Industrial N Illinois

Chicago’s industrial boom whimpered at the close of 2017

  
Ridge Brewster Creek II, Bartlett
Ridge Brewster Creek II, Bartlett

Chicago’s industrial construction boom slowed in 2017, posting 1.7 million square feet of completed space in the fourth quarter, compared with 5.8 million square feet in Q4 of 2016, according to research from Avison Young’s Chicago office.

There was 20.7 million square feet of industrial space delivered in all of 2017, an increase of 15 percent from the 18 million square feet delivered throughout 2016. This slowdown in the construction cycle follows several years of record activity, which added 77 million square feet of new product since 2013. Demand for warehouse, distribution and related spaces has been strong, fueled by growth in e-commerce and space modernization in the corporate supply chain.

“This slowdown is not surprising, given the strength and longevity of the current industrial construction cycle,” said Greg Rogalla, senior research analyst for Avison Young’s Chicago region. “While the new space has pushed the vacancy rate upward, the Chicago industrial market remains healthy and should continue to attract tenants to absorb the new space in the near term.”

Net absorption for 2017 was 19.2 million square feet, down from 19.4 million square feet in 2016.

Last quarter’s deliveries included 10 buildings, the majority of which ranged from 100,000 to 200,000 square feet. Two properties exceeded that, falling in the 275,000- to 425,000-square-feet range while two others were smaller than 50,000 square feet.

Approximately 90 percent of the deliveries, totaling 1.5 million square feet, were built as speculative space and remained unleased at the end of 2017. A 200,000-square-foot building in Cary, IL was constructed as a build-to-suit.

The largest completed speculative buildings in Q4 were: LakeView XVIII, a 417,384-square-foot building in Pleasant Prairie, WI; Rock Run XIV, a 291,728-square-foot building in Joliet, IL and the 186,000-square-foot Ridge Brewster Creek II building in Bartlett, IL.

There were 41 additional properties under construction at year-end totaling 12.4 million square feet, a decrease from 61 properties under construction totaling 20.6 million square feet at Q4 of 2016.