CHICAGO—The drop in the Chicago region's vacancy rate among industrial properties, and the subsequent boost in rental rates, has touched off a wave of speculative development, and many of these buildings are now hitting the market. Ryan Companies US Inc., for example, has completed two speculative buildings, both in the Elgin submarket, just in the last 60 days.
The most recently completed building is a 108,000-square-foot building at 2725 Alft Ln. in Ryan's Randall Crossings Business Park. This follows the completion of a 225,000-square-foot building in the same park at 2750 Alft Lane.
It's an auspicious time to bring such properties to the market. According to Cushman & Wakefield's just–published MarketBeat report, the overall vacancy rate has improved for the 14th consecutive quarter, sinking to just 6.6% at the end of the third quarter, down 1.2% from this time last year, which helped to push up rental rates to pre-recession levels. Furthermore, the total square-feet leased for the metro region is 27.7-million-square-feet year-to-date, an 8.0% increase year-over-year. The total puts Chicago on track to surpass in 2014 the 30.9-million-square-feet leased in 2013.
Randall Crossings Business Park is a master-planned business park which provides a range of industrial uses from general industrial and manufacturing to distribution and office space. The Naperville, IL-based Ryan has owned the 70-acre park since 2005.
A private investor will serve as landlord of the 2725 building. At the start of construction, two tenants agreed to lease the entire building. It sits on a 7.31-acre site, was designed as a single-loaded, multi-tenant facility with 40 foot-by-50- foot typical bay sizes, a 60-foot speed bay, 30-foot clear ceiling height, and office space to suit. The park now has four buildings with a total of about 755,000-square-feet of occupied space.
Ryan officials say the strength of the regional industrial market, and specifically the level of activity around Elgin and the I-90 corridor, has given them the confidence to make plans for additional buildings at the park. They anticipate beginning construction of one building with 85,000-square-feet and another with 246,000-square-feet sometime in the spring.
John Dunneback, Ryan's director of development, says “activity in Elgin along the I-90 Corridor has been very good. Looking at the deal activity pending for 2015, the market will see even more positive absorption than it experienced in 2014.”
“Leasing volume in the Elgin I-90 Corridor climbed to a remarkable 1.3-million-square-feet in the third quarter, largely due to the Weber-Stephen Products Company's 757,100-square-foot build-to-suit lease,” according to Colliers' report on the third quarter. “This was almost three times greater than the 448,000-square-feet leased in the prior quarter. During the same time period one year ago, only 194,400-square-feet of lease transactions were completed.”
Ken Franzese and John Cassidy, principals with Lee & Associates, are marketing the business park.
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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.
