CHICAGO—Spec developments have begun springing up across the metropolitan region, and some developers have also decided to launch these projects in new, nearly-vacant areas just beyond dense submarkets like the I-55 corridor.
ML Realty Partners LLC, for example, opened a spec building last year at its new Heritage Crossing Corporate Center, a 228-acre business park located in suburban Lockport, south of the I-55 corridor along I-355, and tenants now occupy about 70% of its 121,800-square-feet. And as reported in GlobeSt.com last week, company officials say they will launch two more specs at the same location, one with identical dimensions, and another distribution facility that will have 500,000-square-feet. They hope to break ground in the spring.
“The experience with the first building has been pleasant, and that certainly helped us decide to begin the other two,” Pete Harmon, ML Realty’s executive vice president, tells GlobeSt.com. “But the long-term prospect for the I-355 corridor also made it very appealing.”
Unlike the I-55 corridor, this area at the I-355 and 143rd St. interchange allows developers to amass large pieces of property that can host a diverse range of building types, Harmon adds. The Heritage center could eventually hold 2.5-million-square-feet. And the interchange gives tenants superior access to transportation routes. “That was certainly the catalyst for us to start looking at this new parcel.”
Twenty years ago, he says, it was hard to imagine that developers would fill up the land around Weber Rd. and I-55 with distribution, logistics and other industrial structures. But the present density of that industrial area made it inevitable that developers would have to push out its boundaries.
“The market has proven itself time and time again, so what you’re seeing now is the next phase in its growth,” Harmon says. “This is what I would call the I-355 submarket of the I-55 submarket.”
“Right now, there are zero options for tenants in this submarket looking for 500,000-square-feet,” he adds, which strengthened ML Realty’s confidence that a 500,000-square-foot spec would attract sufficient tenants. Furthermore, the smaller structure will have a 30′ clear height, and the big spec will have a 32′ height, another factor that should distinguish the buildings from older product nearby, much of which have 24′ to 28′ heights.
“The Chicago market is deep with quality tenants,” Harmon believes, and its dense networks of railways, roads and airports should keep it a vibrant market for distribution and logistics. “We can certainly hold our own with Long Beach and the other ports on the West Coast. We’re definitely still in the recovery mode, but I contend that deals are out there.”