Infill Industrial Stays Robust
New construction for industrial properties has moderated somewhat, but the need for last-mile distribution facilities is still fueling infill building.
CHICAGO—After a few years of robust new construction, industrial developers slowed down a bit in 2018, but certain niche markets are going as strong as ever. Developers of infill properties, for example, are finding tenants even before they finish up speculative projects.
As reported in GlobeSt.com, Bridge Development Partners, LLC recently signed up a group of tenants for several infill properties still under construction in Cicero, Franklin Park and Waukegan, fully pre-leasing one. And the company has just announced the development of Bridge Point North Phase II, consisting of three state-of-the-art industrial distribution buildings totaling 926,947 square feet in Waukegan, IL.
“Infill is where the action is,” Steve Poulos, Bridge’s founder and chief executive officer, tells GlobeSt.com. But although tenant demand for such buildings is robust, it’s not easy to complete infill projects.
“We end up tearing a lot of stuff down,” he adds, and once the old industrial structures are gone, the real work of environment clean-up begins, as well as securing all the necessary permits or zoning changes. “We take our risk on the front-end. If the deal blows up, you could lose hundreds of thousands of dollars, and perhaps more.”
However, once these buildings get underway, there are a lot of rewards. “We’re getting a lot of traction,” Poulos says. Prospective tenants are plentiful, and it’s not just the chance to have space closer to their customer bases in dense urban cores. “These areas have a tremendous amount of affordable labor.”
Bridge specializes in infill development, and since 2013 it has finished about $2.5 billion worth of projects across the nation. “Groups frequently approach us as we are breaking ground,” Poulos says.
The company will deliver another three Chicago-area buildings at the end of 2018:
Building 3 - Located at 1350 Bridge Dr., this state-of-the-art cross-docked distribution center will total 544,429 square feet and is nearly 60% pre-leased to Bolke-Miller, Co., a contract packager headquartered in Waukegan. Serving tenants 100,000 square feet and larger, the building features 36’ clear ceiling height, 96 exterior loading docks (expandable to 133), and above standard automobile and trailer parking.
Building 4 – The 154,266 square feet facility at 3971 S. Lakeside Dr. features a 32’ clear ceiling height, 57 exterior dock doors and 222 automobile parking stalls.
Building 5 - 228,252 square feet building located at 1550 S. Waukegan Rd. features 32’ clear ceiling height, 59 exterior dock doors and 245 automobile parking stalls. Buildings 4 and 5 were designed to accommodate tenants from 15,000 square feet to 228,000 square feet.
The three buildings comprise the second phase of Bridge Point North, a master-planned 225-acre business park that Bridge acquired in 2015. Bridge’s redevelopment of the site included a new park roadway network, two new or modified traffic signals, and annexation by the City of Waukegan. Since then, Bridge has completed and sold two speculative buildings totaling 1,027,606 square feet, including a 626,848 square feet building that was 100% leased to Amazon and named NAIOP’s 2017 Speculative Development of the Year. A third new construction building, a build-to-suit by owner, was delivered in the park in early-2018.
Bridge has named Whit Heitman, Sam Badger, Jared Paff and Brad Weiner of CBRE as exclusive leasing representatives for Bridge Point North.
A joint venture that includes Bridge Development Group, Banner Oak Capital Partners, LP, Globe Corporate, Wanxiang America Real Estate Group and an undisclosed institutional investor, owns Bridge Point North.