Big box is tighter than ever in Chicago. That is, according to Colliers’ 22Q1 Big Box Industrial Research Report.
In Q1 2022, the big box vacancy rate dropped by more than a full percentage point to 2.61%, a record low by a wide margin. Net absorption for these buildings has totaled at least five million square feet each quarter since Q4 of 2020, reaching 45 million square feet over the six-quarter period, and totaled 6.7 million square feet during Q1 of 2022 alone.
The market consists of 695 facilities totaling 313 million square feet, 82% of which is institutionally owned, while the remaining 18% is owner-occupied. Forty-four percent of the market’s big-box product is located in the I-80 Joliet Corridor (1.54% vacancy) and I-55 Corridor (0.68% vacancy) submarkets.
With availability at an all-time-low, additional decreases to the vacancy rate will be less significant. Colliers found that new development will influence net absorption in the coming months — and there’s a lot of it.
At the end of March, 44 buildings totaling nearly 24 million square feet were in the midst of construction. Compared to 13.6 million square feet in Q1 2021, this is another new record according to the report. Developers are continuing to secure financing and materials in advance to develop new speculative projects to meet demand. Dozens of new buildings are being announced each month, several of which are being pre-leased well before the project is underway.
Regarding transaction activity, new leasing in big-box buildings totaled close to 10 million square feet among 32 new leases and lease expansions during Q1 of 2022, including another five new leases greater than 500,000 square feet. The largest Q1 2022 transactions include:
- Amazon: 1,035,034 square feet; Joliet, Illinois
- Amazon: 1,004,400 square feet; Kenosha, Wisconsin
- NFI Industries: 997,802 square feet; Bolingbrook, Illinois
- SC Johnson: 809,496 square feet; Country Club Hills, Illinois
- RJW Logistics Group: 657,540 square feet; Romeoville, Illinois
- CJ Logistics: 392,915 square feet; Joliet, Illinois
Colliers expects new leasing activity to decline slightly in the coming months due to limited operations. Large new leases will continue to be signed in buildings under construction and build-to-suit projects.