Cushman & Wakefield’s third quarter MarketBeat report states that overall industrial vacancy in the Chicago metropolitan area has improved for the 14th consecutive quarter, measuring 6.6% at the end of Q3, down 1.2% from this time last year. Total square feet leased for this area is 27.7 million square feet (msf) year-to-date, an 8.0% increase year-over-year trending to surpass the total space leased in 2013 of 30.9 msf.
“The uptick in activity within the industrial leasing sector is a strong indication of the demand for warehouse/distribution and manufacturing space in the next few years. Consistent growth will manifest Chicago as one of the major industrial centers in the world,” says Simone Schuppan, Director of Market Research for the Central Region and contributor to the report.
The increasing number of new construction projects shows the confidence of owners and tenants in the market. Construction completions totaled 3.7 msf for the year at the end of third quarter with an additional 15.1 msf under construction. The majority of the newly added inventory – 2.4 msf – is located in the Interstate 55 and Interstate 80 corridors. Over half of the new developments are being built on a speculative basis.
Chicago’s industrial market forward outlook remains positive through the end of the year and 2015. With vacancy declining and strong tenant demand, developers and institutional investors are incentivized to continue building ready-to-go speculative warehouse/distribution space in order to meet increasing demands.
