CHICAGO—Strong user demand for the city's industrial properties is absorbing the city's vacant spaces and giving a lift to rental rates, and buyers have moved in, even snapping up properties that have remained empty for years. Industrial brokers Larry Goldwasser and Colin Green of Cushman & Wakefield in Chicago have just helped complete two industrial sales transactions, totaling more than 220,000-square-feet, of properties that had been vacant for several years. And both expect to see more of these deals throughout 2015.
“Coming out of the economic downturn, buyer demand for industrial product was low,” says associate director Green. “2014 was a turnaround year and so far into 2015 we're seeing an aggressive increase in demand, so properties are trading more quickly.”
The C&W team represented Balton Corp., a Chicago-based wholesale distributor, in the purchase of 1001 E. 99th St., a 102,000-square-foot industrial property owned by Structured Development. The South Side property was vacant for four years. Goldwasser and Green also represented the seller of 5801 W. Dickens St., a 127,000-square-foot industrial property on the Northwest Side. This property also sat vacant for several years, but C&W secured a contract within twelve months of listing it. Steve Kohn of Colliers International represented the buyer.
According to Cook County property records, Balton paid $2.4 million. And Chicago-based Miller Bay LLC bought the Dickens property for $800,000 from Banco Popular NA, which had acquired it through a foreclosure process.
Balton will use the property as a center for their operations, a C&W representative tells GlobeSt.com. And 5801 W. Dickens was purchased as an investment with plans to rehab and lease out the space.
“The search for high quality industrial space is competitive because vacancy rates are the lowest they have been since 2009,” says Green. “Users are hungry to purchase available product because there are steady returns to be made, and owner/users are doing the same.”
Due to strong user demand, 2014 sales volume in each Chicago submarket exceeded 1.0-million-square-feet for the second consecutive year, according to a recent report from Colliers. Investors bought 1.9-million-square feet in the Chicago North market, which surpassed the 2013 level by 48.9%. 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.
"The Chicago South vacancy rate experienced a sharp decline of 77 bps from the 2013 level of 11.17% to 10.40% in 2014," Colliers also found, "while Chicago North 2014 vacancy rate of 6.86% closely matched the 6.87% posted one year prior."
”The timing of these transactions couldn't be better," adds Goldwasser. "Most of the larger available spaces in the city have been or are in the process of being absorbed, making way for some of our new industrial developments that are coming out of the ground. It's an exciting time.”
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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.
