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Chicago Big-Box Industrial Keeps Breaking Its Own Records

Big-box industrial vacancy has dwindled to never-before-seen lows in the Chicago metro, falling more than a full percentage point since the end of last year.

A new Colliers report shows the vacancy rate in Q1 fell to 2.61%, down from 3.67% in Q4 2021 and a bit more than a quarter of the 8.15% reported in the first quarter last year. Colliers characterized the number as record-breaking “by a wide margin.”

Two Amazon facilities in the Chicago area account for more than a fifth of the 10M SF of big-box industrial leased in Q1 2022.

“The market is tighter than ever and large users have few options in existing buildings,” Colliers Vice President Craig Hurvitz said in the report, which also found net absorption for big-box industrial has totaled at least 5M SF per quarter since Q4 of 2020.

Since January 2020, users have absorbed 45M SF — 6.7M SF of which came in the first quarter of 2022 alone.

Chicago’s big-box industrial market, which includes buildings of 200K SF or more with 28-foot ceiling heights, consists of 695 facilities totaling 313M SF. As of Q1, 82% of the area’s stock was institutionally owned, while the remaining 18% was owner-occupied. About 44% of the market’s big-box product is in the Interstate 80 Joliet Corridor and Interstate 55 Corridor submarkets, where vacancy rates have dropped to a previously unheard of 1.54% and 0.68%, respectively.

Per the report, just six big-box spaces of 300K SF or more are vacant in the entirety of the metro area.

“Unprecedented new leasing activity and the delivery of large build-to-suit projects has been behind the record demand,” the report says. “With such a tight market, new development will strongly influence net absorption over the coming quarters.”

Given such limited supply, it stands to reason new big-box development is also hitting record territory. As of the end of March, 44 buildings totaling 23.7M SF were under construction, nearly twice the amount that was underway a year ago.

The quarter saw nearly 10M SF in new leases, led by Amazon, which accounted for more than 2M SF at properties in Joliet and in Kenosha, Wisconsin. Other large leases were signed by NFI Industries, which took up almost 998K SF in Bollingbrook, and SC Johnson, which leased more than 809K SF in Country Club Hills.