Renewed vigor. Those are the words that Avision Young used to describe the Chicago industrial market at the end of the fourth quarter of 2016. And that’s a description sure to please the CRE professionals who work this market.
According to Avison Young’s latest industrial market report, both leasing activity and net absorption continued to see positive momentum in the fourth quarter of 2016. In fact, the Chicago industrial market ended the year with significant year-end gains when compared to the end of 2015, according to Avison Young.
Avison Young also pointed to a steady stream of construction of both speculative and build-to-suit projects in the Chicago area, with several large facilities having broken ground during the fourth quarter.
The Chicago industrial market vacancy rate fell to 6.2 percent by the end of the year, according to Avison Young. That’s down 60 basis points from the end of 2015. Submarkets with the largest year-over-year dips in vacancy rates were the South Chicago, South Cook and Lake County markets.
The O’Hare submarket remains strong, too. Avison Young said that the vacancy rate in this submarket dropped 40 basis points from the end of 2015 to the end of 2016, and ended the year at 5.4 percent. In the Interstate-57 corridor, the year-end vacancy rate fell to a record low of 3.8 percent.
With demand for Chicago industrial space so high, it’s little surprise that net absorption in this market was high, too. Avison Young reported that the Chicago industrial market absorbed 19.4 million square feet of space during 2016. The Lake County submarket was especially busy, seeing net asborption of 1.5 million square feet during the year, up a whopping 195 percent from the end of 2015.
When it comes to leasing, e-commerce giant Amazon, not surprsingly, was especially active. Amazon signed three of the top-five biggest industrial leases in the market during the fourth quarter, the largest being a 954,720-square-foot build-to-suit at 1 Duke Parkway in Joliet. That project is being developed by Duke Realty, and is expected to bring 1,000 new jobs to the area.