Colliers International | Chicago has released its third quarter Industrial Big Box Report, exploring market conditions within the Chicago area’s industrial facilities larger than 300,000 square feet.
According to Colliers’ report, the vacancy rate for modern big box facilities improved by 34 basis points during the third quarter to 7.17 percent– one of the lowest rates this segment of Chicago’s industrial market has historically witnessed. This rate is 149 basis points below the 8.66 percent rate recorded one year ago and about half of the peak 14.32 percent rate recorded during the first quarter of 2011.
Net absorption among big box buildings during the third quarter of 2016 totaled 3.6 million square feet, bringing the net absorption tally through the first three quarters of the year to 11.4 million square feet.
This is ahead of the 10.3-million-square-foot net absorption total during the first three quarters of 2015. Big box net absorption during the third quarter represented 69.3 percent of the 5.3 million square feet of net absorption recorded among all buildings in Chicago’s industrial market.
The largest third quarter big box transactions, include: Georgia Pacific‘s lease of a 1,000,560-square-foot build-to-suit project being developed by Venture One Real Estate in University Park’s Gateway 57 Corporate Park; and Amazon.com‘s signing of a 856,605-square-foot lease for a build-to-suit facility being developed by Seefried Properties, Inc. and USAA Real Estate Company in Monee’s Bailly Ridge Corporate Center.
New leases and lease expansions among big box facilities totaled 2.1 million square feet during the third quarter, only 73 percent of the 2.9-million-square-foot new leasing total recorded during both the second and first quarters of 2016.
Seven big box construction projects totaling 3.3 million square feet were completed during the third quarter. Five of these projects were built on a speculative basis, two of which were leased by electronics giant LG and MOM Brands upon completion. The other three speculative projects were delivered vacant.
A total of eight big box construction projects were started during the third quarter, bringing the total of ongoing projects to 21. There are currently 13.3 million square feet of big box construction projects underway in the market, of which 11 projects, representing 42.8 percent of the ongoing construction activity, are being built on a speculative basis. The remaining ten developments totaling 7.6 million square feet are build-to-suit projects or building additions.