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Chicago Industrial Vacancy Creeps Up As New Product Hits Market

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Chicago’s tighter-than-tight big-box industrial vacancy rate ticked up for the second quarter in a row, as long-awaited new deliveries came online, giving the market a bit of breathing room.

Vacancy climbed 65 basis points to 3.57% in the third quarter, per a new Colliers report provided to Bisnow, after bottoming out at a record-low 2.61% in the first quarter. The report pointed to surging demand in the wake of the pandemic that led to a sharp increase in completed speculative projects over the past six months.

“Unprecedented demand for modern big box space has resulted in a big push for new speculative product and a climbing vacancy rate despite strong leasing activity,” Colliers Vice President for Chicago-Rosemont Craig Hurvitz said in the report, which tallied 14 buildings totaling 7.1M SF completed during the quarter.

The largest big-box industrial leases for the quarter came from Uline, which pre-leased over 1M SF in Bristol, Wisconsin; Home Depot, which inked a new lease for 990K SF in Joliet; and RJW Logistics Group, with an 815K SF lease in Romeoville.

The report notes that while vacancy increased for the quarter, it is still well below the 5.83% rate recorded a year ago. Colliers expects vacancy to nudge up further in the new year amid a record amount of speculative construction expected to come online.

In the third quarter, developers started construction on 31 big-box buildings totaling 15.5M SF. All told, per Colliers, 63 buildings and about 31.5M SF are under construction across the Chicago metro.

“The supply side is starting to catch up,” Colliers broker Matthew Stauber told the Real Deal of the increase in new industrial construction that began in late summer. “Instead of having five bidders for every space, now it’s down to two or three.”

 

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Craig Hurvitz

Senior Director of Research

Chicago - Rosemont

I am vice president, market research at Colliers International | Chicago and lead the Industrial Advisory Group’s market research initiative. I am responsible for managing and maintaining the industrial properties database, which includes property sales and leases, tenant information and comparable transactions. I have a deep understanding of the Chicago-area industrial real estate market and provide in-depth analyses, reports and market trends that are referenced by a diverse group of clients including landlords, appraisers and developers. I am considered an expert in the field and am frequently featured in industry newspapers and publications. 

I have more than 10 years of industry experience having served as the director of research for both NAI Hiffman, and most recently Newmark Grubb Knight Frank. In this role, I oversaw the local research departments and provided comprehensive reports on market statistics in the Chicago and regional commercial real estate markets.

I began my real estate career as director of marketing for Rosemont-based Epic Realty Partners, now affiliated with Transwestern. 

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Matthew Stauber

Executive Vice President

Chicago - Rosemont

Corporate and entrepreneurial real estate users rely on me to develop and execute creative and effective real estate strategies. For 24 years, I have worked with leading companies to help acquire, dispose and lease industrial properties, both nationally and internationally. During my career, I have completed more than 1,000 transactions valued in excess of $2.0 billion. I am a five-time recipient of the Colliers Chicago “top industrial producer” award.

I am an eight-time finalist for the Chicago Industrial Broker of the Year award given at the prestigious Chicago Real Estate Awards dinner benefiting the Greater Chicago Food Depository. I won the award in 2013. Additionally, I am a six-time finalist for the NAIOP Chicago Industrial Transaction of the Year award.

 

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