The DuPage Business Center is an enviable position to maintain the momentum that has been building over nearly three years has resulted in more than 270 acres being sold or under contract.
Results like those don't just happen. They result from deliberate effort and tremendous support. And it doesn't hurt to have been in the midst of one of the greatest economic booms and industrial real estate cycles.
As we market DuPage Business Center, highlighting this recent activity and promoting the opportunity that exists within the center's remaining 110 acres, we attribute the Center's success to:
• Development flexibility -- Opportunity for development within the park expanded significantly in 2017 with the expiration of a 10-year, exclusive agreement with a national industrial firm to develop the park.
Most other parks in the area are developer controlled and they are only interested in leasing space. DuPage Business Center can accommodate developers and users who want to acquire land and build their own buildings. We also have the ability to deliver a build to suit for sale or lease for companies that don't have that expertise.
This flexibility sets us apart from the competition. To underscore this advantage, today there are 7 different groups that control 260 acres and are in varying stages of development of 3.3 million square feet of space.
• Shift in Positioning/Market Perception -- Further broadening the marketability and appeal of the DuPage Business Center was an intentional shift in 2012 away from aggressively marketing the business park as a technology center. As part of that process, the DuPage Technology Park officially became the DuPage Business Center. This bolsters the message that all businesses are welcome there.
• DuPage Airport Authority and West Chicago: Pro-Business -- Since the business center was originally launched in 2006, the DuPage Airport Authority, West Chicago and several of the local West Chicago governmental entities have always been strong advocates for development and has contributed valuable incentives to help attract all types of businesses, including developers. The strategy has paid off as four of the businesses now located with the park came from locations outside of West Chicago.
• Riding the Industrial Wave -- The strength of the industrial market has been witnessed across the Chicago metropolitan area, in virtually all of the various submarkets. According to the most recent statistics from NAI Hiffman, the demand for space remains strong, including in the Fox Valley Corridor where the vacancy rate is 4.44 percent. One year ago the rate was 3.67 percent and in 2017 it was 6.38 percent. In the neighboring I-88 corridor, the vacancy rate is 5.09 percent. One year ago the rate was 4.82 percent and in 2017 it was 4.83 percent.
The marketplace, Chicago overall and submarkets like the Fox Valley and I-88 Corridor, has been incredibly strong. With the available supply shrinking, strong demand for land continues to exist.
With sales totaling 75 acres that already have closed in 2019 and two additional parcels totaling 48 acres under contract, NAI Hiffman says land remaining available for development at DuPage Business Center now totals 110 acres. Lot sizes range from 5 to 46 acres. Depending on uses and design configurations, this means sites likely could accommodate users from 50,000 square feet to 800,000 square feet.
Successful projects in the I-88 and Fox Valley submarkets have historically been in the 200,000 to 500,000-square-foot range. DuPage Business Center is uniquely positioned to capitalize on that segment of the market. According to NAI Research, since 2017 the average size of a newly constructed industrial development (minimum of 100,000 square feet) has decreased from 302,900 square feet in 2017 to 177,100 square feet on 2018 to a midyear 2019 size of 174,400 square feet.
Smaller companies who want to own their own buildings have very limited option unless they are willing to move to the outskirts of Metro Chicago. We can offer fully improved sites in an established business park with off-site detention which is rare. We expect demand for smaller sites to come from smaller users. Most developers cannot achieve economies of scale building small speculative buildings.
With the range of parcels available, DuPage Business Center is well positioned in the market to meet the ongoing demand of users in the market, whether that's through a build-to-suit development or a developer putting up a spec project. As long as interest rates continue to be relatively low, business owners can find competitive financing for the purchase of land and buildings. Obviously if that changes we could see a slowdown in overall activity but as long as the fundamentals remain strong we don't see "being long in the cycle" as an issue.
Mark Moran, an Executive Vice President at NAI Hiffman who along with John Whitehead and Jim Adler has been marketing the park since 2017 says, "The combination of these factors has been the perfect storm for a sustained run of activity that has seen 70 percent of available land at the DuPage Business Center in varying stages of the disposition process."
• Mark Moran is an executive vice president with NAI Hiffman in Oakbrook Terrace.