Industrial Users Continue Absorbing New Big-Box Space As Developers Set Records For New Construction
Most of the economy is in chaos, but the industrial sector in the Chicago region has kept chugging forward in 2020. As more consumers opt for online ordering, distributors leased more than 4M SF of big-box logistics and warehouse space in Q3, according to a new report from Colliers International.
That’s close to the 4.4M SF average recorded for the region’s big-box properties since 2017. Colliers considers buildings to be big boxes if they have more than 200K SF, as well as ceiling heights of 28-foot clear or higher and are of precast construction. There are 647 such facilities totaling 284M SF in the region.
There was 1.2M SF of positive net absorption within this sector between July and September, Colliers reported.
“Positive demand was reported in half of the 22 industrial submarkets tracked, led by the I-80 Joliet Corridor, where two big box leases resulted in net absorption totaling 1.45M SF,” the report said.
But the fast pace of new construction is pushing up the vacancy rate. Developers completed eight big-box speculative construction projects in Q3 totaling 2.9M SF, and almost all of that space was still empty. The overall vacancy rate increased 94 basis points to 8.77%, the highest rate recorded since Q4 2018.
“More big box space is under construction than at any time in the market’s history, totaling 16.7M SF among 22 buildings,” Colliers added. “Contrary to earlier in the development cycle, 70% of the big box space under construction are build-to-suit projects.”