished in 2014, eliminating 906,600 square feet from North Suburbs’
occupied supply. One of these sites is being developed for the FedEx build-to-suit project.
HISTORICAL TRENDS
1.5
12%
1.0
10%
0.5
0.0
8%
-0.5
6%
-1.0
-1.5
4%
-2.0
2%
-2.5
-3.0
2008
2009
2010
2011
2012
2013
2014
0%
Vacancy Rate
Square Feet Absorbed (Millions)
Absorption and Vacancy Rates
LEASING AND SALE ACTIVITY
The North Suburbs’ leasing activity reached 1.1 million square feet in 2014, surpassing 2013 results
by 70.8 percent. The last time North Suburbs year-end leasing volume exceeded 1.0 million square
feet was in 2011 when 1.1 million square feet of lease transactions were reported.
The bulk of 2014 leasing transactions occurred in spaces between 10,000 square feet and 30,000
square feet, as 28 transactions totaling 453,900 square feet or 42 percent of all 2014 leasing volume
occurred in that size range.
Four sale transactions over 100,000 square feet drove total year-end 2014 sale volume to 1.2 million
square feet, marking the third consecutive year that sale activity has surpassed leasing activity.
However, this is an 11.2-percent decline from the 2013 cumulative total of 1.9 million square feet.
NET ABSORPTION
Despite heighted leasing activity in the North Suburbs, net absorption measured a disappointing
negative 202,300 square feet. The elimination of 906,600 square feet of industrial inventory
negatively impacted the results.
TOP 2014 TRANSACTIONS
TENANT/BUYER
SIZE (SF)
ADDRESS
TYPE
Fresh Farms
302,379
5990 W. Touhy Avenue, Niles
Sale
Con-Tech Lighting
188,901
725 Landwehr Road, Northbrook
Lease
Scannell Properties
149,995
1234 Peterson Drive, Wheeling
Sale
WHAT TO EXPECT IN 2015
The limited supply of Class B product should drive additional speculative development in 2015,
however pricing could be an issue.
Rents for Class B product will rise due to reduced supply.
Buyers will be active but should expect to see price increases in 2015 due to very limited supply.
P. 12
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
Northwest Suburbs
VACANCY AND SUPPLY
The Northwest Suburbs’ vacancy rate was negatively influenced by an elevated amount of space
returning to the market. The year-end vacancy rate jumped to 8.44 percent, up 106 basis points from
the 2013 year-end result of 7.38 percent.
Vacant supply rose in each quarter in the Northwest Suburbs in 2014, ending the year at 2.8 million
square feet. This represents a 353,000-square-foot increase from the 2.5 million square feet that
were available one year ago.
CONSTRUCTION ACTIVITY
Two new construction projects were completed in the first quarter at the Brewster Creek Business
Park in Bartlett. A 90,203-square-foot speculative multi-tenant facility was completed on Hecht Drive
while RhinoDox completed a 66,600-square-foot manufacturing plant at 1200 Humbract Circle.
However, a 260,000-square-foot manufacturing facility at 1309 E. Algonquin Road in Schaumburg
was demolished in the third quarter.
MARKET INDICATORS
Northwest Suburbs
2013
2014
VACANCY 7.38%
8.44%
ABSORPTION 721,900
-466,869
RENTAL RATE $4.55
$5.13
Sunstar Americas is close to finishing its 302,000-square-foot manufacturing plant on an 80.0-acre
site in Schaumburg.
LEASING AND SALE ACTIVITY
Leasing activity in the Northwest Suburbs fell by 10.6 percent in 2014. After witnessing total volume
of 836,300 square feet in 2013, transaction volume in 2014 totaled 747,400 square feet.
Creative Works’ 400,000-square-foot lease in Bartlett represented 53.6 percent of all 2014 leasing
volume in the Northwest Suburbs.
The Northwest Suburbs witnessed a marginal increase in sale activity in 2014 with 274,400 square
feet of transactions were completed. Transaction volume in 2013 totaled 253,100 square feet.
HISTORICAL TRENDS
12%
0.9
0.6
9%
0.3
0.0
6%
-0.3
-0.6
3%
-0.9
-1.2
-1.5
2008
2009
2010
2011
2012
2013
2014
0%
Vacancy Rate
Square Feet Absorbed (Millions)
Absorption and Vacancy Rates
NET ABSORPTION
Weaker user demand resulted in year-end net absorption in Northwest Suburbs of negative 466,900
square feet, a dramatic decline from the positive 721,900 square feet of net absorption registered in
2013.
