Chicago Industrial Vacancy Rate Lowest in 14 Years
How much better can business get for the area’s industrial landlords?
The local industrial vacancy rate fell to 7.23 percent in the second quarter, down from 7.6 percent in the first quarter and 8.43 percent a year earlier. The rate is its lowest since 2001, when it dipped below 7 percent.
“The market is in an excellent position right now,” said David Bercu, a Colliers principal based in Rosemont. “We’ve got a win-win situation where users of space, their overall business is good, which is requiring them to go into new real estate projects, and for owners of real estate, it is allowing them to get their buildings leased or sold for reasonable rates within a decent amount of time.”
Net absorption—the change in the amount of occupied space compared with the prior quarter—jumped to more than 8 million square feet in the second quarter, its 13th straight quarterly rise, and the biggest increase since 2010.
The Chicago industrial market is roaring back after taking somewhat of a breather, due mainly to the strength of the overall economy, Bercu said. The market is covering all transaction types, including leases, sales, investment sales and land sales, which is driving up demand.
“Everybody is rowing in the same boat,” he said. “The market hasn’t been isolated to a particular type of transaction in a particular submarket, it is strong across the board.”
The Chicago market “really tracks the overall economy in the U.S. Right now, it’s between manufacturing, industrial and kind of retail-industrial,” said Kevin Matzke, managing principal of Chicago-based developer Clarius Partners. “The fact that the overall economy in the U.S. continues to improve predicts that the industrial vacancy will continue to decrease in Chicago.”
Source: Chicago Real Estate Daily, Crains Chicago Business July 20th, 2015 Ally Marotti