CHICAGO—The economic fundamentals underlying the regional industrial market are so strong that launching speculative developments in certain submarkets has become a no-brainer, Daniel E. Fogarty Jr., tells GlobeSt.com.

The vice president of Conor Commercial Real Estate, a member of the McShane Companies, just recently helped the company finish Northwest Pointe, a speculative industrial development in suburban Elgin. As reported last week, it just signed Glenview, IL-based Illinois Tool Works, one of Chicagoland's largest and most successful corporations, to occupy 136,972-square-feet in the 342,620-square-foot industrial facility at 2501 Galvin Rd.

Back in 2012, when Conor and its joint venture partner, Globe Corp. decided to go forward with this project, the vacancy rate for top-of-the-line product in the Elgin/I-90 submarket had sunk to a historically low level. “When you pulled out the older, obsolete product, stuff with maybe 18' clear heights, and just looked at product with 24' or more and other modern features, the vacancy rate was under 5%. That dynamic remains.”

Signing an investment-grade tenant like ITW provided perhaps the biggest shot in the arm. The firm employs nearly 51,000 and has operations in 56 countries. It agreed to pay $5.40 per-square-foot, triple–net, Fogarty says. Although the developers had to spend some extra money on upgrades to lighting and other features, signing a tenant with such deep pockets made it well worth the expense.

“Rents are picking up,” Fogarty says. “And there continues to be a lack of available space in the most-modern buildings. That means the submarket continues to lend itself to spec development.” He anticipates signing other tenants by the first quarter of next year and adds that the company has an option on land adjacent to this project, which is within Northwest Corporate Park. “Once we stabilize this asset we will look to move forward with other spec developments.”