Chicago industrial construction starts have slowed down over the past year, according to a review by Colliers International. At the end of 2017, 8.9 million square feet of industrial space was under construction, the smallest amount in four years and only 41 percent of the 21.9 million square feet under construction at the end of 2016.
Those construction starts in 2016 contributed to the record-setting 24.8 million square feet of space that were delivered in 2017 across 88 projects. But the dramatic drop off in construction starts from 2016 to 2017—28.8 million to 13.1 million square feet, respectively—means that the total square footage under construction has fallen each quarter since.
The fewer construction starts during 2017 may actually be good news, since 43.9 percent of the speculative activity completed since 2013 remains vacant. Spec space completed over the past two years is currently sitting at a 64 percent vacancy.
For those new projects started since 2013, both speculative and build-to-suit, the average size is up about 13 percent to an average size of near 300,000 square feet. Most new buildings in that time frame are in the 100,000-199,999-square-foot range. Spec projects larger than that are experiencing the highest vacancy rate, with buildings in the 300,000-499,999-square-foot range enduring 59.1 percent vacancy.
Chicago’s southwest suburbs, especially in Will County, continue to see the most developer interest. Over the past four years, 45.5 percent of the speculative and build-to-suit development has occurred in either the I-80 Joliet Corridor or I-55 Corridor submarkets.