Target and Solo Cup are opening huge warehouses in the southwest suburbs
By ALBY GALLUN
February 27, 2023 05:16 PM
Two well-known corporate names, Target and Solo Cup, are expanding their industrial footprints in the Chicago area, signing leases for huge warehouses in the southwest suburbs.
In the larger deal, Target confirmed it has leased a 1.2 million-square-foot industrial building under construction in the Third Coast Intermodal Hub, an industrial park under construction in Joliet. It’s the biggest industrial lease in the Chicago area in more than two years and part of a multiyear expansion of Target’s local distribution network.
Solo Cup, meanwhile, has leased a 1 million-square-foot warehouse in Country Club Hills built by Chicago developer CRG, according to people familiar with the transaction. The two new distribution centers combined could employ several hundred people, if not more.
The leases highlight the continued strength of the Chicago industrial real estate market, even as higher interest rates and economic uncertainty have caused many businesses to curb expansion plans and cut jobs. The industrial vacancy rate fell to a record low of 4.5% at the end of 2022 amid a prolonged boom that has brought some glamour to a meat-and-potatoes real estate sector.
The leases also offer an encouraging sign to developers building monster warehouses on speculation, or spec — without signing up tenants before breaking ground. Developers have been building on spec at a frenzied pace, breaking ground on 88 local spec industrial buildings totaling a record 31.8 million square feet in 2022, according to Colliers.
Though construction has slowed down amid higher interest rates and greater caution among lenders, strong demand for warehouse space will need to continue to soak up all that new supply.
“Both leases demonstrate that industrial demand hasn’t backed off much at all, especially for mega-sized spec warehouse projects,” Craig Hurvitz, vice president of research in Colliers Rosemont office, wrote in an email.
The Target spokesman confirmed the Minneapolis-based retailer has leased a 1.2 million-square-foot warehouse at 101 Compass Boulevard in Joliet for a “supply chain facility.” It’s the first building leased in a 530-acre industrial park approved by the Joliet City Council last May. A representative of the project’s developer, Kansas City, Mo.-based NorthPoint Development, did not respond to a request for comment.
Target has been expanding its local distribution network in recent years, opening a 1 million-square-foot warehouse in Chicago’s Little Village neighborhood in 2021. It followed up last year with leases for two smaller warehouses in Elmhurst and on Chicago’s Southwest Side, near Midway Airport. The chain also operates a 1.4 million-square-foot distribution center in DeKalb and another 1.2 million-square-foot facility in Joliet that opened in 2019, according to real estate data provider CoStar Group.
Target also recently disclosed a $100 million plan to expand its next-day delivery capabilities by opening six new sorting centers around the country.
It’s unclear how many people will work at Target’s new Joliet warehouse. When it opened its Little Village distribution center, the company set out to hire 2,000 employees to work there. The Target spokesman declined to elaborate on the retailer’s plans for the Joliet facility, writing that “we’ll have more details to share as we get closer to opening.”
Solo Cup is moving into the Cubes at Country Club Hills, a 1 million-square-foot building CRG developed near the intersection of interstates 57 and 80. Once a private company based in Lake Forest, the maker of the red plastic cups popular with partygoers was acquired in a $1 billion deal in 2012 by Mason, Mich.-based Dart Container.
A Dart spokeswoman declined to comment. CRG announced the lease but declined to name the tenant, identifying it only as “a national manufacturer.”
The southwest suburbs are a popular spot with many companies seeking distribution space, because they’re close to important crossroads. With warehouses near the intersection of I-80 and I-57 or I-80 and I-55, they can ship goods by truck to a large section of the country in just one day.
“With proximity to a wide swath of the U.S. population, the Midwest ranks as a top industrial market, and modern super-bulk facilities like this one are in short supply,” Jeff Lanaghan, CRG senior vice president, said in a statement.
Brokers at Cushman & Wakefield represented CRG in the lease, while brokers at Newmark represented Solo Cup.
Nothing about NorthPoint is easy, and that was the case again this week with the annexation of 55 more acres for the massive warehouse project. NorthPoint Development wants to develop more than 1,200 acres for warehouses, a plan fiercely opposed by residents who live closest to the proposed development called the Third Coast Intermodal Hub.... Read more →