CHICAGO, October 9, 2019 – The Chicago-area industrial vacancy rate continued to decline in the third quarter even as developers bring more supply to market, suggesting long-term fundamentals remain despite lingering economic and geopolitical uncertainty, according to the newly released “Chicago Q3 Industrial Market Snapshot” from Cushman & Wakefield, the top industrial agency leasing firm in Chicago.
“As we head into the final months of 2019, signs point to yet another year of growth for Chicago-area industrial activity,” said Jason West, vice chair, on Cushman & Wakefield’s Chicago industrial team. “Firms like Crate & Barrel, which recently reported that nearly half of its sales are now online, continue to drive demand for large-scale distribution centers with easy access to consumers. We’ve already seen more of these big-box deals in 2019 than during the same period last year, and with several others expected to close by year’s end, we’re confident in the market’s ability to absorb the new supply.”
The local vacancy rate dropped to 4.9% in the third quarter, besting the 19-year record low of 5% recorded in the second quarter, according to Cushman & Wakefield research. The average asking net rent was essentially unchanged from the second quarter, at $5.42 per square foot, above the year-earlier figure of $5.34. Meanwhile, net absorption totaled 6.8 million square feet, marking the 35th consecutive quarter of positive absorption.
Construction activity remained strong across the market in the third quarter, with year-over-year completions totaling 14.8 million square feet, a notable 56.5% increase from third-quarter 2018. An additional 17.8 million square feet is under construction, nearly 60% of which is being built on a speculative basis.
Cushman & Wakefield reported that eight new big-box leases – defined as deals over 500,000 square feet – were executed in the first three quarters of 2019, compared with four for the same period in 2018. Additional transactions expected to close in the fourth quarter will likely keep big-box leasing volume ahead of last year’s levels, according to the report.
“Many of these big-box users are increasingly exploring how automation can improve their bottom line, which helps explain the need for larger buildings with increased power loads, higher ceilings, expanded loading and trailer parking and other features that are not only in demand, but expected,” West said.
Third-quarter leasing activity totaled 25.9 million square feet, nearly half of which was concentrated in the Interstate 55 and Interstate 80 corridors, as well as southeast Wisconsin. Contributing to the leasing total were several notable transactions that Cushman & Wakefield was involved in, including:
- A 1.069 million square foot fulfilment and distribution center lease in Channahon, Ill., along the I-80 corridor, to an eCommerce company, which closed in September.
- A 646,380-square foot fulfillment center lease for Crate & Barrel that is being built in Romeoville, Ill., near I-55, which closed in September.
- Leasing of 543,780 square feet of new Class A distribution space for Duke Realty at the Airport Logistics Center, 20100 Renwick Road, Romeoville, in September.
For additional Chicago-area research from Cushman & Wakefield, visit www.cushwakechicago.com.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 51,000 employees in 400 offices and 70 countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.