Press Releases

August 03, 2018


Chicago – Total net absorption slowed this quarter with 729,658 square feet absorbed in the overall Chicago market, as compared to over 3.8 million square feet in first quarter 2018. Overall absorption is expected to stay positive through the end of 2018 but is not expected to reach 2017’s total positive net absorption levels of 12.4 million square feet. According to Transwestern’s second-quarter 2018 Chicago industrial market report, demand for high-quality product is strong.

The lack of existing Class A industrial product on the market for sale and competition for tenants is pushing large institutional players to look to well-located Class B assets.

“Our user clients looking to purchase are having to extend their search area criteria to find acceptable properties for purchase, and even then, are struggling to find suitable options,” said Michael Marconi, Transwestern Principal and Managing Broker. “However, those same clients are finding a surplus of Class A options for lease in well-located areas. Once the asking rates and incentive packages come into line with client expectations, we expect those clients looking to purchase may start considering a lease.”

The proven long-term cycle strength of the Chicago industrial sector continues to attract both buyer and developer interest. Industrial investment dollar volume reached $1.6 billion in the first half of 2018, which is $300 million higher than the first half of 2017.

“Although the majority of our institutional clients still see the need to add industrial assets to their portfolio, we are finding that they would rather purchase well-located infill assets with room for growth than be the next group coming out of the ground with a 100,000-square-foot speculative building,” said Marconi.

Overall industrial vacancy for Chicago stands at 5.6 percent, marking a historic low for the area. This figure represents a year-over-year improvement. At $5.60 per square foot, rents are at a record high, with 10 of 19 submarkets reporting higher rents in comparison to last quarter. In particular, central DuPage and Kane submarkets performed well, with the top deal signings of Glanbia and Dart in North Aurora this quarter.  

The full report can be found on Transwestern’s research page: https://transwestern.com/market-reports

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Transwestern is a privately held real estate firm of collaborative entrepreneurs who deliver a higher level of personalized service – the Transwestern Experience. Specializing in Agency Leasing, Tenant Advisory, Capital Markets, Asset Services and Research, our fully integrated global enterprise adds value for investors, owners and occupiers of all commercial property types. We leverage market insights and operational expertise from members of the Transwestern family of companies specializing in development, real estate investment management and research. Based in Houston, Transwestern has 35 U.S. offices and assists clients through more than 211 offices in 36 countries as part of a strategic alliance with BNP Paribas Real Estate. Experience Extraordinary at transwestern.com and @Transwestern.
 

Media Contact:

Megan Skala

312.881.7036

megan.skala@transwestern.com

twmediarelations@transwestern.com

Michael Marconi

Principal and Managing Broker

Rosemont, Illinois

+1 (847) 588-5689