"Clearly, a slowdown will affect the market but it will not have as big of an impact in Chicago as it will in other areas of the country due to Chicago's diverse business climate," says Christopher Porter, a director in Cushman & Wakefield's industrial technology group. "The people who are going to survive and thrive-—whether they are brokers, developers or investors—-are those who have remained focused on mastering the basics of their discipline within our industry and who were financially prudent."
Despite a 10% jump in asking rent in southwest suburban Will County, rents there still are the cheapest in the area at an average of $3.95 per sf, according to Cushman & Wakefield. The suburban submarkets should remain attractive in spite of an economic downtown, Porter says.
"Typically, if there is an economic slowdown, the collar counties with lower taxes will generally fare better," Porter says. "And in the new frontier areas, I would expect to see more realistic pricing of large, unimproved land parcels."
Cushman & Wakefield defines the "new frontier" markets as the area near I-57 in Will County, Minooka and Morris along I-80 in Grundy and Kendall Counties, the area near I-88 in DeKalb County and the area near the junction of I-90 and Route 47. "In particular, from a distribution perspective, the Minooka/Morris and I-57 areas will see increased activity over the coming years," Porter says. "The greatest challenge of new frontier areas will be to get the infrastructure in place. For example, getting the water and sewer lines to unimproved sites."
The market ended the year with a 7.1% overall vacancy rate, according to Cushman & Wakefield's report. Sparked by 12.3 million sf of new construction, total inventory grew to more than 923 million sf. Overall, net rental rates for warehouse/distribution space rose 11% to $4.56 per sf. The biggest jump was in Northwest Cook County, where average net rent for warehouse/distribution space jumped 24% to $5.61 per sf.
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