Is Chicago’s industrial market in danger of overheating?

Millions of square feet of industrial inventory are in the pipeline, with most of it being built on spec

TRD CHICAGO /
Sep.September 11, 2018 12:00 PM

An industrial property at 8601 West 47th Street

With rents hitting all-time highs and vacancy rates at their lowest in nearly two decades, the Chicago industrial market is very hot.

But millions of square feet of inventory are in the pipeline, and most of it is being built on spec. That suggests the market is in danger of oversupply, according to a new report from Transwestern analyzed by Re Journals.

The report said more than 7.3 million square feet of new construction has been completed this year, 65 percent of which is still vacant and available for lease. More than three-quarters of the nearly 10 million square feet of industrial/flex building development now in the pipeline is expected to deliver vacant, according to the report.

Absorption slowed in the second quarter to 730,000 square feet, down from 3.8 million square feet in the first quarter. But a number of submarkets remained strong, including Central DuPage/Kane and Interstate 55.

While the additional inventory set to deliver could slow industrial rents, right now they are soaring. Asking rents hit a record high of $5.58 per square foot in the second quarter, according to a recent Newmark Knight Frank report.

The vacancy rate, meanwhile, hit a 17-year low of 6.44 percent in the second quarter, according to a Colliers International report. [RE Journals] — John O’Brien

 

Related Articles

arrow_forward_ios
Thor Equities CEO Joe Sitt and a rendering of 800 West Fulton Market (Credit: SOM)

Thor Equities lands $144M construction loan for new tower

Flexport CEO Ryan Petersen and 333 N. Green Street (Credit: Getty Images, Sterling Bay)

Sterling Bay inks tech firm to latest lease at Fulton Market HQ

Beverly Hills-based New Pacific Realty Corporation paid $37 million for a 131,000-square-foot warehouse leased by LGS Sky Chefs near O’Hare in Des Plaines (Credit: Google Maps, iStock)

What’s the deal with airline food warehouses selling for $38M?

Chicago Skyline (Credit: iStock)

Windy City’s real estate blown away by other cities

President Donald Trump, Trump International Hotel & Tower 401 N. Wabash Avenue and Cushman & Wakefield CEO Brett White (Credit: Getty Images, Cushman and Wakefield)

Trump Tower has new leasing broker for failing retail space

Ald. Daniel La Spata (1st) and 2620 Hirsch Street in Humboldt Park (Credit: Google Maps)

RBH Group faces setback in its Teachers Village resi project

Freehand Hotel and Queensgate Investment Company CEO Jason Kow

Queensgate lands $44M acquisition loan on hip Freehand Chicago hotel

The Ramova Theatre and Ald. Patrick Daley Thomson (11th) (Credit: iStock)

A real estate encore for the Ramova Theatre

arrow_forward_ios