December 2024
Karis Cold building Chicago’s first speculative cold-storage facility as demand heats up
Construction has begun at Chicago’s first speculative cold-storage facility.
Those working on the project, however, don’t expect it to be the last as demand for cold storage continues to grow, not just in Chicago but across the nation.
General contractor Development Solutions Inc. completed demolition of 3815 S. Ashland Ave. earlier this fall, paving the way for Karis Cold Stockyards to come online. The 100,000-square-foot project will be the city’s first cold-storage facility to offer a 50-foot clear height.
Construction is expected to be completed by July.
A project four years in the making, Karis Cold Stockyards will provide a new option for end users seeking cold storage space in downtown Chicago, according to the facility’s leasing agent John Basile with NAI Hiffman. The NAI Hiffman leasing team for Karis Cold Stockyards includes Basile, Alex Sutterer and Packy Doyle.
“We’re trying to replace the stock that’s being taken out of inventory as well as address changing consumer needs,” Basile told the Chicago Business Journal. “The vast majority of existing facilities are dated and are no longer efficient.”
Changing dynamics of Chicago’s legacy manufacturing neighborhoods has further driven the growing shortage of modern freezer buildings. Nowhere is this more apparent than in the Fulton Market District, Chicago’s oldest food marketing district and historic home to all sorts of meatpacking, warehouse and industrial businesses. Now it is Chicago’s hottest neighborhood for tech.
“So many facilities have come offline. It all started with Fulton Market, with the Fulton [Market] Cold Storage building becoming Google, which kicked off the resurgence in the West Side,” Basile explained. “Fulton Market was such a center of food production, all of that has been converted to residential and office, which only plays into the narrative of older, dated product coming out of inventory and needing to be replaced with new inventory.”
Sitting several miles south of Fulton Market, the former abandoned manufacturing facility where Karis Cold is building its new facility was an “eyesore” for the community, Basile said.
How changing consumer tastes are fueling the market for cold storage
Karis Cold Stockyards is already seeing strong pre-leasing activity amid increased demand for these types of facilities as consumer preferences have continued to move away from shelf-stable foods to more fresh and frozen foods.
Globally, the cold-storage market is projected to grow by 17% annually between now and 2029, according to Research and Markets, with frozen food consumption accounting for over 75% of worldwide sales.
In Chicago, the sector’s growth has been even more pronounced as the city has become one of the nation’s largest and highest-performing cold-storage markets, according to Nick Schlanger, NAI Hiffman research director.
“We’re currently tracking 15.9 million square feet of cold storage with only 1.5% of those currently vacant. That vacant number has been below 5% since the start of 2019, driving new construction and demand,” he told the Chicago Business Journal.
Schlanger added that a third of the new construction is built on a speculative basis, meaning there’s no tenant commitment, demonstrating the high confidence in this segment of the market right now.
“We want our food produced locally,” Basile told the Chicago Business Journal. “We want fresh foods, we want fewer ingredients and we want oversight into what we put on the table, and that’s resulted in an increased need for storage of frozen and refrigerated foods.”
About Hiffman National:
Based in the Chicago area, with an additional five regional hubs and 30 satellite offices, Hiffman National provides superior property management, project services and accounting services to a diverse portfolio including office, medical office, retail and industrial properties nationally. The firm’s comprehensive property management platform and attentive approach to service contributes to client NOI and has helped the firm to more than double in size in five years. Hiffman National is an award-winning company with more than 250 employees strategically located throughout North America.
About NAI Hiffman:
NAI Hiffman is one of the largest independent commercial real estate services firms in the US, with a primary focus on metropolitan Chicago, and part of the NAI Global network. We provide institutional and private leasing, property management, tenant representation, capital markets, project services, research, and marketing services for owners and occupiers of commercial real estate. To meet our clients’ growing needs outside of our exclusive NAI Hiffman territory, we launched Hiffman National, our dedicated property solutions division, which provides property management, project services, and property accounting services across the country. NAI Hiffman | Hiffman National is and award winning company headquartered in suburban Chicago, with more than 250 employees strategically located throughout North America.
