Grubb & Ellis has reported in its second quarter industrial analysis that vacancy in the Chicago area dropped 20 basis points to 11.1 percent from 11.3 percent, suggesting that the industrial market continues to experience positive growth.
The manufacturing sector has steadily expanded for the past few years as the economy slowly recovers. The Institute for Supply Chain Management reported that economic activity in the manufacturing sector expanded in June for the 23rd consecutive month, increasing 1.8 percentage points to 55.3.
Significant gains have been made in the automotive industry as it continues to improve, with sales expected to increase by approximately 25 percent since 2009, Grubb notes in the report.
Large deals have been a trend in markets such as I-55 and I-88, but as pent-up demand reaches a critical point “More deals for mid-size distribution space are anticipated, particularly in the retail sector, where demand for warehouse space has been on the rise as more and more consumers shift their preference to online shopping.”
INDUSTRIAL TRENDS HIGHLIGHTS
- Many submarkets reported a continuing recovery in filling unoccupied spaces, with economic factors such as fuel costs, as well as location, contributing to second quarter leasing activity. In addition, some retailers were positioning themselves for future expansion, another positive indicator for that sector.
- Also, LEED-certified buildings remained attractive to local tenants as a means of reducing expenses.
- The Chicago metropolitan area posted 466,000 square feet of positive net absorption during the period, bringing the year-to-date total to nearly 4.4 million square feet absorbed, led by solid gains in the Fox Valley, I-55 Corridor and Central Will submarkets.
- Asking rental rates averaged $3.91 per square foot for warehouse/distribution space, a very slight increase from the first quarter. Quarter-over-quarter, average asking rental rates dropped for general industrial and R&D/flex space, declining 10 cents and 47 cents to $4.26 and $7.95 per square foot, respectively.
