Q3 2023 Chicago Industrial Market Report
Leasing totals for the third quarter fell below 10 million for the second straight quarter. Despite lower activity, fundamentals remain strong. Vacancy is still near record lows, sitting at 4.3 percent and net absorption remains in line with the ten-year average, with 5.9 million square feet of move-ins, and triple net rents increasing to $7.90. If leasing volume continues to wane, there will be pressure on landlords who bet on the hot market.
Notable users taking occupancy this quarter are G3 Enterprises (306,552 square feet) at 6510 W 73rd St, Bedford Park, Wolf Home Products (1,019,200 square feet) at 30350 S Graakamp Blvd, Wilmington, and Amazon (700,000 square feet) at 1401 E Gurler, Dekalb. Additionally, ULINE moved out of 502,033 square feet at 11290 8th Ave in Pleasant Prairie.
There are 91 buildings under construction, totaling over 29.0 million square feet – mostly built on spec. Anticipated new product, coupled with limited options, has pushed rents to historic highs. Building sales for the quarter totaled $600 million in volume, with the average price per square foot increasing to $85 per rentable square foot. The average cap rate for these transactions ticked up 30 basis points to 6.9 percent.
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