Demand for Chicago Industrial Grows Again, Matching Pre-Pandemic Levels
Industrial demand, measured by net absorption and new leasing volume, increased during the first quarter of 2021 for the third consecutive period. Both indicators returned to pre-pandemic levels – net absorption between January and March totaled 7.2 million square feet, matching the impressive net absorption recorded during the first quarter of 2020 before the pandemic took hold. New leases and lease expansions totaled 13.8 million square feet, a 24 percent increase over the strong 11.1 million square feet of new leasing activity recorded during the fourth quarter of 2020.
As a result of the demand recorded, the overall vacancy rate decreased by 5 basis points to 6.68 percent during the first quarter of 2021, the first decrease recorded since the first quarter of 2020. The vacancy rates in eight of the 22 industrial submarkets tracked are near all-time lows, particularly in infill areas close to Chicago’s large population and labor resources.
Development activity remains robust, with a near-record 24.2 million square feet under construction, 69 percent of which are build-to-suit projects. Eight buildings greater than one million square feet are actively under construction, all of which are build-to-suit facilities or pre-leased to a single tenant.
Key Takeaways
- Net absorption, a metric used to measure demand, totaled 7.2 million square feet, matching the demand recorded one year ago before the pandemic took hold.
- The vacancy rate decreased during the first quarter of 2021 for the first time in four quarters.
- New leases totaled 13.8 million square feet, the third quarter in a row this figure has increased.
