CHICAGO INDUSTRIAL OVERVIEW

Transcription

1 CHICAGO INDUSTRIAL OVERVIEW FIRST QUARTER 2015 Vacancy Rate Net Absorption Asking Rents 7.93% 2,703,658 SF VACANCY Vacancy rates continued to improve across the Greater land industrial market in At the conclusion of the fourth quarter, the Greater Metro market reported a decrease in vacancy rate to 7.98%. The total vacancy rate of all markets including Southeast Wisconsin and Northwest Indiana clocked in at 8.01%. This represents an improvement of 1.17% and the lowest vacancy rate since the second quarter of In analysis, many submarkets reported compacting vacancy rates, as increasing demand coupled with limited space returning to the market in the fourth quarter. Submarkets showing notable vacancy improvements yearoveryear include South (1.91%; 7.83% from 9.74%), the I55 Corridor (1.79%; 8.91% from 10.70%), and West Cook (1.72%; 8.71% from 10.43%). The Northwest Indiana and Southeast Wisconsin submarkets followed suit, reporting substantial vacancy rate improvements. Despite a recent surge of speculative construction activity, new product deliveries have not adversely affected overall vacancy due to steady absorption rates. The economic recovery and the rise of ecommerce and supply chain logistics in the Midwest will contribute to this trajectory of vacancy rate improvement in Lease & Sale Activity Q/Q STAT SNAPSHOT FOR FURTHER MARKET INFO CONTACT PW 1Q 2015 Market Trends by PaineWetzel. All Rights Reserved

2 CHICAGO INDUSTRIAL OVERVIEW ABSORPTION The Greater land industrial market ended 2014 with a cumulative total of 14.9 million square feet of positive net absorption. Although a decline from last year s absorption of 17.6 million square feet, the absorption gains for 2014 surpassed the 8.9 million square feet of new construction delivered during the year, a 33% increase from the previous year s construction deliveries. The fourth quarter of 2014 witnessed 3.2 million square feet of positive net absorption, a 39% increase compared to the same quarter last year. Absorption is defined as the change in occupancy in a market over a given period of time. Eighteen out of twentyfour submarkets recorded positive gains for Submarkets with the most substantial positive absorption gains include the I55 Corridor (2.6 million square feet) and O Hare (2.2 million square feet). Six additional submarkets reported gains of over 1 million square feet in In contrast, both the DuPage and Lake submarkets reported a negative change in absorption rates of over 1 million square feet compared to the previous year. The end of the year marked fourteen consecutive quarters of positive net absorption for the Greater land industrial market. As economic recovery and increasing demand continues, positive net absorption rates are expected to continue into Leasing activity totaled 20.8 million square feet in 2014, with the fourth quarter witnessing 4.5 million square feet of tenant activity. Ten out of twentyfour submarkets reported over 1 million square feet of leasing activity for the year. The I55 Corridor led in terms of lease activity, recording 3.5 million square feet of completed tenant transactions and accounting for 17% of all completed transactions during the year. This was followed by O Hare and Will County, each reporting 2.3 million square feet leased. In the fourth quarter, twenty lease transactions each over 100,000 square feet were completed, nearly doubling the eleven reported in the fourth quarter in FIRST QUARTER 2015 SELECT DEALS Location Tenant Type Size Romeoville Aurora Bolingbrook Beloit Hanover Park Elgin Aurora Lenox PAE Midwest Warehouse & Distribution Sony Music Distribution Dakkota Integrated Systems, LLC EcoLab Maines Paper and Food Service Box Partners LBP Manufacturing International Paper Co. Prime Woodcraft Inc. Renewal Sublease 723, , , , , , , , , ,840 Submarket I55 Corridor I55 Corridor South Wisconsin Thorndale Corridor North Will *GRAY denotes PaineWetzel deal 2 PaineWetzel 1Q 2015 Market Trends by PaineWetzel. All Rights Reserved

3 CHICAGO INDUSTRIAL OVERVIEW LEASE ECONOMICS The average asking lease rate continued to increase by yearend. In the Metro market, the average asking rate increased $0.03 PSF to $4.58 PSF Net from the previous quarter s rate of $4.55 PSF Net. The rate across all markets rose $0.05 PSF from $4.49 to $4.54 PSF Net. Compared to yearend 2013, the current asking rate represents an 8.6% increase in asking lease rates across all markets. Shrinking supply of available product has contributed to the slow rise in lease rate for the past ten quarters. In light of these factors, many tenants are opting for renewals or expansions in their current spaces. With an improving economic landscape, landlords can expect to continue to fill space in the upcoming year. SALES ACTIVITY Owner and user sale activity accounted for 11.5 million square feet of completed transactions in Owner and user sale volume was most prevalent in the I55 Corridor, which reported 1.8 million square feet in completed sale transactions in 2014 with five of those transactions each totaling 100,000 square feet or more. The West Cook and South Cook submarkets also noted over 1 million square feet in completed transactions, noting 1.2 and 1.1 million square feet, respectively. The West Cook and O Hare submarkets reported the largest number of transactions, each reporting over 20 transactions in The fourth quarter witnessed an impressive 3.9 million square feet in sale volume in all submarkets, a 15% increase compared to the previous quarter s reported 3.4 million square feet and the largest sale volume tallied for the year. FIRST QUARTER 2015 SELECT SALE TRANSACTIONS Location Size Buyer Seller Price Submarket Aurora 320,047 DCT Industrial Trust EverWest Real Estate Partners LLC $16.8MM/$52.50PSF Elgin 225,205 TA Associates Realty Wanxiang American Real Estate Corp. $16.3MM/$72.38PSF Gary 196,000 T&B Tube Four C Holdings LLC $2.2MM/$11.22PSF NW Indiana EGV 169,000 Atlas Toyota BK Equities LLC $5.3MM/$31.20PSF O'Hare St. Charles 158,400 Cabot Properties LLC JSQ Commercial LLC $10.3MM/$64.84PSF 154,000 Joe Perillo BMW HNI Corporation $1.9MM/$12.34PSF Central City 140,000 R.P. Fox & Associates Mico Designs, Ltd. $3.4MM/$23.93PSF Central City 128,100 Sitex Group Grand Trunk Western Railroad Company $3MM/$23.42PSF South Elgin 110,343 Bucher Hydraulics, Inc. Zilber Property Group $6.7MM/$61PSF 104,158 Balton Corporation Structured Development, LLC $2.4MM/$23.04PSF South *GRAY denotes a PaineWetzel deal 3 PaineWetzel 1Q 2015 Market Trends by PaineWetzel. All Rights Reserved

