Chicago Industrial Market Starts Strong Following Impressive 2017 Market Update & 2018 Forecast

Transcription

1 2018 Starts Strong Following Impressive 2017 Market Update & 2018 Forecast

2 Chicago is the second largest industrial market in the US Top 10 US industrial markets by inventory size Detroit San Francisco Bay Area 384 Million SF Chicago 1.4 Billion SF 723 Million SF Cleveland 397 Million SF Philadelphia- Lehigh Valley 448 Million SF New York City Metro 810 Million SF Greater Los Angeles 1.6 Billion SF Dallas-Fort Worth 800 Million SF Atlanta 690 Million SF Houston 550 Million SF

3 Greatest Q1 Net Absorption Tally Since Mililons of Square Feet Q1 Q1 Q1 Q1 Q1 Q

4 Vacancy rate improves for second quarter in a row 15% 12% 12.3% 9% 6% 3% 5.4% 13 BPS since Q % 0%

5 Infill submarkets continue to set new vacancy rate record lows 15% 12% 9% 6% 3% 4.4% North Suburbs 4.3% Central DuPage 3.1% O'Hare 0%

6 Vacant spec deliveries push vacancy rate higher in others 25% 20% 15% 10% 5% 11.8% I-55 Corridor 8.2% I-80 Joliet Corridor 6.5% Southeast Wisconsin 0%

7 Few construction starts in Q1, but new surge coming BTS SPEC 50 projects (20 infill) SPEC BTS DEMO Construction Starts (Millions of Square Feet) Forecast

8 Development activity during current cycle ( )

9 Least amount under construction since build-to-suit projects 2,530,572 SF 42% 1 building addition 67,251 SF 1% 30 projects currently under construction 57% 18 speculative projects 4,584,269 SF

10 17 of the 30 projects under construction are infill Number of Projects Under Construction ,000-99,999 SF GREENFIELD INFILL 100, ,999 SF 200, ,999 SF 300, ,999 SF 500,000+ SF

11 Q largest new leases signed Whirlpool Corporation 1,001,184 SF Joliet, IL Lease expansion/renewal Uline 417,384 SF Pleasant Prairie, WI The Clorox Company 402,092 SF University Park, IL RJW Transport 356,621 SF Woodridge, IL The Royal Group 323,343 SF Cicero, IL The Home Depot 250,456 SF Joliet, IL Ardagh Group S.A. 223,080 SF Chicago, IL Holly Hunt 210,315 SF McCook, IL

12 2017 largest new leases signed Kenco Logistics Services, LLC 599,317 SF Monee, IL Q CTDI, Inc. 501,313 SF Joliet, IL Q Central American Group, Ltd. 500,160 SF Romeoville, IL Q E-commerce tenant 438,150 SF Crest Hill, IL Q Richwill Enterprises, Inc. Richwill Enterprises, Inc. 388,262 SF Alsip, IL Q Samsung 352,338 SF Bolingbrook, IL Q Expeditors International 310,458 SF Franklin Park, IL Q Madden Communications 301,174 SF Somers, WI Q1 2017

13 2016 largest new leases signed 1,507,545 SF BTS lease Wilmington, IL 1,000,560 SF BTS lease University Park, IL 954,720 SF BTS lease Aurora, IL 856,605 SF BTS lease Monee, IL 767,161 SF Romeoville, IL Reviva Logistics 746,772 SF Joliet, IL 728,044 SF Monee, IL 719,542 SF Wilmington, IL 626,848 SF Waukegan, IL 615,160 SF BTS lease Bolingbrook, IL

14 Where tenants are locating All new leases 10,000+ SF signed in 2017 All other submarkets 22.9% I-55 Corridor 15.2% Chicago South 4.6% OHare 10.5% Southeast Wisconsin 4.7% I-88 Corridor 6.4% Lake County 7.9% South Suburbs 8.3% I-80/Joliet Corridor 9.6% Central DuPage County 9.8%

15 Average asking net lease rate still at recent high $5.00 $4.50 $4.00 $3.50 $ $4.25 $3.98 $4.04 $4.06 $4.11 $4.41 $4.56 $4.60 $4.66 $4.66

16 Average asking sale price gradually climbing $50.00 $48.00 $46.00 $44.00 $42.00 $40.00 $38.00 $ $47.55 $44.76 $42.20 $40.82 $43.14 $43.56 $45.44 $45.58 $46.07 $46.13

17 Eight year of good news does the bottom fall out? Minimal change in vacancy expected in 2018 as supply matches demand Multiple big box transactions in the pipeline when will they get done? Fewer construction deliveries in 2018 than the past two years, but a new wave of development beginning in spring Continued positive net absorption during 2018 (likely below 2016 & 2017 levels)

18 Infill development will continue to be in high demand due to the growth of e-commerce and the need for these companies to be in close proximity to their end customers especially near O Hare Increased demand for freezer/cooler space due to the growth of online grocery service When will the big bombers developed in the I-80 Joliet Corridor lease up?