TOP 2014 TRANSACTIONS
TENANT/BUYER
SIZE (SF)
ADDRESS
TYPE
Creative Works
400,000
1350 Munger Road, Bartlett
Lease
Stonemont Financial Group
260,000
1309 E Algonquin Road, Schaumburg
Sale
Hi-Grade Welding
76,867
140 Commerce Drive, Schaumburg
Lease
WHAT TO EXPECT IN 2015
Lease rates will stay flat in the Northwest market in 2015.
Sale prices will increase based on limited availability.
Alternative uses like health care and special education are anticipated to drive absorption in 2015.
P. 13
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
O’Hare
VACANCY AND SUPPLY
The O’Hare vacancy rate fell 240 basis points in 2014 to 5.98 percent, down from the 2013 rate of
8.38 percent. This represents the largest year-over-year decline of any Chicago-area market in 2014.
The last time that the O’Hare market’s vacancy rate fell below 6.0 percent was in the first quarter of
2001, when a rate of 5.32 percent was reported.
O’Hare’s available supply declined sharply in 2014. After reaching 11.7 million square feet at the end
of 2013, available supply measured 8.4 million square feet at year-end 2014. Users looking for big
box space in the O’Hare market will have just two options above 200,000 square feet and zero above
250,000 square feet.
MARKET INDICATORS
CONSTRUCTION ACTIVITY
Two buildings were delivered to the O’Hare market in 2014 measuring 630,500 square feet which
was 21.3 percent lower than the 800,800 square feet completed in 2013. The largest development
was for DHL, which moved into a 491,000-square-foot build-to-suit lease at 895 Upper Express Drive
in Chicago. Additionally, Brennan Investment Group, LLC built a 139,400-square-foot speculative
warehouse/distribution facility at 1780 Birchwood Avenue in Des Plaines.
O’Hare
2013
2014
VACANCY 8.38%
5.98%
ABSORPTION 1,343,464
3,253,708
RENTAL RATE $4.74
$5.14
Two construction projects totaling 65,800 square feet commenced construction in Des Plaines.
Liberty Property Trust broke ground on a 235,800-square-foot speculative warehouse/distribution
facility at 333 Howard Avenue while LSG Sky Chefs contracted IAC to build a 130,000-square-foot
food processing facility at 200 Touhy Avenue.
The O’Hare market’s inventory base was reduced by 289,900 square feet as 333 Howard Avenue in
Des Plaines, formerly occupied by Ciba Vision, was demolished. Liberty Property Trust is expected
to begin construction immediately on its planned speculative development.
HISTORICAL TRENDS
4.0
14%
3.0
12%
2.0
10%
1.0
8%
0.0
6%
-1.0
4%
-2.0
2%
-3.0
-4.0
2008
2009
2010
2011
2012
2013
2014
0%
Vacancy Rate
Square Feet Absorbed (Millions)
Absorption and Vacancy Rates
LEASING AND SALE ACTIVITY
Leasing activity in the O’Hare market measured 5.7 million square feet, a 13.3-percent increase over
the 5.1 million square feet leased in 2013 and the metropolitan Chicago area’s highest year-over-year
volume increase in 2014.
Tenant demand in 2014 was driven by users in the 100,000- to 200,000-square-foot size range as
nine such transactions totaling 1.3 million square feet were recorded, compared to just four transactions
totaling 437,000 square feet in 2013.
O’Hare’s sale volume totaled 1.0 million square feet, a 48.3-percent decrease from the 2013 total sale
activity of 1.9 million square feet. The largest sale occurred when House of Spices purchased a
128,600-square-foot facility at 2121 Touhy Avenue in Elk Grove Village.
NET ABSORPTION
Strong tenant demand resulted in O’Hare market’s year-end net absorption of positive 3.3 million
square feet, far eclipsing the 2013 outcome of 1.3 million square feet and the highest in the O’hare
market it the past 10 years.
TOP 2014 TRANSACTIONS
TENANT/BUYER
SIZE (SF)
ADDRESS
TYPE
Wholesale Interiors
306,590
1010 Foster Avenue, Bensenville
Lease
BMAK Auctions, LLC
234,000
777 Mark Street, Wood Dale
Lease
Ceva Logistics
208,406
1925 Busse Road, Elk Grove Village
Lease
WHAT TO EXPECT IN 2015
Sales will be less prevalent in 2015 due to the limited supply.
Developer interest for redevelopment opportunities will remain strong, however the current supply of
projects already in process will draw developer caution.
Big box users will have to look elsewhere for blocks of space greater than 250,000 square feet.
