While investment activity in the Chicago industrial sector has slowed significantly since its height in 2021, the average price-per-square-foot that investors are paying for warehouses, distribution centers and manufacturing space has remained steady, according to the latest research from Avison Young.
That’s one positive sign that the fundamentals of the Chicago industrial sector remain strong even as higher interest rates have kept investors largely on the sidelines.
According to research released last week by Avison Young, since 2018, the average price-per-square-foot for industrial space in Chicago has increased 38%. Avison Young says that this steady increase has been driven by robust demand, showing that the overall health of the industrial sector here is strong despite slowing investment sales.
Avison Young reported that the average price-per-square-foot of industrial real estate in Chicago stood at $100 in 2023. That’s up from $98 in 2022 and $87 in 2021. So far in 2024, that price-per-square-foot figure has jumped to $105.
This is a significant increase from 2018’s price-per-square-foot of $76 in the Chicago industrial market.
Investment sales do remain sluggish in the Chicago industrial market, though. Avison Young reported that these sales were down 50% in 2023 when compared to the year prior. And sales look to fall even further this year. You can blame much of this on today’s higher interest rates.
During the past 12 months, the O’Hare industrial submarket has been the most active in terms of sales volume, with Avison Young reporting $781.2 million worth of transactions. Next was the South I-55 corridor submarket with $439.3 million transacting.
As Avison Young says, both of these submarkets have remained popular to investors and users because of their close access to vital interstates and O’Hare International Airport.
