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What Industrial Tenants Want with Infill Space

As director-asset management for Westmount Realty Capital, Laura Collins, oversees more than six million square feet of industrial real estate in the Midwest region of the U.S., including nearly five million square feet of multi-tenant industrial space in the Chicago area. She took the stage at Connect Industrial last month for the “Growing Development & Changing Technology” panel, and here she continues the conversation on demand for infill space.

Q: What trends are you seeing in the infill industrial space in Chicago?

A: The O’Hare market is as tight as it has ever been. We’re seeing a historically low vacancy rate, and there is a large demand for Class B industrial buildings. These infill locations are appealing due to their excellent location, competitive price and good condition. Not everyone needs 32-foot clear heights. If you aren’t using high racking to store goods and are more price conscience, then infill locations become the name of the game.

Both businesses and consumers want goods “just in time,” and they aren’t willing to wait for something to be shipped in from out of state or even from two-to-three hours outside of Chicago, where industrial space is cheaper. Whether your product is B2B or C2B, the goods need to be closer to the customer, which has caused an increased in demand for infill industrial.

Q: In your experience, what are tenants looking for when they lease infill industrial space?

A: With older infill properties, we find that if we put our money into making the space clean and bright with updates like freshly painted walls, upgrade the lighting to LED and make sure that everything is “move-in ready,” buildings lease quickly. In spaces that are 10,000 to even 40,000 square feet, a lot of tenants will come in and take a remodeled space “as is.”

Most infill tenants are looking for warehouse space. We find that ceiling heights are still important, but they are not the single most important feature that tenants are looking for. We are getting more requests for properties with drive-in doors, in addition to or in place of traditional loading docks.

Q: There has been some buzz around non-traditional uses for industrial space. Have you seen an uptick in companies that are not using the space for logistics and warehouse needs?

A: There has been a rise in somewhat unique uses. In our portfolio, we have a couple tenants who lease the space for gymnastics studios, and a tenant that provides self-storage concierge services. We also recently met with a company that provides dog training for security purposes. They were looking for an infill industrial space close to O’Hare to use as a dog training facility. These types of companies don’t require ceiling heights more than 18-20 feet, but are looking for space in their desired location at a lower cost than other property types.

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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 13-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 15-20 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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