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Duke Realty has preleased the entirety of 10000 Woodward Avenue in Woodridge, IL

Connect Webinar: The Midwest’s Hot Industrial Markets are Everywhere in the Region

Where are the hottest industrial markets in the Midwest in late 2021? “I think they’re all hot in the Midwest right now, which is not something we say very often,” Susan Bergdoll, regional SVP with Duke Realty, says in Connect CRE’s new webinar focusing on this asset class and region.  

She notes that the markets that come most readily to mind—Chicago, Columbus and Indianapolis—remain as active as ever, but in adds that in Minneapolis, where Duke has 5.5 million square feet of space, “It’s crazy busy up there right now.” 

Alfredo Gutierrez, founder and CEO of SparrowHawk Real Estate Strategists, cites the fast-paced growth of secondary and tertiary markets as demand accelerates for warehousing and shipping capacity closer to home. Although Louisville is not as big an industrial market as Columbus or Indianapolis, “it was accelerating at a much faster pace than both of those markets were pre-pandemic, and the pandemic has just accelerated it.”  

Gutierrez turns the webinar’s subtitle–”If You Build It, Will They Come?”–on its head. “They’re coming, and we need to build it,” he says. Industrial tenants, and particularly the parcel-package delivery services, are “following the rooftops” as consumers relocate to other markets outside of the main hubs. 

Moreover, Bergdoll observes, while 2020 was the year of Amazon expansion, the retailer has pulled back on its leasing and build-to-suit activity this year. ‘So this continued growth has been fueled by tenants other than Amazon,” she says. 

A veteran of 10 years in the logistics sector before moving into commercial real estate in the early 2000s, NAI Hiffman EVP Adam Roth sees the essential link between the two sectors. “The absolute dictator of industrial real estate space is transportation,“ he says.  

Although the international supply-chain issues that figure in the logjam that’s causing many retailers to face inventory shortages during the crucial holiday season will eventually resolve themselves, there are also longer-term domestic headwinds, including government regulations implemented in 2017, Roth points out. “These domestic issues are not going to go away.” 

NAI Hiffman commissioned a study on where to locate industrial properties. The study found that “you can service 90% of the population, within 150 miles, with just 33 locations,” says Roth.  “Of those 33 locations, eight are in the Midwest.”  

The issue around length of haul is “forcing companies to get closer to the consumer,” he says. “That means there’s going be more absorption and more activity in those markets,” including metro areas such as Des Moines, which wouldn’t have been top of mind not long ago but are now hotbeds of leasing and development. 

The webinar discussion also focuses on how supply chain challenges affect demand, distribution and development; the current landscape of cap rates and IRR for industrial investments; and how industrial owners can differentiate their properties in the eyes of tenants. Click on the video below for the complete discussion, moderated by Connect CRE founder and CEO Daniel Ceniceros.

Pictured above: Duke Realty’s forthcoming development in Woodridge, IL.


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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 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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