Spec projects are fueling Chicago’s industrial boom

Demand for industrial space is high, pushing vacancy rates to new lows

Oct.October 08, 2019 05:00 PM
The Marina Crossings in Chicago

The Marina Crossings in Chicago

Can’t stop, won’t stop. Third quarter numbers show a high demand for speculative industrial projects, indicating the boom in Chicago’s industrial real estate sector is likely to continue.

Colliers International found that the city’s speculative industrial sector reached new heights last quarter — with 8.8 million-square-feet of new product, according to ReJournals. This is the largest amount in any one quarter since the development period began in 2013, bringing the total for this period up to 65 million square-feet.

Even with the current pace of development, the vacancy rate for speculative industrial spaces is at the lowest it has ever been this period, 29.8 percent. This is down from 47.5 percent just two years ago, according to ReJournals. All speculative industrial spaces under 750,000 square feet hit a vacancy rate even lower than that.

These low vacancy rate numbers indicate that there is high demand for speculative industrial space, according to ReJournals.

This comes amidst a hot industrial real estate market in Chicago. Last quarter, the sector saw its lowest industrial vacancy rate since 2001. Developers say that the demand for industrial real estate won’t be slowing down anytime soon.

Some investors are earning massive profits on industrial properties they bought less than a decade ago. Last week, Angelo Gordon & Co. turned a $47 million profit on a $56 million Streamwood industrial property the firm bought for $11 million in 2012. [ReJournals]Kelsey Neubauer

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