Middle Market Digest-The Midwest

CHICAGO—It would be difficult to point to a real weak spot in the Chicago real estate market. The last couple of weeks have been full of encouraging signs. The city and the surrounding region have continued to exert a gravitational pull on Midwest corporations. Officials from Caterpillar, for example, said they plan to move the company’s headquarters from its longtime home in Peoria to the Chicago metro area, although they have not nailed down an exact location. It will become just one of many corporations that decided it needs Chicago’s global transportation options, and with city officials now putting forward plans to greatly expand O’Hare Airport’s capacity, there is every reason to expect this type of migration to continue. Chicago also got another reminder of its global reputation this week due to the impending purchase of 181 W. Madison by a Chinese group. HNA Group will pay about $360 million for the property, which has more than 900,000 square feet. After some record-setting years for overseas investment, especially from buyers in Asia, Canada and Germany, the Chicago market saw a big slowdown in 2016. This latest move illustrates that overseas investors still consider the US in general, and Chicago’s office market in particular, a stable place to park their money. It can’t escape the notice of potential investors that developers here have had great success in creating new office submarkets, such as Fulton Market, that users are flocking into. Malmesbury, England-based Dyson said this week that it would expand its US headquarters, adding about 100 new employees once it moves from River North and into more than 40,000 square feet at Sterling Bay’s Fulton West.

But it’s not just the region’s office market that is showing signs of strength. The industrial sector continues to make impressive gains. This week, Cushman & Wakefield closed two leasing transactions at O’Hare Peninsula Business Park to bring that park, a seven-building, class A development in Elk Grove Village with more than 250,000 square feet, to 100% leased. It’s not the only local business park to reach full capacity, and that has developers keen to break ground on additional projects. The Opus Group just announced that it would develop a third speculative building at its Paragon Business Park in Romeoville after successfully constructing and selling two other speculative industrial developments in 2016. And as experts don’t expect any slowdown to hit the Chicago industrial market in 2017, the demand needed to fill new speculative structures definitely exists.