P. 14
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
South Suburbs
VACANCY AND SUPPLY
The South Suburbs’ vacancy rate significantly improved from the 2013 rate of 9.66 percent to the
year-end 2014 rate of 7.86 percent. This represents a drop of 180 basis points.
Vacant space at the end of 2014 totaled 7.9 million square feet, falling an astounding 1.9 million square
feet from the 9.8 million square feet vacant reported at the end of 2013. This was primarily attributed
to the fact that only 2.8 million square feet of space returned to the market in 2014 versus 4.5 million
square feet in 2013.
CONSTRUCTION ACTIVITY
Two build-to-suit construction projects were completed in 2014 adding 76,000 square feet to the
South Suburbs’ inventory base. Plastics Color Corporation built a 40,000-square-foot manufacturing
facility at 14201 Paxton in Calumet City and Intermodal Maintenance Group built a 36,000-squarefoot garage building at 5444 W. 73rd Street in Bedford Park.
MARKET INDICATORS
South Suburbs
2013
2014
9.66%
7.86%
ABSORPTION
817,623
1,967,585
RENTAL RATE
$4.20
$3.73
VACANCY
7035 W. 65th Street, a 437,900-square-foot manufacturing facility in Bedford Park, was demolished
in the third quarter.
Three buildings commenced construction in the South Suburbs that will eventually add 255,000
square feet to South Suburbs’ inventory. The largest development was a 150,000-square-foot
freezer/cooler facility at 7035 W. 65th Street in Bedford Park for Professional Freezer Services.
LEASING AND SALE ACTIVITY
2014 leasing volume totaled 2.9 million square feet, a 25.8-percent increase from the 2013 total of
2.3 million square feet. This represents a new all-time high for the South Suburbs.
Sale activity in the South Suburbs measured 2.8 million square feet in 2014, an amazing 38.3-percent
rise from the 2013 year-end total of 2.0 million square feet. The largest sale occurred when
Professional Freezing Services purchased a 437,910-square-foot manufacturing facility at 7035 W.
65th Street in Bedford Park.
HISTORICAL TRENDS
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
-2.5
-3.0
14%
12%
10%
8%
6%
4%
2%
2008
2009
2010
2011
2012
2013
2014
0%
Vacancy Rate
Square Feet Absorbed (Millions)
Absorption and Vacancy Rates
ABSORPTION
The South Suburbs achieved positive net absorption for the third consecutive year, reaching 2.0
million square feet in 2014. This was more than double the year-end 2013 volume of 817,623 square
feet.
TOP 2014 TRANSACTIONS
TENANT/BUYER
SIZE (SF)
ADDRESS
TYPE
Professional Freezing Services
437,910
7035 W. 65th Street, Bedford Park
Sale
The Crown Group
330,000
6901-39 W. 65th Street, Bedford Park
Sale
Permasteelisa
161,740
7400-20 W. Richards Road, Bridgeview
Lease
WHAT TO EXPECT IN 2015
Tenant demand will be steady but not to the levels witnessed in 2014.
Sale prices will increase in 2015 caused by limited supply.
Rent growth is possible if tenant demand is sustained.
P. 15
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
Southeast Wisconsin
VACANCY AND SUPPLY
Southeast Wisconsin’s vacant industrial supply measured 1.7 million square feet, falling below 2.0
million square feet for the first time since the third quarter 2006. In comparison, 2013 year-end
volume totaled 2.4 million square feet – a remarkable 700,000-square-foot decline.
The industrial vacancy rate in the Southeast Wisconsin market measured 3.46 percent at year-end
2014, a substantial 144-basis-point drop from the 4.9 percent vacant recorded in 2013.
CONSTRUCTION ACTIVITY
Southeast Wisconsin witnessed two completed build-to-suit projects and two building expansions in
2014 which added 1.6 million square feet to the total inventory base.
MARKET INDICATORS
Southeast Wisconsin
2013
In the second quarter, a 432,000-square-foot build-to-suit project in Sturtevant was completed for
United Natural Foods and in the third quarter one build-to-suit and two building expansions were
completed. KTR Capital Partners completed a 500,000-square-foot warehouse/distribution facility
for Amazon.com in Kenosha; Rust-Oleum built a 250,000-square-foot warehouse addition also in
Kenosha, while Kerry Ingredients & Flavours added 76,320 square feet to its manufacturing plant in
Sturtevant.