4 CHICAGO INDUSTRIAL OVERVIEW CONSTRUCTION Recent BuildtoSuit Projects Tenant Size Status Submarket Michelin 1,700,000 U/C Will Amazon 1,015,740 U/C Wisconsin Pactiv 898,560 Complete I55 Corridor WeberStephen Products Co. 757,120 U/C McHenry Uline 520,000 U/C Wisconsin Amazon 513,976 Complete Wisconsin O'Reilly Automotive Inc. 499,471 Complete DuPage CoreCentric Soultions, Inc. 350,000 U/C DuPage Construction activity increased by 33% in 2014, with 8.9 million square feet of new product delivering on the market. The fourth quarter contributed 2.9 million square feet of deliveries to the year s total. The largest single delivery for the year was Pizzuti s 895,560 square foot buildtosuit completed on behalf of Pactiv Corporation in the Will submarket. The fourth quarter witnessed the completion of two of the largest speculative projects for the year, including Pizzuti s 672,080 square foot delivery in the I55 Corridor and Opus Group s 604,565 square foot delivery in the submarket. Upcoming notable deliveries include Ridge Property Trust s 1.7 million square foot Michelin buildtosuit, the largest lease signing of 2014, with a second quarter scheduled delivery. Additionally, KTR Capital Partners 1 million square foot facility for Amazon is schedule to deliver in the first quarter in the Southeast Wisconsin submarket. FedEx Sunstar Americas, Inc. 350,000 U/C North Cook 302,000 U/C Golden Corridor *GRAY denotes a PaineWetzel deal Top speculative projects for the upcoming quarter include Prologis 329,828 square foot facility delivering to the I55 Corridor and Bridge Development s 226,196 square foot facility delivering to the West Cook submarket. ECONOMIC FORECAST Source: Bureau of Labor Statistics National, statewide and local unemployment rates dipped to recent lows at the end of the year. The Metropolitan Statistical Area (NapervilleJoliet, ILINWI) reported an unemployment rate of 5.8%, the lowest rate since the third quarter of Nationally, the unemployment rate decreased by 110 basis points since the previous year while the statewide rate fell by a substantial 230 basis points since yearend PaineWetzel 1Q 2015 Market Trends by PaineWetzel. All Rights Reserved

5 CHICAGO INDUSTRIAL OVERVIEW/ FIRST QUARTER 2015 FIRST CHICAGO QUARTER 2014 INDUSTRIAL CHICAGO INDUSTRIAL MARKET STATISTICS Inventory Available Space Vacancy (%) Current Absorption YTD Absorption Average Asking Rent (Net/PSF) Average Sales Price (PSF) Central City 85,088,199 2,936, % 163, , North 85,789,123 4,263, % 230, , South 96,648,722 7,501, % 76,717 76, North Cook 68,480,051 5,192, % (298,056) (298,056) Lake 66,281,346 6,070, % (275,425) (275,425) Golden Corridor 23,854,039 2,181, % (252,457) (252,457) O Hare 103,222,926 8,038, % 492, , West Cook 109,704,485 9,337, % 112, , Midway 38,901,441 2,811, % (158,330) (158,330) South Cook 71,014,194 6,290, % 318, , I Corridor 89,938,896 8,132, % 1,004,555 1,004, DuPage 107,273,514 9,990, % 29,774 29, McHenry 20,948,938 3,015, % 4,771 4, Thorndale Corridor 27,251,955 1,842, % 332, , ,048,767 7,368, % 1,116,630 1,116, Kendall 1,890, , % 34,800 34, Grundy 10,294, , % Will 69,259,266 7,340, % (273,630) (273,630) Kankakee 3,499, , % Boone 3,250, , % DeKalb 23,205, , % LaSalle 3,771, , % Greater Metro 1,197,619,212 94,302, % 2,659,260 2,659,260 $4.82 $50.32 SE Wisconsin 38,183,320 2,897, % (40,000) (40,000) NW Indiana 28,961,756 3,146, % 84,398 84, GRAND TOTAL 1,264,764, ,347, % 2,703,658 2,703,658 $4.75 $ PaineWetzel 1Q 2015 Market Trends by PaineWetzel. All Rights Reserved

6 CHICAGO INDUSTRIAL OVERVIEW/ CHICAGO INDUSTRIAL SUBMARKET MAP 200+ Markets 59 Offices 800+ Professionals OUR MISSION IS TO PROVIDE THE HIGHEST POSSIBLE PROFESSIONAL REAL ESTATE REPRESENTATION TO OUR CLIENTS BY CREATING VALUE AND PROMOTING THEIR BEST INTERESTS AT ALL TIMES. RESEARCHERS: Emily Dretzka TEL Sylvia Tabor TEL PW 8725 W Higgins Rd Ste 800 IL