The O’Hare submarket has been the focus of much developer interest this year, but a new report offers numbers that show just how popular the area around Chicago’s major airport has been. According to a Q3 report from Cushman & Wakefield, nearly 22% of all industrial lease deals in the Chicagoland area completed during 2021 were in the O’Hare submarket. This amounts to roughly 4.8 million square feet of industrial space leased so far this year around O’Hare.
O’Hare’s figures fly paces around the second most busy submarket, which was the I-55 corridor, with roughly 11% of the region’s industrial lease deals in 2021. By the end of Q3, O’Hare’s industrial vacancy stood at just 3.7%, or about 3.5 million square feet of the submarket’s 95.5 million square feet total space. While lease deals were also plentiful across the I-55 corridor, the submarket’s vacancy rate stood at 7.8% by the end of Q3. The higher vacancy rate could be considered attributed to the 2.23 million square feet of new deliveries in I-55 in Q3.
Other indicators pointing to the market’s overall health illustrate continued growth and demand. For instance, overall asking rents for the region increased 3.8% year-over-year to $5.67 per square foot. Additionally, there is still a tremendous amount of new product still under construction. By the end of Q3, the report shows that there was just under 24 million square feet of new space in the works. Of this amount, 67% of the under-construction industrial product, or 16 million square feet, is speculative.
The biggest driver of the demand and fast pace of lease deals is the expanding need for warehouse product, the report indicates. This year has been a big moment for the booming logistics industry as the supply chain continues to evolve. A whopping 82%, or 32 million square feet, of new leasing year-to-date was for warehouse product, Cushman & Wakefield reports. Demand is expected to beat last year’s record figures as we head into the final months of 2021. So far this year, the total leasing figure for Chicago industrial market is at 39 million square feet. The total amount of space leased during 2020 was 42.6 million square feet for the entire year.
