Industrial is flourishing across the U.S., and it doesn’t look like it will slow any time soon.
Chicago is no different. With back-to-office still underway, and the future of storefront retail largely dependent, the market continues to shine in the spotlight.
Newmark’s Q1 Chicago Industrial Market Report is only further proof.
Vacancy has hit record lows for another quarter, falling 60 basis points and 180 basis points year-over-year to 4.4%, a 1.8% decline. Additionally, 10.8 million square feet of absorption was recorded in Q1, according to Newmark. This has dipped compared to prior metrics, but demand is still outpacing availability.
Tenants are willing to pay higher for rents because of this and accept fewer concessions in leases. Taking rents increased $0.15 per square foot, and occupiers are being forced to make faster decisions in response.
Newmark found that rent is not the only cost occupiers have to worry about, either. Landlords are passing the baton of typical landlord costs. Some, for example, have declined lease offers for demising space unless the tenant is willing to pay demising costs.
Developers continue to build to try to rectify this, despite the high commodity and materials pricing. About 25 million square feet are currently in progress in the area; 2.3 million square feet has delivered this year.
Leasing velocity is higher, as well. And the submarket that saw the most leasing volume? I-80, with the largest deal of Q1 being Home Depot’s direct lease at Bailly Ridge in Monee for 800,000 square feet.
Other notable I-80 leases include:
- LG: Heritage Crossing in Lockport (543,000 square feet)
- Eaton Vance Corporation: Internationale Centre in Woodridge (371,000 square feet)
Outside of that market, SC Johnson & Son signed at Logiport 57-80 in Country Club Hills for 810,000 square feet. Symbia Logistics took the spot for the largest renewal of Q1, having expanded into 453,000 square feet at Bolingbrook Corporate Center West.
Sales are also off to a great start, reflecting a 67% higher volume in the first two months than the same period last year, based on the report.
Q1’s largest individual property sale was Exeter Property Group’s purchase of 916,000 square feet at Tinley Park Corporate Center from Blackstone’s Gramercy Property Trust. The largest overall transaction was Taurus Investments Holdings’ portfolio purchase of one million square feet from Prologis.
