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Industrial Prices Against Flat Rent, Higher Vacancy

CHICAGO-Delta Associates, the research affiliate of Transwestern Commercial Services, notes first-quarter sales averaged $44 per sf, up 5% from a year earlier, despite vacancy rising nearly a half-point to 9.9%.

By Mark Ruda | Updated on April 11, 2005

CHICAGO-Vacancy rates are up, rents are flat, but sales prices for industrial properties across the Chicago market are on the rise, according to Delta Associates’ first-quarter report. Prices for industrial assets averaged $44 per sf in the first quarter, according to the research affiliate of Transwestern Commercial Services, up about 5% from the same period last year.

Meanwhile, the amount of new construction has more than doubled in the past year, to nearly 10 million sf in the first quarter. Delta Associates notes 33% of the new construction is pre-leased, while 70% of the 4.7 million sf of deliveries in the first quarter had tenants lined up. However, the new inventory has nudged the vacancy rate nearly a half-point to 9.9%, according to the report. Nonetheless, rents inched up to an average $4.87 per sf.

“Rents will likely rise modestly in 2005 as demand for this product type continues to strengthen,” according to Delta Associates. “With market conditions strengthening and rents edging up, this asset class will continue to provide steady returns on investment.”

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