Industrial Midwest

I-80 market sees significant decrease in vacancy

| markt

Class A vacancy experienced a dramatic decrease in the I-80 corridor last year, signaling that the market may have hit bottom.

Class A vacancy experienced a dramatic decrease in the I-80 corridor last year, signaling that the market may have hit bottom.

According to a market study from Champion Realty Advisors, the I-80 submarket Class A vacancy declined from 26.94 percent to 20.07 percent in 2010. Approximately 4.25 million square feet of leases were completed, which doubled the deal volume of 2009.

The study concludes that the market has hit bottom and it should continue to rebound into 2011.

“There are two big factors as to why the market performed better in 2010,” says J.D. Salazar, managing principal at Champion. “We had our second year of no new construction and 2010 saw double the amount of demand from 2009.”

The largest lease in the corridor was completed by Northern Builders with its 860,100-square-foot lease to Navistar in the Cherry Hill Business Park in New Lennox. The move took a 520,000-square-foot spec building off the market and Navistar will build out the remaining square-footage this year.

The largest transaction went to an agreement between Clorox and USAA for an approximate 1,350,000-square-foot build-to-suit in USAA's Commerce Business Center in University Park.

Despite the availability of large blocks of space in the market, both transactions involved new construction.

There are presently four buildings that can deliver 800,000 square feet of distribution space, which is identical to the number available in 2010. There are 11 buildings available that can deliver 500,000 square feet of contiguous distribution space, which is 1 more than in 2010. The largest available space is a 965,183-square-foot spec building in Minooka owned by Opus Group.

“Clorox had a very specific interior footprint and they were focused on a build-to-suit from the beginning,” says Salazar. “Navistar’s move had to do more with location and logistics.”

Salazar expects leasing activity to continue its upward trend. His firm is tracking 3 million-square-feet of users that are currently searching in the market place.

“We are marketing a 347,000-square-foot, ProLogis-owned facility in Romeoville and tours doubled in January when compared to 2010 numbers,” he says.

If a large number of these potential tenants start making deals in the marketplace, Salazar believes it is feasible that owners could see rent relief in the second half of the year.

“I think we are at the bottom on rents,” says Salazar. “Overall concessions are at the bottom. We might see rents rebound in the third or fourth quarter.”

Pending transactions:

  • Home Depot in Joliet (650,000 square feet)
  • Creative Converting (operated by Exel) in Joliet (450,000 square feet)
  • Advertising Resources, Inc. in Tinley Park (350,000 square feet)
Largest available spaces:
  • Minooka Ridge #2 at 801 MidPoint Road, Minooka 965,183 square feet available, owner-Opus
  • 18801 Oak Park Avenue, Tinley Park 915,643 square feet available, owner-- First Industrial
  • 501 Internationale Parkway, Minooka 849,691 square feet available, owner--ProLogis
  • CenterPont Import DC at20901 Walter Strawn Dr. Elwood 799,294 square feet available, owner-- CenterPoint Properties