As construction activity continues to fall, the Chicago industrial market continued to see strong leasing activity and rental growth in the second quarter of the year.
That’s the big takeaway from Avison Young‘s second-quarter Chicago industrial report.
According to Avison Young, the overall vacancy rate in the Chicago industrial market remained stable, hitting 5.8% in the second quarter. Sublet vacancy peaked, though, with 4.9 million square feet of this type of space available as of the end of the quarter.
Leasing activity remained robust, with Avison Young reporting that 22.2 million square feet of industrial space was leased in the Chicago market during the first half of 2024. That represents an increase of 53% from the pre-pandemic averages recorded from 2017 through 2019.
Construction activity has dropped, though, not surprising considering the higher interest rates and construction costs facing developers. Avison Young said that the Chicago area had 12 million square feet of industrial space under development in the second quarter, a decrease of 23% from the previous year.
Avison Young predicts that this reduction in construction activity will drive rental growth higher and continue to stabilize vacancy rates.
