LIVE BLOG: CIP Transportation & Logistics Conference

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20121101-081146.jpgJones Lang LaSalle’s Kris Bjorson is participating in a panel discussion on the evolving state of the transportation/logistics market in Chicago and the Midwest. Other panelists include architect Karl Heitman, CenterPoint Properties’ Michael Murphy, Clarius Partners’ Kevin Matzke and Providence Logistics’ Chris McGrath.

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9:05 a.m. — Murphy on the demand for warehouse/distribution space: “We’ve seen pretty healthy leasing activity and what I’ll call ‘rent stabilization.’ Our occupancies are as high as they’ve been in three or four years.”

9:10 a.m. — Matzke on tenants’ appetite for long-term leases as opposed to short-term extensions: “We’re all trying to break out of what has been a real psychological paralysis. The user community just doesn’t feel good about making bets on the future and I don’t know what’s going to change that.”

9:15 a.m. — McGrath : “Users are looking at the bottom line and the lowest total delivered cost to the customer. It’s all about the supply chain … the cost of fuel, the cost of labor.”

9:18 a.m. — Bjorson: “30 to 40 percent of the growth is e-commerce related.”

9:19 a.m. — Bjorson: “When Illinois is No. 5 on every single multi-market (distribution center) search, there’s a problem. We’re not competing on a regional basis.”

9:21 a.m. — Heitman on the evolution of warehouse design: “We’re seeing a lot more automation in the buildings because of the velocity at which these products are moving in and out of the buildings. We’ve needed to increase the column spacing to increase flexibility.”

9:27 a.m. — Heitman: “The energy codes in Illinois have changed and now they’re actually more stringent than LEED.”

9:29 a.m. — McGrath: “There’s more than one type of building in the market today and that’s being driven by the needs of the customer. You’ve got your square buildings and then you’ve got a lot of folks who want a very narrow cross-dock building. One size does not fit all.”

9:34 a.m. — Murphy is now discussing CenterPoint’s development of a new 650,000-SF “rapid deployment” center and a 1.6M-SF supply distribution center for Home Depot in Joliet.

9:42 a.m. — Bjorson on e-commerce: “Traditional (bricks-and-mortar) retailers on the whole are only a fraction of the way there in terms of e-commerce growth — 3 out of 10 on a spectrum. They’re still trying to fully understand what we the customers want. There’s tremendous growth ahead in terms of e-commerce.”

9:45 a.m. — Heitman: “The good news for Chicago is our central location. Labor and taxes are high, yes, but there’s definitely a movement to the central part of the U.S. and e-commerce is driving that.”

9:51 a.m. Matzke: “Things that are unsustainable tend to end and we can’t sustain this level of negativity forever. Somebody said we (in industrial real estate) are having fun again, and that’s a good sign. And if you actually look at the numbers, they’re not that bad.”

9:53 a.m. Heitman on the ideal make-up of a spec building in today’s market: “650 (thousand SF) minimum in terms of volume, lots of room for parking, clear heights in the 35-foot range with lots of power and baseline design for LEED certification.”

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