In the O’Hare Airport submarket of Chicago, logistics demand is understandably high. In a market where vacancies for distribution space recently reached levels as low as 3 percent, opportunities for new infill redevelopment are limited. It’s also wise to make the most of the space available.
This was certainly the case for Duke Realty’s recent speculative redevelopment at 901 Chase Avenue. The new, 154,000-square-foot logistics property is in Elk Grove Village, near the north cargo gate of O’Hare and minutes from the I-90 and I-290/355 interchanges. It’s LEED Certified®, as are all newly developed Duke Realty projects. And it’s an attractive location, especially for companies looking for first-generation space and a large, diverse labor pool.
A tool and die caster had formerly occupied the site, which had undergone previous environmental remediations in the ’80s and ’90s. The seller of the property understood that its attraction also came with environmental challenges.
“He knew he needed a sophisticated buyer who would be able to handle whatever remediation was needed,” said Susan Bergdoll, Vice President of Leasing and Development for Duke Realty in Chicago. “It takes time, and it takes expertise. He didn’t want to get 90 days through due diligence and have a buyer walk away because they couldn’t figure it out.”
In the case of 901 Chase, Duke Realty has successfully remediated the property, and 47,000 of the 154,000 square feet have already been leased to UPS. Predictably though there were a few challenges along the way.
“Before we agree to a close, we do a significant amount of testing to look at what’s there. Along with the history of the site, this leads to our initial plan for development,” said Bergdoll. “In developing this site, we found a few things we weren’t necessarily expecting, but we were able to remediate those responsibly.”
“In the process of demo, you never know what you’re going to find,” said Jessica DeFrances, Duke Realty Construction Project Manager for 901 Chase. “We had an environmental engineer on site full-time to help advise us on how to proceed with all contaminants encountered. We remediated the site to what the EPA required and as advised by the engineer.”
Since infill is at a premium near O’Hare, the team decided to maximize the buildable area and trailer parking by using an underground stormwater retention system. “You dig out a huge underground area and install storage tanks to hold all of the rainwater—and then release it into the system at an agreed-upon rate,” said Bergdoll. “It’s more expensive, but that allows you to develop more of the site.”
In the future, Bergdoll sees the 901 Chase project as a model for infill development in the area. “We have another site in Chicago that we haven’t developed yet, but we’ve done our due diligence and are definitely using some of the same approaches that we learned at 901 Chase,” Bergdoll said.
“Any infill redevelopment that you’re doing in the Chicago area has a very high chance of environmental issues,” Bergdoll added. “Ideally you have a seller who is willing to work with you on the front end to allow you to do all the testing that you need to do.”
As of June 2020, nearly a third of the space at 901 Chase Avenue has been leased. There has been strong interest in the remaining 107,000 square feet. Those interested in leasing space may contact Avison Young representatives Brian Colson at 847.886.0228 or Brian Pomorski at 847.232.8612.