Q4 2023: Chicago Industrial Market Report
The Chicagoland industrial market ended the year softening as developer and landlords realize that they have overshot their predictions for demand, leaving an abundance of high rent, speculative space empty. The fourth quarter saw leasing totals below ten million for the third straight quarter. With lower leasing volume and the lowest net absorption figures since 2011 (with 1.2 million square feet of positive absorption) the market is in flux. Vacancy is still near the record low, sitting at 4.3 percent with triple net rents increased to $8.01. Notable users moving out this quarter are Dart at 701 Central Ave, University Park and CommScope at 27000 Ellis Dr, Joliet. Additionally, Walmart (1,500,800 square feet) moved into 201 S McLindon Rd in Minooka.
There are 70 buildings under construction, totaling over 18.0 million square feet of new space – most of which is being built on spec. Anticipated new product, coupled with limited options, has pushed rents into uncharted territory as triple net rents across all sizes and submarkets increased. Building sales for the quarter totaled $802 million in volume, with the average price per square foot increasing to $88 per RSF. The average cap rate for these transactions ticked up 90 basis points to 7.8 percent.
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