Despite the trials and tribulations of the last few years, Chicago is still the place to be.
9.4 million residents call Chicagoland home, making it one of the largest metros in the U.S. Not only that, but it’s also the most diversified large economy in America.
Industrial has done particularly well. But what makes Chicagoland so attractive?
Data from Cushman & Wakefield’s Chicago Industrial Market Overview revealed there are 200 million consumers within a 500-mile radius — and 30% of North American consumers are within a one-day truck drive, to start. More than 14,500 logistics companies have made Chicago their home base, as well as 24 of the 25 largest third-party logistics providers.
It’s the logistics epicenter of the country by these stats, and Q1 2022 is only further confirmation.
Nearly five and a half million square feet of construction were completed, up nearly 59%. There is 16.3 million square feet of spec under construction, an 100% increase year-over-year.
Demand is still outpacing supply, and vacancy decreased 90 BPS year-over-year to 4.1%, the lowest it’s been in over a decade. Overall average asking net rental rates increased 9.9% year-over-year to $6.14 per square foot, based on the report.
We can break this down by submarket.
Cushman & Wakefield found Western Kane County to have the lowest vacancy rate at 1.2%, down 1890 BPS year-over-year, followed by Interstate 39 Corridor (2.2%), Western Cook County (2.4%), Southern DuPage (2.8%) and O’Hare (2.8%). Of these, Western Cook County reflected the most inventory per square foot at exactly 102,497,658 square feet. Western Kane County reflected the least by comparison — around 6.7 million square feet — but the largest year-over-year change of all submarkets.
As for new leasing, 13.6 million square feet were totaled through Q1 2022, marking the sixth consecutive quarter of double-digit leasing. Demand was especially concentrated in retail trade/e-commerce and logistics, which, according to the report, accounted for 56% of new leasing.
I-55, I-80 and Southeast Wisconsin accounted for over half of new leasing activity.
Major industrial investors and developers have a significant presence in Chicago, and the market shows no signs of slowing any time soon. Spec and build-to-suit development is at an all-time high, and activity is only expected to increase throughout the coming months.