CHICAGO—The Chicago's industrial market really hit its stride in the first quarter, and the next three months saw leasing accelerate, reaching a historic level of activity and filling up all of the region's large vacancies, according to a new report by Colliers International.

The vacancy rate among the big box facilities fell from 9.97% in the first quarter to just 9.31%, a decline of 66 bps. And the market recorded about 4.9 million square feet of net absorption, a significant jump over the roughly 1.8 million square feet in the first quarter. And “at 5.2 million square feet leased, the second quarter volume posted the largest level recorded in our tracking period, (which started in 2011),” according to the firm.

Colliers defines big box facilities as those with at least 300,000 square feet of space, of precast construction and with at least 28' clear heights. The Chicago region's big box inventory consists of 256 facilities totaling 143.87 million square feet. The majority of this space is in the I-80 and I-55 submarkets.

“The vacant big box supply measured 13.9 million square feet at the end of June, a dramatic reduction from the 14.5 million square feet vacant in the prior quarter,” Colliers found. And the Chicago metro area no longer has any vacant blocks of space over 750,000 square feet. The largest vacancy remaining is a 700,200 square-foot space at 5800 W. Industrial Dr. in suburban Monee.

The I-55 Corridor still has about 4.3 million square feet available in its big box facilities, the most of any submarket in the region. “This supersedes the I-80/Joliet Corridor for the most available industrial supply, a title it has held since the second quarter of 2012,” according to the firm.

The historic leasing activity in the last quarter was driven by Saddle Creek Logistics' decision in May to lease a new 1,114,575 square-foot build-to-suit distribution facility at CenterPoint Intermodal Center in suburban Joliet. The transaction was the largest industrial transaction in the Midwest region up to that point, according to officials from Newmark Grubb Knight Frank, which represented Saddle Creek. The 3PL will move from a 590,000 square-foot facility in Elwood, IL, by February 2016.  

“The deal is not only representative of a robust market, but also of Chicago's strategic importance as a regional and national hub for the distribution and logistics industry,” Geoffrey Kasselman, executive managing director and head of NGKF's national industrial practice, told GlobeSt.com.

That importance is fueling a boom in new construction. Developers delivered four projects to the market during the second quarter totaling 2.7 million square feet. This accounted for 68.1% of the 4.0 million square feet finished this quarter. Colliers cited Amazon's 1.1 million square-foot project at 3501 120th Ave. in Kenosha, WI, as the quarter's largest project. And three speculative projects were finished, adding 1.3 million square feet to the region's big box inventory. The largest was by ML Realty Partners, which completed a 512,000 square-foot building at the Heritage Crossing Corporate Center on 14908 Gouger Rd. in Lockport.

“The Chicago market is deep with quality tenants,” Pete Harmon, a former executive vice president at ML Realty, told GlobeSt.com, and its dense networks of railways, roads and airports should keep it a vibrant market for distribution and logistics. “We can certainly hold our own with Long Beach and the other ports on the West Coast.”