2014
VACANCY 4.90%
3.46%
ABSORPTION 1,112,595
2,018,320
RENTAL RATE $4.05
$3.53
An additional six new construction projects with a combined inventory of 3.0 million square feet have
broken ground in the Southeast Wisconsin market. The largest of these developments is by Amazon.
com who has hired KTR Capital Partners to build a 1.1 million-square-foot build-to-suit property at
Kenosha Enterprise Park that the e-retailer will lease. The building is set for completion first quarter
of 2015.
LEASING AND SALE ACTIVITY
Southeast Wisconsin leasing activity totaled 1.1 million square feet in 2014, a 15.4-percent drop from
the 2013 year-end total of 1.3 million square feet.
HISTORICAL TRENDS
3.0
14%
2.5
12%
2.0
10%
1.5
8%
1.0
6%
0.5
4%
0.0
2%
-0.5
0%
2008
2009
2010
2011
2012
2013
2014
Amazon.com’s 500,000-square-foot build-to-suit lease at Kenosha Enterprise Park represented
almost 50 percent of all 2014 leasing volume in the Southeast Wisconsin.
Vacancy Rate
Square Feet Absorbed (Millions)
Absorption and Vacancy Rates
Sale activity was impressive in the Southeast Wisconsin market in 2014 as 764,000 square feet of
transactions were completed. This more than tripled the 166,995 square feet sold in 2013.
ABSORPTION
Swift user demand resulted in 2014 resulted in year-end net absorption of 2.0 million square feet, an
impressive 900,000-square-foot improvement from the 1.1 million square feet posted in 2013.
TOP 2014 TRANSACTIONS
TENANT/BUYER
SIZE (SF)
ADDRESS
TYPE
Amazon.Com
500,000
SWC Highway 142 and I-94, Kenosha
Lease
United Natural Foods
432,000
Highway H and Hwy 11, Sturtevant
Sale
FNA IP Holdings
176,433
7152 72nd Ave, Pleasant Prairie
Lease
WHAT TO EXPECT IN 2015
Developers will continue to exercise caution in regards to building speculative product which will hold
down vacancies in 2015.
Rental growth will continue for well-located modern functional space.
P. 16
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
FOURTH QUARTER 2014 MARKET STATISTICS
Total
Inventory
Sq. Ft
Sub-Market
New
Supply
Came
on
Market
Vacancy
Rate
Current Qtr
Vacancy
Rate
Prior Qtr
Net Absorption
Current Qtr-SF
Net Absorption
YTD-SF
Leased SF
Current Qtr.
Sold SF
Current Qtr.
Under
Construction
Current Qtr.
Ave Annual
Asking
Rate/SF
Ave Asking
Sales
Price/SF
Central DuPage County
84,503,494
0
793,235
7.35%
8.36%
845,944
170,709
703,418
781,604
-
$5.21
$62.55
Chicago North
89,493,780
-350,000
801,225
6.86%
6.80%
(412,443)
(449,188)
166,429
307,351
0
$8.37
$49.10
Chicago South
84,013,865
-5,109
1,092,313
10.40%
9.89%
(499,080)
359,395
363,133
253,394
162,000
$4.33
$26.30
DeKalb County
19,981,307
0
146,325
3.79%
4.40%
(39,937)
(259,733)
-
15,988
0
$3.29
$39.28
Elgin I-90 Corridor
29,606,392
40,000
505,739
11.75%
13.08%
421,757
753,238
451,786
447,400
1,077,278
$5.14
$54.65
Far South Suburbs
45,378,632
0
0
4.81%
5.33%
209,000
386,455
209,000
0
46,500
$3.59
$36.71
Fox Valley
90,988,100
552,775
608,519
6.83%
7.21%
834,169
1,336,341
672,530
530,214
656,078
$4.40
$48.23
I-290 North
75,829,512
-63,384
882,629
8.07%
8.68%
118,070
1,521,890
555,897
433,527
0
$4.21
$32.64
I-290 South
46,116,575
662,700
1,159,151
6.78%
5.10%
(155,022)
1,285,280
315,049
16,380
226,196
$4.50
$28.69
I-39 Corridor
17,919,915
0
0
2.91%
3.08%
30,960
162,026
-
30,960
0
$2.29
$18.03
I-55 Corridor
77,624,123
991,726
2,126,314
10.86%
9.04%
(569,703)
1,736,307
