CHICAGO—The industrial markets in the city of Chicago and its immediate suburbs always attract notice. But just over the state's northern border, and still just within the city's metropolitan area, residents in Wisconsin towns like Kenosha and Pleasant Prairie have seen a relatively quiet boom take hold among the 47,939,500-square-feet of industrial space in their immediate area.
“It's the hottest market in the area,” says Whit Heitman, a principal with Chicago-based Paine/Wetzel/TCN Worldwide. He recently helped complete a 314,249-square-foot lease to Integrated Merchandising Systems in a 626,784-square-foot industrial facility located at 10100 58th Place in Kenosha. The original owner built it on spec about five years ago, but was unable to find tenants, and, like too many buildings in the neighborhood, the vast structure was left vacant. But with the new lease, IMS now entirely occupies 10100 58th Place, and fully-occupied buildings have become common in Southeast Wisconsin.
“There's nothing, zero, available now,” Heitman says, speaking of modern industrial spaces with over 300,000-square-feet in southeast Wisconsin. “It's a really tight market.”
Data just published by Colliers International illustrates just how big a jolt the submarket's economy has received. The vacancy rate has dropped for eight consecutive quarters. Furthermore, “the second quarter vacancy rate of 5.34% fell over one-half of a percentage point from the first quarter mark of 5.93%. The decline was more dramatic compared to one year ago when Southeast Wisconsin's vacancy rate was 6.62 – a remarkable 128 bps decline.” The submarket now has the third-lowest vacancy rate in the Chicago area.
However, all these companies squeezing into the shrinking amount of vacant space has not sparked a construction boom. Although Ta Chen International has nearly finished a 470,000-square-foot BTS in Pleasant Prairie, only one project, with a total of 208,000-square-feet, was completed during the first quarter, and nothing was delivered in the second. “Speculative development remains rare in Southeast Wisconsin,” Colliers notes.
But Heitman has become optimistic on that score. “There's talk of building spec [buildings] now. We're seeing a lot of companies that need space that are looking for land up there.”
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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.
