The coronavirus crisis has crippled commerce across the U.S. but the industrial market has been resilient, and the Chicago-area continues to post strong numbers.
The local vacancy rate dipped to 6.16 percent in the first quarter, from 6.3 percent the year before, according to Crain’s, citing a Colliers International report.
Net absorption, or the change in the amount of leased space compared to the same period a year before, was 7.2 million square feet from January through March, according to the report. It was the second best quarter in the last four years, Colliers noted.
The continued rise in e-commerce has contributed to millions of square feet of warehouse space flooding the Chicago market. Amazon has been among the biggest players in recent months. Since September, the Jeff Bezos-led behemoth inked four leases and acquired a fifth property for a total of over 3.4 million square feet it will occupy or build out. Amazon is also in talks to buy a sixth property in Pullman it intends to develop into a warehouse.
But Amazon is not the only power player. Lowe’s will lease a 1.4 million-square-foot distribution center in Manteno that once was occupied by Sears, according to a February report. The deal is the largest industrial lease that the Chicago market has ever seen, not including build-to-suit warehouses.
Chicago industrial did hit a road bump at the end of 2019, with just 364,500 square feet of new supply delivered in Cook County, compared to 1.5 million square feet over the same period in 2018, according to NAI Hiffman. But there was a silver lining: Total square footage for projects under construction increased to 5 million square feet, from 3.8 million square feet in 2018.
The coronavirus has upended consumer habits, with increased demand on deliveries across the nation as most states remain under lockdown. That has put added pressure on the industrial supply chain, industry pros said.
“More and more people are accustomed to ordering online, whether it be goods and services or food and beverage. It’s going to accelerate,” Colliers’ David Bercu told Crain’s. [Crain’s] — Alexi Friedman