Finding those elusive small industrial buildings

Jan. 16, 2024 — Despite a wave of new industrial construction hitting the market in 2024, the inventory of small industrial buildings — those under 75K SF — remains scarce. Inventory in that size range is low, given challenges finding suitable land sites and the higher costs to build smaller sites. The result? Bidding wars and the need for deeper market intel and quick responses when buildings become available. This dynamic is presenting challenges for Chicago area businesses looking to expand their industrial space. One notable exception is this small industrial building for lease.

Small industrial buildings in O’Hare submarket

This is particularly apparent in the O’Hare submarket, where developers and investors have scooped up many properties over the past several years. There is little opportunity to buy land sites  — and the cost analysis for small industrial buildings isn’t favorable. The O’Hare submarket recorded 1.8 million square feet of new space delivered over the past 12 months. Construction activity has dropped over the last few quarters, however, and there is only 240,000 square feet under construction, according to CoStar research. That space is spread across three buildings ranging from 27,840 to 132,500 square feet. Deliveries are expected in April through October of 2024. There also are 10 additional buildings proposed.

Brown Commercial Group’s Vice President of Sales Mason Hezner, has these tips for navigating a market segment where multiple offers and quick decisions are driving activity:

• Start working with a broker now to define your space needs and locational preferences. The Brown Commercial team is constantly monitoring the market and often knows about space before it becomes available.
• Define your 3-5 year growth projections. Will you need to expand or add a location or move closer to different transportation options or labor pools?
• Get financing (or cash) in order now so you’re ready to jump as opportunities arise.