This article appeared in Globe Street on August 9th, 2013. Click here to see the full article.
Last spring, HSA Commercial, an industrial developer, broke ground on a 180,480-square-foot speculative warehouse in west suburban Woodridge and they just broke ground on yet another, this time at Delany Rd. and Blanchard Rd. in north suburban Waukegan. They partnered with Boston-based Great Point Investors for this 218,500-square-foot building, the first speculative industrial project northern Lake County has seen in a long time.
“Being the first in the ground means a lot,” says Tim Thompson, executive vice president and managing director of the Industrial Services Division at Chicago-based HSA Commercial. “There are other people looking around up there and talking about doing something, but no one else has started.” Leasing activity has been accelerating in the immediate area for some time, especially among local companies hunting for new, class A space. “In that market, a lot of them are growing and right now they have nowhere to go. Obviously, we’re going to get a lot of attention.”
Although “a historically large amount of newly-available second generation space caused Lake County’s vacant [industrial] supply to swell to 7.5-million-square-feet in the second quarter,” up from 6.9-million-square-feet, according to new research by Colliers International, and the overall industrial vacancy rate increased from 9.86% to 10.59%, Thompson says HSA Commercial was not fazed.
“Lake County has always been a fragmented market,” he explains, due to the vast open spaces that separate the several concentrations of industrial buildings. Therefore, most companies in northern Lake County have historically been reluctant to move to the southern region, and vice versa. And even though the county-level vacancy rate increased over the last quarter, the rate among class A industrial space in northern Lake remained less than five percent, Thompson estimates. “So we feel we’re pretty well-positioned.”
The new building will have 30’ clear heights, 28 truck docks, 4 drive-in doors, 300 parking spaces and access to both Highway 41 and Interstate 94. And Thompson says that since most local companies use between 25,000-square-feet and 60,000-square-feet, HSA will retain the flexibility to divide the building down to 25,000-square-foot suites. “I think it’s most likely that this building will get tenants that currently have 30,000-square-feet and need to move up to 40,000-square-feet.” However, “we have a couple of people looking at the building now, and for much larger space,” so they have not set anything in stone.
Michael Caprile, vice chairman, and Steve Roth, executive vice president, of CBRE secured Great Point Investors for the joint venture with HSA. Birmingham-based Regions Bank will provide construction financing for the project, and Premier Design + Build will serve as the general contractor.