Chicago’s industrial market recorded 3.7 million square feet of net absorption during the first quarter of 2017. This represents 20 quarters in a row where the net absorption total has been positive, demonstrating continued strong demand. Accordingly, the vacancy rate improved by 11 basis points (BPS) between January and March, dipping to 6.6% — the lowest rate recorded since the third quarter of 2001.
Vacancy and Absorption
The overall vacancy rate of 6.6% is 46 BPS below the Q1 2016 rate. In several submarkets — including O’Hare, Central DuPage and the I-80/Joliet Corridor — the vacancy rate has dropped to a new record low.
A total of 52 construction projects totaling 18.3 million square feet are currently under construction, all of which are expected to deliver by the end of 2017. Speculative development accounts for 8.4 million square feet, or 46% of the ongoing activity, none of which has been pre-leased.
Leasing and Sale Activity
New leasing activity, which includes new leases and lease expansions, totaled 7.5 million square feet among 118 leases during the first quarter. The largest new lease involved CTDI, Inc. leasing 501,313 square feet in the 751,769-square-foot building recently completed at 3900 Brandon Road in Joliet’s CenterPoint Intermodal Center.
For more details, download the latest Chicago Industrial Report. This quarter, we completely redesigned the report to provide a more comprehensive summary of market activity through useful charts, tables and maps.
Craig Hurvitz is vice president of market research at Colliers International | Chicago and leads the Industrial Advisory Group’s market research initiative. Craig is responsible for managing and maintaining the industrial properties database, which includes property sales and leases, tenant information and comparable transactions. He has a deep understanding of the Chicago-area industrial real estate market and provides in-depth analyses, reports and market trends that are referenced by a diverse group of clients including landlords, appraisers and developers.