432,641
112,244
2,219,383
$5.07
$69.17
I-80/Joliet Corridor
73,328,562
788,526
1,035,170
9.27%
9.44%
838,621
2,738,204
971,417
101,260
2,343,915
$3.47
$54.58
Lake County
70,355,305
0
427,275
10.00%
9.96%
(43,657)
(72,140)
213,250
24,247
860,488
$5.19
$52.53
McHenry County
30,099,848
0
187,552
14.52%
15.00%
143,368
463,627
197,286
12,360
20,000
$4.04
$38.02
North Suburbs
56,226,169
150,070
574,943
5.36%
5.43%
149,402
(202,347)
256,496
302,379
306,448
$5.18
$56.49
Northwest Suburbs
34,058,583
0
559,040
8.44%
8.45%
(9,803)
(466,869)
485,111
48,220
302,000
$5.13
$60.87
O’Hare
139,589,258
340,532
965,034
5.98%
7.00%
1,726,975
3,253,708
1,944,379
376,430
365,781
$5.14
$56.43
South Suburbs
101,532,085
-691,910
279,516
7.86%
8.50%
1,160,760
1,967,585
1,603,647
1,674,672
255,000
$3.73
$30.17
Metro Chicago Total
1,166,645,505
2,415,926
12,143,980
7.91%
8.10%
4,749,381
14,684,488
9,541,469
5,468,630
8,841,067
$4.59
$46.13
Northwest Indiana
54,500,906
0
29,556
6.16%
7.16%
547,194
664,981
232,395
134,355
318,120
$3.52
$32.40
Rockford Area
52,095,970
80,000
25,000
9.22%
9.89%
422,010
934,022
268,921
26,213
435,000
$2.76
$17.81
Southeastern Wisconsin
49,977,613
308,433
488,569
3.46%
3.74%
423,321
2,018,320
197,195
73,500
3,014,738
$3.53
$31.46
GRAND TOTAL
1,323,219,994
2,804,359
12,687,105
7.73%
7.97%
6,141,906
18,301,811
10,239,980
5,702,698
12,608,925
$4.41
$43.56
QUARTERLY COMPARISON AND TOTALS
Q4-14
1,323,219,994
2,804,359
12,687,105
7.73%
7.97%
6,141,906
18,301,811
10,239,980
5,702,698
12,608,925
$4.41
$43.56
Q3-14
1,320,053,725
2,102,509
9,699,511
7.97%
8.43%
7,802,102
12,159,905
9,913,838
5,530,040
15,613,944
$4.31
$43.24
Q2-14
1,317,951,216
1,393,343
11,847,098
8.43%
8.53%
1,922,549
4,357,803
9,021,292
5,194,399
12,955,527
$4.19
$44.41
Q1-14
1,316,557,873
808,987
13,752,791
8.53%
8.70%
2,435,254
2,435,254
8,510,129
4,163,516
9,867,130
$4.18
$44.04
Q4-13
1,315,748,886
2,698,924
14,261,931
8.70%
8.80%
3,153,323
12,760,948
6,867,660
6,719,920
9,800,982
$4.11
$43.14
The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability. As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports.
P. 17
| COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q4 2014 | CHICAGO | INDUSTRIAL
CHICAGO INDUSTRIAL SUBMARKET MAP
485 offices in
63 countries on
6 continents
SOUTHEAST WISCONSIN
United States: 146
Canada: 44
Asia: 38
Australia/New Zealand: 148
Latin Ameria: 25
EMEA: 84
LAKE COUNTY
McHENRY COUNTY
83
45
Lake Michigan
68
12
14
41
21
62
94
59
53
90
O'HARE
294
58
www.twitter.com/ColliersChicago
O'Hare Expy.
inElg
20
31
20
41
90
190
CHICAGO
NORTH
290
CENTRAL
DuPAGE
64
DeKALB
COUNTY
15,800 professionals
NORTH
SUBURBS/COOK
Lake Cook Rd.
72
billion square feet under management
94
22
NORTHWEST
SUBURBS
> 1.46
60
83
ELGIN I-90
billion in annual revenue
> Over
45
12
> $2.1
290
94
I-290 NORTH
53
355
90
I-88 / FOX VALLEY
I-290 SOUTH
83
59
290
CHICAGO
SOUTH
43
45
88
ay
East-West Tollw
88
www.colliers.com/chicago
64
90
34
294
94
55
34
50
43
53
355
I-55 CORRIDOR
94
90
55
12
20
SOUTH SUBURBS
57
94
53
171
7
50
45
I-80 / JOLIET CORRIDOR
294
80
80
FAR SOUTH SUBURBS
NORTH
0 1
5
10 miles
NORTHWEST
INDIANA
RESEARCHER:
George A. Cutro
Vice President
Research Services
Colliers International Chicago
6250 N. River Road, Suite 11-100
Rosemont, IL 60018
TEL +1 847 698 8295
[email protected]
55
Accelerating success.
www.colliers.com/marketname