Demand continues to swell. As a result, Chicagoans are still dealing with tight conditions, and delays and steep prices across the board are still concerning.
But this is nothing new, and construction is projected to remain steady as ever. Savills’ Q1 2022 Chicago Market Report provided an in-depth look at recent patterns.
Asking rents continued to trend upward, increasing 7.5% quarter-over-quarter to $5.76 per square foot, according to the report, and seven million square feet of net absorption was observed. Vacancy fell to 6.8% — down 260 basis points from 2021.
Larger Leases at New Developments
Savills found that Amazon leased more than one million square feet (of the 4.5 million square feet delivered in Q1) on 38th Street in Kenosha to be used for same-day delivery; Eaton leased 371,000 square feet in Woodridge to be delivered in July. Other leases included Pitney Bowes in Joliet Area for 363,000 square feet, RTC in I-55 for 228,00 square feet and Symbia Logistics in I-55 for 184,000 square feet.
Fewer Affordable Options
Occupiers seeking strategic proximity to major submarkets like O’Hare saw far fewer affordable options, pushing companies further from O’Hare, larger suburbs and major interstates.
The lower asking rents and property taxes that come with more rural locales, though, cannot be overlooked. Developers are considering repurposing existing properties and converting them to industrial, based on the report. Dermody Properties, for instance, acquired the former Allstate office campus in Northbrook and is seeking to turn the 120-acre piece into more than three million square feet of warehouse buildings.
The market shows no signs of slowing for the foreseeable future, as has remained the case for the last year — especially in Chicagoland. Expenses considered, Chicago is comparatively inexpensive in relation to U.S. coastal markets, and Savills expects continued activity.
The number of square feet under construction at the time of the report sits above the historical average at nearly 28 million square feet. Asking rent growth over the past 12 months sits at 11.8%.