CHICAGO- The Chicago industrial market has been recovering for two years, according to Avison Young, and in 2013, as the prices for Class A properties continue to rise, investors will focus even more attention and dollars on Class B properties. “Furthermore,” the firm states in an April 2013 report, “the industrial market is giving the multi-family sector a run for its money as the preferred investment vehicle for institutional investors. This is due to historically steady cash flows, low capital/tenant improvement expenditures, and positive macro-economic occupancy drivers.”

Investors have long been attracted to Chicago's Class A industrial properties, buying $1.3 billion worth since 2007. Many industrial developers, however, still worry about the strength and endurance of the recovery and shy away from building new product. Nationally, from 2003 to 2007, developers put up about 200-million-square-feet of new product each year. Currently, only about 50-million-square-feet get built each year. Many expect this will push up Class A rents. The subsequent boost in returns, Avison notes, should increasingly make these buildings the cornerstone of many portfolios, and force investors to hunt around for other places to park their money.

In a March 2013 report, Prologis found that “new starts remain well below historical norms, which means new demand can quickly tighten the market. In fact, supported by robust new demand, the vacancy rate declined 30 basis points in the fourth quarter of 2012, the largest quarterly decline since 2006.” An April story in GlobeSt.com described this partial revival.