NAI Hiffman presented its Third Quarter 2014 Market Peek, a first look at the market statistics for the Chicago Metropolitan industrial and office real estate markets.
More Than 15 million SF Under Construction in Industrial Market
The industrial market witnessed its 17th consecutive quarter of improving conditions during the third quarter. 1.8 million SF of vacant space was absorbed between July and September, bringing the tally for the first three quarters of the year to 8.4 million SF absorbed.
Despite continued absorption, the overall industrial vacancy rate held steady at 8.1% due to the completion of unleased speculative buildings and the demolition of several buildings in the market.
Construction activity continues to accelerate, with more than 15 million SF currently underway, the most development seen in more than six years. 46%, or about 7 million SF, of those construction projects are being built on a speculative basis with no tenant in place. The remainder are build-to-suit projects.
Suburban and Downtown Office Market Vacancy Rates Improve
During the third quarter of 2014, Chicago’s suburban office market absorbed more vacant space than the downtown market for the fourth consecutive quarter.
Between July and September, net absorption totaled 245,000 SF in the suburbs compared to 116,000 SF in the downtown office market. However, the downtown vacancy rate improved by 29 basis points to 12% by the end of the third quarter, while the suburban vacancy rate improved by only 19 basis points to 18.9% in the same time period.
More than 3.7 million SF of new construction is underway, including a 53-story, 1.2-million SF office tower at 150 N Riverside Drive in Chicago breaking ground during the third quarter.
