The Industrial Real Estate Risk Playbook With Daniel S. North
For most of the last decade, the legal language buried in industrial and data center contracts was an afterthought. Buyers and developers fought over price, timing, and tenant credit, then signed off on standard clauses they assumed would never come up. That assumption no longer holds. Tariffs, supply chain volatility, geopolitical risk, and a strained power grid have moved a handful of once sleepy contract provisions to the front of the negotiation, and the deals that finance and close on schedule are increasingly the ones that got the risk allocation right at the letter of intent stage.
Daniel S. North, a partner in the Chicago office of Polsinelli with more than a billion dollars in national property transactions behind him, has built a practice around exactly this shift. His view of where the friction now lives is a useful map for any owner or investor operating in the Chicagoland and Wisconsin industrial corridors.
Force Majeure Stopped Being Boilerplate
Ten years ago, force majeure was background language. It sat near the end of the lease or purchase agreement, rarely read and almost never negotiated. Today it is a business term that gets fought over line by line, often before a deal even reaches a definitive agreement.
The change is practical. A single clause now carries detailed carve-outs for pandemics, government shutdowns, tariffs, and supply chain disruption, because each of those events actually happened or threatened to happen inside recent deal timelines. The party that bears the consequences of a delayed delivery or a tariff-driven cost spike is no longer decided by a default template. It is decided by negotiation, and the side that understands the mechanics walks away with the better allocation.
Timing Risk Is Not Pricing Risk
One of the most useful distinctions for anyone underwriting a development or build-to-suit is the difference between timing risk and pricing risk. They look similar on a Gantt chart and behave very differently on a balance sheet.
Timing risk is the possibility that a delayed shipment of steel, switchgear, or rooftop units pushes delivery past a critical date. Pricing risk is the possibility that the same disruption raises the cost of those materials between signing and completion. A delay can often be absorbed with schedule float or a revised delivery window. A price increase has to land on someone, and the contract decides who. Treating the two as a single line item is how parties end up surprised when a supply chain problem turns into a margin problem.
Why Contractors Are Walking Away From Guaranteed Maximum Price
The guaranteed maximum price structure was the comfortable default for owners who wanted certainty. Set a ceiling, and the contractor absorbs overruns above it. In a stable materials market that trade worked. In a volatile one, contractors are increasingly unwilling to accept a true guaranteed maximum, because they cannot price risk they cannot forecast.
The result is more shared-risk language, more contingency built into budgets, and more attention to escalation clauses that spell out what happens when a material doubles in cost mid-project. For owners and developers in Chicago industrial real estate, that means underwriting needs to assume the contractor will not eat every surprise, and the capital stack has to be built with that reality in mind.
Data Centers Run on Wattage, Not Square Footage
The fastest-growing corner of the market follows a completely different logic. Data center deals are priced and structured around power, not floor area. A gigawatt project is described in megawatts and the cost of delivering them, not in rentable square feet, and that single fact reshapes the legal strategy around the asset.
Phasing becomes central. Because utility capacity arrives in stages over a multi-year buildout, large projects are structured to match construction milestones to the grid’s ability to actually deliver electricity. The contract has to account for a utility timeline the developer does not control. This is the same valuation puzzle explored in our breakdown of valuing Chicago data centers and adjacent properties, where wattage and power access drive pricing in ways traditional square-foot comparables miss entirely.
Development also carries a political dimension that industrial product rarely does. Communities raise concerns about water usage for cooling, electricity costs for existing ratepayers, and noise. Those concerns show up as entitlement risk and timeline risk long before they show up in an operating budget.
The Power Grid Is the Constraint Nobody Priced In
North argues the most underappreciated story in commercial real estate is the power grid itself, and the infrastructure constraints that will dictate where and when the next decade of development gets built. The data supports the concern. Data centers accounted for roughly 4% of total US electricity use in 2024, with demand expected to more than double by 2030. One market research forecast projects US data center grid power demand will rise to roughly 134 gigawatts by 2030, nearly triple the 2024 level.
For deals on the ground, the implication is simple. Power availability, not land, is becoming the binding constraint on siting decisions across high-demand nodes. That changes which parcels are worth pursuing along the I-55 corridor, the O’Hare submarket, and the southeastern Wisconsin markets absorbing reshoring and logistics activity. A site with capacity in hand is worth more than a comparable site stuck in an interconnection queue, and the gap is widening.
Risk Looks Different by Asset Class
The right legal strategy is asset-specific. Industrial product lives or dies on speed to market, so the contract priorities are delivery certainty and tenant flexibility. The rise of small bay industrial reflects this, where tenants prize speed, location, and stock turnover over raw size, a dynamic detailed in our conversation on building a small bay industrial portfolio with Frank Forte.
Multifamily turns on financing contingencies and the terms that let a deal survive a shifting rate environment. Student housing answers to a calendar, with delivery windows tied to the academic year that leave no room for a late completion. A clause that protects an industrial developer can be useless to a student housing sponsor, and the practitioners who close consistently treat each asset on its own terms. For a broader read on how these dynamics are playing out locally, our Q2 2026 state of the Chicagoland market tracks the leasing and development activity behind these structures.
Structuring Deals for the Market We Actually Have
The risk allocation strategies North outlines are increasingly the difference between deals that close on schedule and deals that stall in committee. Van Vlissingen and Co. works with owners, developers, tenants, and investors across Chicagoland and Wisconsin to structure leases, dispositions, and acquisitions that account for the construction risk, power constraints, and infrastructure realities reshaping the market today. To hear the full conversation with Daniel North, listen to the episode on The Real Finds Podcast, and reach out to our team to talk through how these frameworks apply to your next deal.