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All Of Chicago's Industrial Construction This Year Will Be Warehouses

Warehouse, industrial, distribution center
The average height of warehouses and distribution centers has risen nine feet in the past 50 years.

The most popular product type in Chicago-area industrial real estate in 2018 will be warehouses. According to Marcus & Millichap's 2018 industrial investment forecast, warehouses are in high demand from investors because they can realize higher yields and appreciation. Investors will find plenty of inventory: all of the 13M SF in industrial real estate under construction this year is warehouses.

Marcus & Millichap Regional Director David Bradley said e-commerce demand continues to drive new warehouse construction, and investors are looking at warehouses as long-term holds, anticipating last-mile delivery models such as drones and driverless vehicles will become the norm. Bradley said he expects investor interest in warehouses to be especially heavy near the Tri-State Tollway, which provides easy access to Chicago and is surrounded by densely populated suburban areas.

The forecast calls for vacancy in the sector to fall to 5% this year, with O'Hare boasting the lowest vacancy rate in the area. Asking rents will rise to $5.74/SF this year, a 5.5% increase over last year.