Chicago Industrial In Q2: 9.2M SF Under Construction
Chicago area industrial real estate construction saw a 27.4% increase over Q1.
Colliers' Chicago construction review showed 35 projects totaling 9.2M SF were in various stages of construction in Q2, compared to 7.2M SF last quarter. More impressive, 20 projects totaling 5.9M SF broke ground last quarter, the highest new construction total since Q4 2016.
Demand for new warehouses continues to drive construction activity, and the Interstate 88 corridor is one of Chicago's hottest submarkets. Colliers Executive Vice President Matthew Stauber said 89.8% of the 3.1M SF in spec space in the corridor built since 2013 has been leased. Running close behind is the I-90 Elgin corridor, where 2.7M SF in spec space has been built in the last five years and 81.6% is leased.
Both I-88 and I-90 provide direct access to O'Hare, and Stauber said there was 1M SF in absorption of new spec product in the submarket in the past 90 days. Stauber anticipates interest in O'Hare to continue.
"It's an infill market with few barriers to entry, and sourcing opportunities there have become more difficult. But there is an incredible amount of demand for infill markets, and comparable sales support the land prices," Stauber said.
Stauber said e-commerce and last-mile distribution continue to be the primary drivers for demand in the area. There is also growing interest from food support companies that were displaced from Fulton Market.
Stauber said to keep an eye on the Stockyards district on the South Side. Many of those same food distribution companies are looking there for opportunities, and the Stockyards can soon emerge as a new industrial hotbed.