What else can really be said about the monumental industrial boom happening in the Chicagoland region during these last few years? Countless reports have broken down the details and numbers for each quarter, showing signs of strength each time. And yet again, we are seeing more evidence of a record year in the making for industrial construction, leasing and vacancies in the Chicago area.
According to a recent Q3 report from Lee & Associates, there are a couple of figures that stand out. A big one is the net absorption rate. By the end of Q3, the report indicates that the region witnessed 15.76 million square feet of net absorption so far in 2021, which is more than double where the 12-month trailing absorption rate was by the end of Q1 2021 and five times the number in Q3 2020.
However, a chart which compares the annual net absorption rate from the last ten years shows that 2016 still holds the record at around 27 million square feet.
The vacancy rate is also very low right now, which has been an ongoing theme for much of this year. The Lee & Associates report pegs the Q3 2021 industrial vacancy rate at 5.26%. During the same period a year prior, the overall vacancy rate stood at 6.81%.
This means that at 5.26%, the current vacancy rate is even lower than the 6.2% from last quarter, which became a 20-year record low. Consecutive record low vacancy rates is certainly a telling sign of just how hot the regional industrial real estate market is.
And then there’s the sheer amount of new industrial product under construction. While the methodology for capturing and analyzing the data in this specific report isn’t detailed, the report does suggest that we’re currently witnessing a record level amount of projects currently under construction.
There’s still one more quarter left in 2021, and already, the under-construction numbers are breaking through to new heights.
By Q3, there was 22.82 million of new industrial space under construction, the report details. This is already higher than the 21 million square feet of new construction during 2020, which was also a record-setting year. However, the totals reported by Lee & Associates differ from the findings in reports of other CRE companies. For instance, by the end of 2020, Colliers International had pegged that total at nearly 30 million square feet of new industrial product under construction.
Other market indicators can be explored in the following graphic, including total inventory and average asking rent.