A vacant 40-acre Joliet site has been sold to a logistics developer, marking a major step forward for the long-planned Rock Run Crossing project set to bring big warehouses, 760 apartments and a casino to a new neighborhood in the southwest suburb.
Atlanta-based IDI Logistics paid $12 million for the development site, which is northeast of the convergence of Interstates 55 and 80. Peoria-based Cullinan Properties, led by Matthew Beverly, was the seller.
IDI is planning to build a 677,000-square-foot warehouse that has already been pre-leased to Ecolab, a Saint Paul, Minnesota-based firm that develops and provides technology and systems to treat, and purify water, among other services. It will also build a second 220,000-square-foot warehouse on the site based on speculation, with no pre-leasing of the asset yet completed.
While Chicago-area industrial assets in the development pipeline notched record paces of pre-leasing earlier in the pandemic, the frenzy has slowed some. Even as vacancy in industrial assets fell 40 basis points to 4.7 percent in the first quarter, more sublease offerings are hitting the market. This includes popular submarkets like O’Hare International Airport’s surroundings, which suggests some tenants overloaded on their recent leases, according to Savills. Available space is also staying on the market longer, including in new construction.
“A lot of product is coming on the market, but the vacancy rate is still low, so we’ll see if that product gets leased up or not,” Steve Golumbeck of IDI’s Chicago office said.
He believes logistics developers will start looking for more opportunities to assemble parcels closer to the urban core. Joliet, however, remains in demand as Target took 1.2 million square feet in warehousing at the Rock Creek Logistics Center to notch the first quarter’s largest Chicagoland industrial lease.
“I would say we’re still bullish for industrial, but we think it will be a little less in the farm fields out on I-80 and I-55 and stuff and more interior of I-294,” said Golumbeck, who declined to discuss the anticipated development costs of the warehouse.
As for the seller, Cullinan, it has a few other notable land and development deals in the works. It’s developing 760 apartments on much of the rest of the 330-acre Rock Run site, and is under contract to sell land to Penn Entertainment to assist in the gaming company’s relocation of its Hollywood riverboat casino in downtown Joliet. Penn is planning to build a new casino closer to the interstates bordering Rock Run, a project that could cost $360 million.
Plus, Cullinan is working on rolling out an updated site plan to put another 1 million square feet of commercial buildings up on the land that will include retail, entertainment and commercial space, Beverly said.
“That will complement the casino, the multifamily, with some office use and medical use. We’re striving for a true mixed use work live play environment in Joliet,” Beverly said.
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