Industrial Commercial Real Estate Update

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Industrial Commercial Real Estate Update

As we come out of the Pandemic caused by Covid 19, we continue to see high demand for industrial properties.  The demand is extremely high for distribution, data centers and cold storage.  The industrial market was seeing great growth prior to Covid 19 but with the Pandemic and the Stay At Home orders, have caused many to order online for food, clothing and home remodeling needs, thus creating a booming market for industrial. The far Western suburbs surrounding our corporate office in Batavia, have seen firsthand the growth in this market.

The DuPage Airport Authority and owners to the DuPage Business and Technology park welcomed three new industrial building into the park.   Amazon, Norix and Suncast all recently expanded and built new distribution centers in the park in West Chicago. Several other speculative buildings have also gone up.

Facebook is spending $ 800 Million to build a 907,000 SF facility in DeKalb, Illinois.    This will be Facebook’s 16th data center and is bringing 1,200 construction jobs to the area along with permanent jobs at the facility.

Lineage, one of the world’s largest cold storage logistics company for the food industry has also been a hot commodity.   It has locations in Batavia and Geneva and they continue to expand through purchase and new construction.  Cold storage continues to rapidly expand as there is a current shortage of this type of use.

The I88 corridor has also seen many new speculative industrial buildings going up from REIT’s (REIT = Real Estate Investment Trust) eager to capture tenants for their buildings and provide income for their investors.  These big box buildings have been going up for several years as the industrial market expanded.  Many REIT’s typically buy investment grade buildings with tenants already in them. However, as the market heated up, many REIT’s went into purchase and construction mode especially buying up land around expressway’s and interchanges.

What we have not seen during this expansion is the building of smaller buildings or condos for smaller service providers to rent or to buy.  Industrial Condo buildings were very hot in the early 2000’s, however the great recession and the building costs have put stress on these smaller properties.  There is demand for these smaller units, 1,500-5,000 SF, but the cost to build versus the rental rates that can be charged or prices to sell are just too high and not reasonable for a tenant or buyer and so developers have stayed away at this time.

Only time will tell if the demand for industrial will keep pushing the market, especially with all the talk of inflation.  For now, the market remains strong in Industrial.  Let us know if BEI CRE can help with your industrial needs.

Brad Schreiner

For more information or questions:

Contact Brad Schreiner, Director of Sales and Leasing, Managing Broker

630-457-1248

[email protected]

BEI Commercial Real Estate is a locally owned property management, development and commercial real estate firm dedicated to investing in the communities. For 60 years Batavia Enterprises has been an active supporter and participant in local community events and is proud to have helped many local non-for-profit organizations. With properties in Batavia, Geneva, St. Charles, West Chicago, Elburn, Elgin, Sugar Grove and Rockford, the company can provide quality space to help growth and expansion for all types of businesses.

Learn more at www.beicre.com

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