Build-to-Suits Push Demand Positive, Industrial Vacancy Rate Climbs Again
Demand for industrial product in the Chicago market was positive during the third quarter of 2020, despite chaos due to the Coronavirus pandemic, an economic recession, and political uncertainty. Net absorption totaled 1.2 million square feet between July and September, bringing the tally for the first three quarters of 2020 to 8.7 million square feet. While this pales in comparison to the 17.6-million-square-foot absorption total recorded during the first three quarters of 2019, it is still a positive figure, demonstrating the resiliency of the industrial market.
The industrial vacancy rate increased for the second quarter in a row, rising by 30 basis points to 6.72 percent, the highest rate recorded since the fourth quarter of 2017. This rate bottomed out one year ago at 6.15 percent.
Following two quarters of record new leasing activity when more than 14 million square feet of new leases and lease expansions were signed during each quarter, new leasing volume totaled 8.8 million square feet during the third quarter of 2020. Despite the decrease, this still represents robust leasing activity and is particularly encouraging because it includes comparatively little contribution from Amazon.com. While the e-commerce giant was responsible for more than 50 percent of the new leasing volume recorded during the second quarter, Amazon leases accounted for only seven percent of the activity between July and September.
