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Industrial Midwest Panelists: Development “Where the Action Is”

“Development seems to be where the action is,” said HSA Commercial Real Estate CEO Robert Smietana during the “Trends and Forecasts from Industrial Industry Leaders” panel at the recent Connect Industrial Midwest. And, with the Chicago region being home to some $13 billion worth of industrial product that’s now half a century old, there’s plenty of development opportunity.

And development means looking to the future rather than the past, noted Logistics Property Company CEO Jim Martell. Take clear heights, for instance—they’re now as high as 55 feet, he pointed out. Meanwhile, older buildings can be adapted to last-touch delivery applications.

With the next generation of product coming on line, “The industrial market has a chance to accommodate people we haven’t seen before,” said Michael Brennan, chairman of Brennan Investment Group. That includes data center operators.

However, Brennan isn’t one to knock Class B and C industrial: he pointed out that these properties average 97% occupancy. “If that’s obsolete, then I want some of that,” he said.

Class B properties are also being snapped up by investors, said Ken Szady, senior leader of Marcus & Millichap’s Institutional Property Advisors division. He also noted that secondary markets are, if anything, providing a stronger return than Chicago.

“Southern Wisconsin is on fire,” said Szady. As a case in point, the Wisconsin properties in a recent portfolio sale represented lower cap rates than the portfolio’s Chicago assets.

That being the case, one of the Chicago region’s traditional strengths—its labor pool—remains a draw for industrial tenants, even as concerns about taxes may tempt them to cross the state line. ”The quality of Chicago labor helps keep companies here,” said Justin Fierz, principal of Midwest Industrial Funds. Siegel Jennings’ Molly Phelan moderated the conversation.

For comments, questions or concerns, please contact Paul Bubny

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 16-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 7-10 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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