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Chicago Industrial: BTS Outperforms Large-Scale Spec for Occupancy
For Chicago-region industrial construction of 500,000 square feet or greater, recent market dynamics suggest that going the build-to-suit (BTS) route may be the surer path for developers, says Colliers International’s Craig Hurvitz. In larger buildings, BTS projects have posted a better track record than speculative builds in terms of occupancy.
Hurvitz notes that in the 34 large-scale spec buildings delivered or begun since 2013, lease-up to date has been only 47.7%. Further, of seven spec projects greater than 800,000 square feet launched since 2017, just one—Hillwood’s 992,640-square-foot Joliet Logistics Park, purchased recently by 3PL provider NFI—is now occupied.
Conversely, Hurvitz notes that seven BTS deals of 500,000 square feet or larger were completed in 2018 alone. One has already been signed in 2019.
“This demonstrates that these giant requirements haven’t disappeared. These users are finding value in going with a build-to-suit facility, versus leasing a recently-completed speculative building,” he says.
Pictured: Joliet Logistics Park
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