Available spaces in new buildings like this are becoming scarce, prompting developers to launch new projects. Available spaces in new buildings like this are becoming scarce, prompting developers to launch new projects.

CHICAGO—In the past few years, Midwest Warehouse has been one of the many distributors picking up more industrial space in the Chicago metro area, and it has just decided to buy, as well as occupy, the newly constructed 575,000-square-foot industrial property at 3451 S. Chicago St. in suburban Joliet. The firm paid $27.8 million to Molto Properties, which had purchased the asset in 2011.The distributor will occupy about 366,000 square feet. Otis Elevator already occupies the rest of the building.

“We had a short-term tenant in there, so it was 100% occupied,” Cushman & Wakefield industrial specialist Jason West tells GlobeSt.com. But West, along with his colleague Sean Henrick, were originally brought in by Molto to find a long-term tenant for the space, and then Midwest Warehouse expressed an interest in buying it outright. “They’ve got a lot of real estate in the metropolitan Chicago area, so they just prefer to own instead of lease. Our client ultimately achieved an attractive return on its investment.” Tim Thompson from HSA Commercial Real Estate served as broker for Midwest Warehouse.

“We had a lot of showings for this space,” West adds. “It’s desirable for any user that needs space in the 300 to 400,000 square foot range.” Located on nearly 30 acres, 3451 S. Chicago St. features 32’ clear ceiling heights, heavy power, ESFR Sprinklers and T-5 lighting, ample loading and parking capacity and a fully fenced and secure yard.

West notes that the building’s proximity to I- 80 and I-55 and the BNSF and UP intermodal facilities were draws for Midwest Warehouse. “The Joliet market has become a top choice for big-box warehouse. In addition to the region’s excellent transportation infrastructure, space users here enjoy access to a tremendous labor pool and the ability to reach 30% US households within a day’s drive.”

“There is a shortage of bulk warehouse space in that market,” he says. “We’re starting to see more construction activity down there, both specs and build-to-suits, because of this shortage.”

New industrial leasing activity in the Chicago industrial market totaled 28.8 million square feet and investment sales reached 24.5 million square feet in 2015, according to C&W research. The overall vacancy rate decreased 0.3 of a percentage point year-over-year to a 15-year low of 6.4%. Looking ahead, the firm anticipates that the logistics corridors along I-80 and I-55 will see the majority of tenant and developer activity in the coming year.