CHICAGO—Jones Lang LaSalle recently released a quick quarterly snapshot of the metropolitan area's industrial market which shows falling vacancy rates, lots of absorption and a robust development pipeline. The overall vacancy rate for industrials in Chicago and its suburbs has sunk to just 8.4%, according to the firm's second quarter data, down from 10.6% at the end of the second quarter last year. And net absorption stood at 8,872,623-square-feet for the year, compared to 7,348,188-square-feet by the end of last year's second quarter. Furthermore, “occupiers are making leasing commitments with a sense of urgency as they recognize that the availability rate has dropped below 13%.” Last year at this time, that rate was 14.5%, and now stands at 12.8%, the data show.
Much of the increased activity came from consumer electronics providers and furniture companies, JLL researchers say, most likely due to a gathering economic recovery that has encouraged many people to make the big purchases they put off put off during economic hard times.
The increased flood of activity over the past year has also swelled the development pipeline. At the end of last year's second quarter, developers had 886,124-square-feet under construction, but this year, that number jumped to 3,993,917-square-feet, with 2.4-million-square-feet already delivered. “Food users and e-commerce distributors are pursuing BTS projects to meet their specialized needs for efficient layouts with high ceilings and ample trailer positions and car parking,” the researchers note.
Logistics will continue to play a big role. Through renewals, just five logistics firms were responsible for over 1.3-million-square-feet of leasing activity and “supply chain alignment decisions by 3PLs due to the excellent transportation infrastructure will continue to drive the market.”
Significant leases during the second quarter include: Peacock Engineering's lease for 532,560-square-feet at 1001 W. Crossroads Parkway in Romeoville; Orbus Exhibit and Display Group's 12-year lease in a 347,400-square-feet BTS warehouse at Union Pointe Business Park in south suburban Woodridge; and Integrated Merchandising Systems' 314,249-square-foot lease at 10100 58th Place in Kenosha, Wisconsin, near the Illinois border. LaSalle Investment Management owns the 626,784-square-foot facility, now entirely occupied by IMS. The company leased the other half of the building last year.
Daniel E. Fogarty, the vice president of Conor Commercial Real Estate, the developer of Union Pointe Business Park, told GlobeSt.com last May that they expected to fill up the park's remaining sites in 12 to 24 months. “The economy is picking up nicely and we feel very bullish about it.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
