CHICAGO, IL—Leasing of industrial “big box” buildings larger than 200,000 square feet was at its highest levels in the current building cycle in 2018, according to research by Craig Hurvitz, vice president, and Jennifer Olsen, senior research analyst, in Colliers International’s Chicago office.
Colliers’ year-end “Chicago Big Box” report says leasing activity was 16.4 million square feet in 2018, but that included 2.1 million square feet of space leased in build-to-suit properties still under construction.
The availability of space in large industrials declined by 57 basis points in 2018, to 9.07%, Colliers says. Construction of 23 big box buildings totaling 10.2 million square feet was completed during 2018, with 16 projects totaling 6.9 million square feet built on a speculative basis with no tenants lined up. Those spec builds are now 10.1% leased. The remaining seven buildings were build-to-suit projects totaling 3.3 million square feet, according to the report.
Vacancy fell significantly during the first half of the year but increased slightly towards the end of the year due to large new vacancies, including Toys ‘R’ Us moving out of its 637,614-square-foot facility in Joliet, Coleman Cable System vacating its 502,033-square- foot building in Pleasant Prairie, and medical device manufacturer Medtronic closing its 464,400-square-foot facility in Joliet.
New leases and lease expansions totaled 16.5 million square feet in 2018, the greatest annual total of the current cycle, Colliers says.
The three largest new leases of the year were build-to-suit leases, all signed during the third quarter. The largest was a 750,314-square-foot build-to-suit lease with S&S Activewear for a building Prologis is developing for the company in Lockport.
Dozens of big box buildings were traded during 2018, many of which were sold as a part of larger portfolio sales. The Blackstone Group purchased 19 Chicago-area big box buildings as part of portfolio sales. Two of the portfolios involved hundreds of buildings nationwide.