How low can they go? Chicago-area industrial vacancies hit 18-year low

Demand fueled by surging e-commerce is more than keeping up with torrid rate of construction
May 14, 2019 09:05AM

It was the sixth straight quarter in which vacancies fell. (Credit: iStock)

It was the sixth straight quarter in which vacancies fell. (Credit: iStock)

Chicago’s industrial real estate market is showing no signs of slowing down, with demand fueled by growing e-commerce helping developers fill a surge in new construction.

The industrial vacancy rate fell to 6.3 percent in the first quarter, a slight dip from the fourth quarter of 2018 and the lowest level in 18 years, according to a Colliers International report cited by Crain’s.

It was the sixth straight quarter in which vacancies fell. With net absorption at 3.7 million square feet during the quarter, it was the 28th straight quarter in which demand outstripped new supply.

Colliers said developers are expected to deliver some 20 million square feet of industrial space this year, up from 14 million last year but down from a record 24.8 million in 2017, according to Crain’s.

While all manners of online sales are boosting the industrial market, changes in the food distribution industry — helped by Amazon’s entry into the sector through its Whole Foods acquisition —are further fueling a red-hot industrial market. [Crain’s] — John O’Brien