“There is currently a bias toward infill projects,” Regnery says, which total more than half of the projects underway, the greatest amount of infill development the big box market has witnessed during the current cycle.

A healthy amount of leasing activity is happening across most the metro area. The large leases in the second quarter, Regnery says, “were all over the map,” including Elgin, North Lake County, Aurora and Bolingbrook.

“The only outlier is the I-80 submarket,” Regnery says. Its vacancy rate jumped from 10.38% to 13.6% in just the last quarter. And developers completed just over two million square feet of new supply even though leasing activity and net absorption was flat.

“What sets I-80 apart is that, unlike other submarkets, it competes with other markets throughout the Greater Midwest,” he says. Tenants here generally establish regional or national distribution operations, and that means going to other hubs like Indianapolis, Memphis, Louisville or Southeast WI is usually an option. “On the coasts you don't have that situation,” as distributors in the West will choose the Inland Empire, and in the Northeast the choices are mostly limited to NJ or PA's Lehigh Valley.

However, Regnery believes the vacancies in the I-80 area are temporary. The dense population in Chicago, and the need to serve it, will eventually bring in tenants to fill those empty spaces.

He also expects Southeast WI to become the focus of a lot of attention. There was only about 63,000 square feet of leasing activity in the second quarter, but with the coming of Foxconn, many firms are making plans to begin projects here, including a new one million square foot spec project. “We are seeing tremendous new activity and demand. It's a real bright spot.”