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Chicago Industrial Shows Signs Of A Cooling Period


Bull markets have to stabilize and the numbers from Transwestern's Q2 Chicago industrial market report show signs of a slight cooling off period. Don't worry, we're still in the Golden Age of Industrial. You're just going to pan harder for the nuggets.

Industrial vacancy rates for the area decreased only .1% in Q2, to 6.7%. Total net absorption was negative: 553k SF was added back to the market. Rental rates have stabilized to $5.40/SF.

Despite these numbers, there's little cause for alarm. The negative net absorption, in particular, is mainly because a Romeoville Sports Authority closed its doors, adding 454k SF back to the market. The Transwestern report notes this will correct itself.

Now for the good news. First, there's a red-hot demand for smaller buildings (20k SF to 60k SF) across many submarkets, especially from food distribution and e-commerce companies. Construction activity rose to 15M SF in Q2, and more than 1.1M SF of industrial and flex properties broke ground. And more than one-third of major lease signings in industrial submarkets were over 100k SF, a trend that is expected to continue in 2016's second half.

Read the full report here.