The Chicago area remains a key industrial hub and target for investors, with the market experiencing a 30.4 percent increase in industrial sales activity year-over-year, through February 2019. Like many markets around the country, portfolio sales volume contributed to Chicago’s industrial velocity.
According to a recent report from Avison Young, Chicago is poised for another strong year as Q2 2019 approaches. The metro falls behind Dallas, which saw a 45.7 percent jump in industrial sales from February 2018 to February 2019. Investment sales data was tracked through Avison Young research and sales data provided by Real Capital Analytics.
“The growth in e-commerce and corporate supply chain needs continues to fuel strong absorption and construction, which are positive barometers for the investment market,” said Erik Foster, Avison Young principal and leader of the firm’s national industrial capital markets group. “We expect to see strong fundamentals and sales volume continue in the Chicago market as we move further into 2019.”
Institutional investors have made a big push into the industrial sector in recent years and continue to lead a significant amount of sales volume in the Midwest and across the U.S. In Chicago, there were $469.7 million in sales over 51 properties in January and February 2019. Only Los Angeles saw more with $992 million and 73 properties.
More than half of Chicago’s sales volume in the first two months of the year were in portfolio sales, with $244.3 million. Portfolio sales were up 100 percent year-over-year, while individual sales were down 10.3 percent over the same time frame. This Q1 2019 activity follows a strong 2018 in Chicago, which had $6.4 billion in industrial sales, a 44.3 percent increase from 2017.
“Institutional investors are looking to capitalize on the strength of the industrial sector and the increasing rental rates in many markets,” said Foster. “By leveraging their financial bandwidth they can gain access to key industrial markets and scale up their presence quickly.”
Buildings sold through February 2019 in Chicago had an average price of $83 per square foot. Among the notable sales was one that sent four Chicago buildings totaling 1.26 million square feet to Dream Industrial, a Toronto-based REIT. The buildings—located in Alsip, Des Plaines, Melrose Park and Waukegan, Illinois—were part of a 21-building, 3.5 million square foot portfolio in multiple markets that sold for $179 million in February of 2019. The seller was Transwestern Investment Group.
