“There is probably a two- or three-year supply of spec product in Chicago right now,” concedes Matt Kurucz, development manager for the Chicago region at IDI. He doesn't expect demand for space to pick up substantially until the third quarter of 2009. “We used to have five or six companies at any one time looking for 1 million feet each. That kind of tenant is very rare right now.”

Some developers, like Pizzuti Cos., based in Columbus, Ohio, are determined to differentiate themselves. Pizzuti finished a spec building of 648,000 sq. ft. in Romeoville astride I-55 in late summer featuring high-diffusion skylights and other energy-saving features. “We can show tenants how they can save 40 cents per foot in energy costs by moving into this building,” says Michael Chivini, executive vice president of Pizzuti.

When railroads and highways aren't enough, proximity to air cargo can be an advantage. In Rockford, 60 miles northwest of Chicago, United Parcel Service has expanded its shipping hub at the city's Chicago Rockford International Airport.

Corporate tenants have come piling into the market, including hardware retailer Lowe's Cos., which moved into a 1.2 million sq. ft. building a year ago, and Kerry Americas, a food distribution company owned by an Irish firm, which is in the process of erecting 220,000 sq. ft. in two buildings.

Par Tolles, president of DP Partners in Reno, worries that Chicago's industrial market overall is falling behind other markets. The company owns business parks in New Jersey, Las Vegas, Los Angeles and other places. A 496,000 sq. ft. spec building erected by DP in the south suburb of Sauk Village, available since May, has attracted a trickle of tenant prospects.

“Our developments in New Jersey and Savannah, Ga., are leasing up now. Their operations are close to normal,” Tolles says. “For whatever reason, Chicago has been slower.”

The Sauk Village DP building is near the future site of CenterPoint's Crete intermodal railpark and close to the site of a proposed third major Chicago area airport. “The airport might not ever get built, and the intermodal could be years away, too,” says Tolles. “But if the intermodal is built, it would be icing on the cake for us. We'd love to see it happen.”

So would many other Chicago developers. The city has grown and prospered as a crossroads for rail traffic. In the future, there is a growing realization that it will be the railroads that will get the local industrial market humming with activity again.

H. Lee Murphy is a Chicago-based writer.

CHICAGO - BY THE NUMBERS

LARGEST PRIVATE EMPLOYERS

1. Jewel-Osco supermarkets
   35,500 employees

2. Advocate Health Care
   28,000 employees

3. United Parcel Service of America
   21,000 employees
   Source: NREI estimates

METRO POPULATION:
8.4 million

Source: U.S. Census Bureau

UNEMPLOYMENT RATE:
7.5%

Source: Illinois Department of Employment Security

METRO AREA VITAL SIGNS

Office:

16.9% vacancy, 2Q 2008

16.9% vacancy, 2Q 2007

$32.81 rent per sq. ft., 2Q 2008

$31.42 rent per sq. ft., 2Q 2007

Source: Grubb & Ellis Co.

Multifamily:

8.4% vacancy, 2Q 2008

4.6% vacancy, 2Q 2007

$2.39 average rent per sq. ft, 2Q 2008

$2.30 average rent per sq. ft. 2Q 2007

Source: Appraisal Research Counselors

Retail:

8.6% vacancy, 2Q 2008

7.5% vacancy, 2Q 2007

$23.53 rent per sq. ft., 2Q 2008

$22.72 rent per sq. ft., 2Q 2007

Source: Reis

Industrial:

9.4% vacancy, 2Q 2008

8.3% vacancy, 2Q 2007

$4.58 rent per sq. ft., 2Q 2008

$4.31 rent per sq. ft., 2Q 2007

Source: Grubb & Ellis

Hotel:

70.9% occupancy, 2Q 2008

73.8% occupancy, 2Q 2007

$199.22 average daily rate, 2Q 2008

$190.25 average daily rate, 2Q 2007

Source: Smith Travel Research

MAJOR PROJECTS

Chicago Spire: Marketing has started in the U.S. and overseas for the corkscrew-shaped 2,000-ft. tower designed by Spanish architect Santiago Calatrava on the near north side of the city. There will ultimately be 1,300 condominium units spread over 2.5 million sq. ft., with prices topping $1,200 per ft. The new building is expected to dwarf the Sears Tower, which rises 1,730 ft. The spire also is expected to be the tallest building in North America when it is completed.

Developer: Shelbourne Development Ltd.

Completion: 2011, unofficial estimate

Cost: $1.5 billion, unofficial estimate

River Point: A 50-story office tower planned at 201 N. Canal St. in the West Loop neighborhood spanning 1.1 million sq. ft. Investment firm William Blair & Co. signed on as the lead tenant, taking 325,000 sq. ft. The high-rise will overlook the Chicago River.

Developer: Hines Interests, L.P. with minority partners

Completion: Summer 2011

Cost: $400 million