One year after the start of the coronavirus pandemic, the Chicago-area industrial market’s vacancy and rental rates have nearly returned to pre-pandemic levels, according to a new report from Newmark.
Although the industrial sector took a hit in the first few weeks of the crisis, it began climbing back once the shock wore off and tenants saw increased demand from homebound consumers purchasing goods online. Many resumed signing leases, sending vacancy down to 6.2% in Q1 2021, a decade low, and recently have shown a willingness to pay more for space.
Courtesy of Newmark
“This sentiment of only a slight dip in the market as opposed to a full long-term stop is reflected in the rental rates on transactions completed during the pandemic,” according to the Newmark report.
The company analyzed Chicago-area leases completed in 2019 just before the pandemic and found the average net rental rate was $6.19 per SF. Starting in March 2020 and through the summer, rental rates for new deals fell to $5.59. But from Labor Day through Q1 2021, the rates rose to $6.04.
“These rents reveal the uncertainty felt through the summer as the businesses reacted to the state of the world at the time, including second rounds of outbreaks, social unrest and the upcoming election,” according to Newmark. “As far as the industrial market goes, that hesitation seems to have dissipated.”
Courtesy of Cawley Chicago
1640 West Hubbard St.
Kaufman Jacobs sold its 1640 West Hubbard St. in Chicago’s Kinzie Corridor for an undisclosed price. The 35K SF mixed-use space includes flex, distribution, gallery and creative loft office. Cawley Chicago’s Zach Pruitt, Frank Melchert, Brenten Blakeman and Nicholas Schaefer represented Kaufman Jacobs.
Kenall Manufacturing sold 13.7 acres at 10200 55th St. in Kenosha, Wisconsin, about 60 miles north of Chicago, to Panattoni Development Co. Colliers International Chicago’s Ned Frank, Fred Regnery, Jeff Devine, Steve Disse and Jack Rosenberg represented both buyer and seller. Frank, Regnery, Rosenberg and Colliers’ Pat Hake were hired to lease the spec facility.
Courtesy of Essex Realty Group
663 West Grace St.
The 663 Grace Condo Association sold in a Section 15 deconversion its 80-unit condominium property at 663 West Grace St. in Chicago’s East Lakeview neighborhood. An Essex Realty Group team of Doug Imber, Kate Varde, Brian Karmowski, Jaimie Steinher and Dan Shepherd represented the association in the $13.8M deal. The buyer was a local investor. The association’s legal counsel was Omar Malik and Kelly Elmore of Kovitz, Shifrin and Nesbit. The buyer’s legal counsel was Scott Weinstein of Field and Goldberg. Financing for the purchase was provided by Red Capital’s Jim Sotos.
Courtesy of NRC Realty & Capital Advisors
Chicago-based NRC Realty & Capital Advisors was hired by Circle K Stores Inc. to coordinate the sale of 269 store sites across 29 states in the U.S. and 37 sites across six provinces in Canada. The average building size is between 2K SF and 3K SF, and the average lot size is 29K SF. The stores are being offered in packages, grouped primarily by geography.
Thor Equities Group signed several more leases for its 800 West Fulton Market, a new 19-story mixed-use building it developed with joint venture partner QuadReal. Office furniture and design firm Teknion will occupy 22K SF. In addition, the developers are filling up the tower’s retail space, with Zeppola Bakery agreeing to take more than 1K SF.
Sammons Financial Group signed a new lease for 10K SF at The Old Post Office. The renovated building, constructed in 1921, opened its doors to new tenants in November 2019 and is now 83% leased. Other tenants at the 2.5M SF office building include Uber, Walgreens, Ferrara Candy Co. and HomeChef. Telos Group’s Jamey Dix, Matthew Whipple and Daniel Heckman represented ownership in the transaction. Sammons plans to occupy its space in early 2022.
Hardinge, Inc. signed a $4.2M lease for 45K SF of industrial manufacturing space at 1755 Britannia Drive in northwest suburban Elgin. Kenneth Franzese and John Cassidy of Lee & Associates’ Illinois office represented Scannell Properties, the owner of the newly constructed, 80K SF building. NAI Hiffman’s Steve Bass represented Hardinge.
Lactalis Heritage Dairy, the U.S. subsidiary of Lactalis Group, signed a multiyear, 35K SF headquarters lease at 540 West Madison St. in the West Loop. This will be the company’s first Midwest location. Savills’ Lisa Davidson represented Lactalis.
Restricted Article Specialists signed a long-term lease for 17K SF at 501 Eastern Ave., a free-standing building in Bensenville near O’Hare International Airport. Cushman & Wakefield’s Eric Fischer, Marc Samuels and Steve Stone represented building owner Venture One Real Estate.
JLL closed a $55M recapitalization of a 15-building logistics portfolio totaling more than 1M SF of industrial and flex space throughout Chicagoland, part of a new joint venture between Chicago-based real estate investor Clear Height Properties and Harbert U.S. Real Estate, an investment fund sponsored by Harbert Management Corp. Clear Height will continue managing the assets and retain an ownership percentage. The JLL team was led by Kurt Sarbaugh and Christopher Carroll, with assistance from Robin Stolberg.
The new venture will seek to double the size of its portfolio by acquiring additional industrial properties throughout Chicagoland over the next 12 months.
Courtesy of Draper and Kramer
949 West Dakin St.
CONSTRUCTION AND DEVELOPMENT
Draper and Kramer topped off a 120-unit mixed-use development at 949 West Dakin St. in Chicago’s Wrigleyville neighborhood. The project, located across the street from the Sheridan Red Line station and 2.5 blocks north of Wrigley Field, will be named Wrigleyville Lofts. Draper and Kramer plans to begin pre-leasing this summer for fall 2021 move-ins. Designed by Sullivan, Goulette & Wilson Architects, Wrigleyville Lofts will include 14K SF of ground-floor retail. The Chicago regional office of the Department of Housing and Urban Development financed the project, with Gershman Mortgage acting as the HUD lender in the transaction. Leopardo Construction is the general contractor.
Pangea completed renovations of 6904 South Creiger Ave., a 26-unit apartment building in Chicago’s South Shore neighborhood. It is one of 13 properties Pangea acquired from the troubled nonprofit Better Housing Foundation in July. When Pangea acquired the 281-unit BHF portfolio, the buildings had 1,792 code violations. Pangea began renovations on 6904 South Creiger last October, and the first residents have moved into completed units.