Leasing in Big Box Buildings Breaks Records in 2020
Chicago's biggest and most modern industrial buildings recorded an impressive and record-setting year despite the unpredictably introduced by the Coronavirus pandemic, an economic recession, political turmoil, and social unrest.
New leases and lease expansions totaled 24.9 million square feet in big box buildings over the course of 2020, a new record. This figure was a 20 percent increase over 2019's total of 20.7 million square feet, the previous record. Mega-sized leases greater than 1 million square feet accounted for 42 percent of this activity, with eight new leases totaling 10.4 million square feet signed during the year.
Year-over-year, Chicago's big box vacancy rate declined slightly to 8.51 percent. The rate dipped as low as 7.83 percent during the second quarter of 2020, then spiked to 8.77 percent during the third quarter of the year due to the delivery of 3.9 million square feet of vacant speculative development projects and new vacancies introduced in second generation big box buildings. An uptick in demand during the fourth quarter pushed the vacancy rate down 26 basis points.
Net absorption was positive during all four quarters of 2020, totaling 15.1 million square feet. While this is below 2019's record net absorption total of 17.4 million square feet, it was one of the greatest annual totals in the big box market's history, and was particularly impressive in light of the uncertainty experienced in nearly every facet of life during the year.