Five straight years of positive absorption. That’s the best news from Newmark Grubb Knight Frank’s first quarter Chicago industrial market report.
According to the report, nearly 4.3 million square feet of industrial space was absorbed during the first quarter of 2015 in the Chicago market. This isn’t a new trend. Newmark Grubb Knight Frank reports that the Chicago industrial market has now seen positive absorption for 20 consecutive quarters.
That’s a five-year winning streak.
Even with more than 4 million square feet of absorption, though, the market’s vacancy rate remained unchanged, 8.3 percent. You can blame this on the completion during the first quarter of seven speculative industrial projects totaling more than 2.2 million square feet. Six of these projects haven’t bee leased yet, meaning that about 1.5 million square feet of vacant space was added to the market. That makes that 8.3 percent vacancy rate seem pretty impressive.
Tenants in the Chicago market are on the hunt for warehouse and distribution space, according to Newmark Grubb Knight Frank. The company said that about 87 percent of the nearly 4.3 million square feet absorbed during the first quarter came in warehouse and distribution buildings. Just 13 percent of the absorption came in the market’s manufacturing sector.
Because the Chicago industrial market is so strong, it’s no surprise that rental rates have been on the rise. According to the report, weighted asking rental rates jumped by 3 percent from the past year, including to $4.78/SF triple net.
