The Chicago-area industrial market’s building craze continues apace, with dropping vacancy and rising rents further fueling an explosion of development.
Developers had 19.3 million square feet of industrial construction underway in the first quarter of 2019, a 57 percent increase year-over-year, according to an Avison Young industrial market report cited by Bisnow. The first quarter of 2019 is the 19th consecutive quarter with at least 35 industrial buildings totaling more than 10 million square feet of construction underway.
Fears of overbuilding began to surface in the fourth quarter of 2018, when a similar amount of industrial space was under construction. Those fears have yet to come true, as vacancy dipped and asking rents improved through the first quarter.
Despite a 13 percent drop in leasing activity from the end of 2018, the industrial market saw vacancy hit 5.9 percent in the first quarter, a 20 basis point drop year over year, according to Bisnow. Average asking rents were just north of $4.90 per square foot, up over 20 cents from the same period last year.
Chicago’s 1.1-billion-square-foot industrial market has been firing on all cylinders for over a year. Its performance has led investors to the market in droves, so much so that the competition for industrial assets has driven down capitalization rates. [Bisnow] — Joe Ward