Weather, Market Keeps Arsenal On Track

JOLIET, IL-The weather and slowdown in the building industry have paid dividends for CenterPoint Properties Trust, keeping its 1,312-acre CenterPoint Intermodal Center on the site of the former Joliet Arsenal on budget and on schedule. Although the development is expected to take a decade to complete, three tenants already have committed to taking more than 10% of the project’s ultimate space and CenterPoint reports an increase in prospect traffic.

“We’re making tremendous progress,” says Chief Operating Officer Mike Mullen. “Our unusually dry summer has offset the delays we experienced after this winter, when we got 30 inches of snow…We’re moving 11,000 cubic yards of soil a day. Knock on wood, if the weather holds up, we should have all significant excavation completed by the middle of August.”

Construction of rails and roadways will begin in the next two months, Mullen says. Meanwhile, a 1-million-sf building is expected to be ready for DSC Logistic next year.

The largest industrial REIT in the Chicago market reports a “spotty” market with vacancy rates ranging from a taut 1.5% in some city and near suburban areas east of Interstate 294 to 16% in west suburban Carol Stream. Meanwhile, tighter lending has also helped bring speculative building to a virtual halt. That has paid off for CenterPoint, which saw a 27.1% increase in earnings per share in the second quarter despite a write-off of a technology venture.

“Due to the slowdown in the construction trades, we’re seeing very favorable pricing on the subcontracts that are being awarded,” Mullen says.

CenterPoint estimates nearly 16 million sf of industrial space could be built on the site, and already has three letters of intent covering 1.7 million sf. CenterPoint plans to lease most of the property there, although it sold a 56-acre site for $6 million to establish an area comparable of $2.50 per sf.

“We do not want to sell this land,” Mullen says. “I could sell land there all day.”

Instead, CenterPoint plans to rent facilities at $2.95 per sf to $3.50 per sf, noting comparable space costs $3.50 per sf to $4.50 per sf.