Industrial builders in Chicagoland smashed records for new construction this summer, surpassing the already fast development pace of 2021.
didn’t slow metro area groundbreakings. Developers in the third quarter began construction on 48 buildings which, when completed, will total 17.2 million square feet, 32% greater than the previous record, according to Colliers. These projects brought the total under construction to 32.5 million square feet, the most at one time in the market’s history.Advertisement
Developers responded by launching the construction of mammoth facilities, often in outlying suburbs near transportation arteries such as I-55 and I-80, including Romeoville, where Molto Properties this summer broke ground on Weber55 Logistics Park, a two-building, 1.1-million-square-foot complex on 60 acres, and Joliet, where NorthPoint Development just began construction on former farmland of a 1.2-million-square-foot building, part of its new Third Coast Intermodal Hub.
Economic headwinds will soon help slow the pace of construction, according to Colliers Executive Vice President Mike Senner. The Fed jacked up interest rates throughout 2022 to cool the economy and tame inflation. The moves will affect everyone in industrial real estate, and with more hikes likely, project financing is already drying up.
“There will be less of a gold rush mentality, the kind where people need space at any costs,” Lowenbaum said. “Instead, in the future any new construction is more likely to be a planned expansion.”