Chicago's Inland Port Set for Major Expansion

A new 751K spec at CenterPoint’s complex in Joliet, IL.

CHICAGO—E-commerce has become the engine driving the industrial real estate market, and as the nation’s second busiest inland port, the Chicago area stands to benefit tremendously over the next few years. The availability rate recently dropped to just 6.6%, the lowest among 12 major inland ports recently analyzed by a research team from CBRE Group Inc . As reported in GlobeSt.com, the large retailers, distributors and logistics firms that flock to these 12 ports have driven inventory growth at twice the national rate. But even this rate of expansion may not succeed in satisfying the robust demand in the Chicago region. “There are roughly ten users in the market looking for buildings with between 500,000 square feet and around one million square feet,” Traci Buckingham Payette , senior vice president with CBRE, tells GlobeSt.com. However, “there is only one building available that has 500,000 square feet,” and developers only have two others of that size underway. Another four or five large buildings have reached the planning stages, she adds, but even if developers break ground on these in the fall, the gap between supply and demand will remain. “I think we will continue to see that gap for at least 24 months.” CBRE defines Inland ports as having a Class I rail connection to a major seaport and other access to significant transportation infrastructure, including rail, highway, waterway or a combination of the three. And the Chicago region has the CenterPoint Intermodal Center , North America’s largest intermodal terminal, which sits on 6,500 acres in Joliet and Elwood, IL, about 40 miles southwest of Chicago. Since it opened in 2002, it has absorbed more than one million square feet annually and now houses 15 million square feet of distribution space. The intermodal serves the Union Pacific and BNSF rail hubs, which have direct connections to seaports of Los Angeles and Long Beach, CA. Payette says that the rise of e-commerce has consumers constantly shifting the way they shop, making “it hard to look into the crystal ball and predict what will happen.” Still, those Class 1 rail lines make it a certainty that the Chicago region will remain a key marketplace, and she expects that between five and seven million square feet of new space will begin springing up around the intermodal terminal in the next 12 months, primarily buildings with more than 700,000 square feet. And earlier this month, IL Gov. Bruce Rauner and CenterPoint Properties agreed that the company will build a toll bridge linking its intermodal facility to I-80, a move that Payette says will encourage the construction of even more warehouse and distribution facilities in the surrounding area. “That will have a significant impact.”