Chicago Industrial Market Holds Steady

CHICAGO—After dramatic improvements during the first quarter of 2013, leasing and sale activity among industrial properties in the Chicago metropolitan area slowed down in the second quarter, according to research published last week by Colliers International. Net absorption was positive, but was still below the level seen in the first quarter. However, the vacancy rate remained largely unchanged, with only a marginal increase of 3 bps from 9.0% to 9.03%. The recent completion of a 1.6-million-square-foot BTS in the I-80/Joliet Corridor for Home Depot at the giant CenterPoint Intermodal Center helped keep the overall vacancy rate steady, Colliers found.

During the first quarter, the overall vacancy rate fell a surprising 51 bps, from 9.51% to 9.0%. “The dramatic improvement was the result of strong leasing demand coupled with a nominal amount of space returning to the market,” Colliers researchers noted at the time. But for the second quarter, “leasing volume totaled 8.7-million-square-feet, a 14.9% decline from the 10.3-million-square-feet registered in the first quarter.” Still, net absorption was positive for the fifth consecutive quarter. And even though Chicago-area industrial supply increased slightly, from 118-million-square-feet to 118.9-million-square-feet, “the second quarter level represents a 10.6% improvement from one year ago when 133.1-million-square-feet were reported vacant.”