Chicago is leading major U.S. cities in pandemic recovery measures, and that’s good news for commercial real estate, according to panelists at the October luncheon of the Chicago chapter of the Society of Industrial and Office Realtors (SIOR), the leading international professional commercial and industrial real estate association.
The discussion was kicked off by Lisa Dziekan, Vice President of Business Development and Global Strategy, World Business Chicago. The first major U.S. city to reopen in June, Chicago’s 7.1% unemployment rate is lower than that of New York City and Los Angeles. For eight consecutive years, Chicago has led the country in corporate relocations and expansions, attracting more than 325 new investments in 2020. Also noteworthy, Chicago minted 12 “unicorn” companies in 2021—more than any other U.S. city.
Sterling Bay’s Dr. Suzet McKinney, Principal and Directorof Life Sciences, highlighted Chicago’s life sciences potential as companies seek lower-cost alternatives to San Francisco, San Diego and Boston. Not only are housing costs lower in Chicago than in the top clusters, but laboratory rents are in the $60-$65 per square foot range, whereas Boston laboratory rents can exceed $100 per square foot.
For example, Sterling Bay’s 320,000-square-foot ALLY life sciences building, coming online in Q3 2023, has already attracted a tenant relocating from the West Coast. Previously Sterling Bay redeveloped the former Lurie Children’s Hospital at 2430 N. Halsted Street into The Labs, a fully occupied 120,000-square-foot medical research facility.
Adding to Chicago’s good economic news is its booming industrial real estate market. New leases totaled a record-breaking 48.6 million square feet in 2020—a 28% increase over 2019 volume. IDI Logistics’ Scott Gibbel, Vice President, shared how the developer is responding to intense demand by expanding its 30 million-square-foot Chicago portfolio with more than 631,00 square feet of industrial space under development in Chicago, Franklin Park and Romeoville.
In general, the panel discussion portrayed a metropolitan area that is rapidly moving past the pandemic. Although downtown office remains in limbo, Dr. McKinney noted that tenants were returning to offices in the West Loop/Fulton Market. Meanwhile, the industrial market will be frenzied for the foreseeable future. As Gibbel advised, commercial real estate professionals better “Buckle up!” for an exciting road ahead in Chicago.
Adam Marshall is President of the SIOR Chicago chapter and Senior Managing Director at Newmark.