CHICAGO—New developments for industrial users have begun rising in the northwest suburbs, and Ed Lowenbaum of Lowenbaum REP, a Chicago-based commercial real estate firm, says it's because developers out there are “starting to feel there's more demand. And we're telling our clients that there are opportunities.”
The vacancy rate for the northwestern suburban industrial market has sunk in the past year. According to data from Lowenbaum REP, the area now has 28,334,347-square-feet of space, of which 7.5% is vacant, down from over 9.5% in the first quarter of 2012.
Lowenbaum's firm recently represented Echelon Design, Inc., and Hendrick Metal Products in lease negotiations for industrial space in the Elgin area. Echelon will soon move into a 50,193-square-foot unit in the first building constructed at Prairie Business Park, a new development by Interstate Partners, LLC currently going up in suburban Gilberts. Tenants like Echelon, he says, have opportunities because while demand has increased, most “companies in the area are pretty well right-sized and just about everybody is still very cautious about expansion.” This has given companies actively developing industrial products an incentive to offer good leasing terms.
Echelon, a trade show producer, will move from a 28,000-square-foot space and take advantage of Prairie Business Park's 30-foot clear ceiling height. “They stack a lot of exhibits in their warehouse, so the increased clear height helps them significantly. Potentially, it's a 20% increase in your floor space without having to pay for it.”
Furthermore, securing space in a new building gives Echelon a better image, he adds. And although the companies have not disclosed the exact terms of the deal, “[Interstate] has been very cost competitive. We have found it very attractive in terms of rates and very competitive with existing second-generation space."
Throughout the area, "tenants can get a pretty competitive deal in a new building if they commit to a 5 to-10-year deal.” Echelon signed for seven years. For shorter deals, second-generation space still offers better value.
Interstate broke ground on this 203,217-square-foot building earlier this year, Lowenbaum says, once they had Echelon and a couple of other tenants ready to occupy much of the space. Eventually, they plan to have four or five large industrial buildings in the 40-acre park, which lies just beyond Elgin's 360-acre Northwest Corporate Park. He expects Interstate will start on the next building “as soon as they get a nibble on it.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
