Record-Breaking Leasing Activity Pushes Chicago’s Industrial Market Into Higher Gear
Tenants signed 173 new leases and lease expansions larger than 10,000 square feet during the second quarter of 2021 totaling 15.4 million square feet – the greatest quarterly new leasing volume ever recorded in the Chicago industrial market. This activity follows on the heels of two quarters where the new leasing volume fell into the top six greatest quarterly totals. Not only have established users been expanding, Chicago’s robust and diverse industrial market has been attracting new companies as well.
Big leases greater than 500,000 square feet have played a significant role – while few leases in that size range were signed prior to 2019, 16 were signed in 2020 and 10 have already been signed during the first half of 2021.
As a result, net absorption – an indicator used to measure demand – has been impressive. Through the first two quarters of 2021, net absorption totaled 14.7 million square feet, eclipsing the 14.2 million square feet recorded during all four quarters of 2020, and is on pace to set an annual record.
The industrial vacancy rate decreased by a remarkable 39 basis points to 6.29 percent between April and June, the lowest rate recorded since the first quarter of 2020 before the pandemic took hold. The vacancy rate in eight of the 22 industrial submarkets tracked were at or near all-time lows, particularly in infill areas close to Chicago’s large population and labor resources.
More than 30 million square feet is under construction for the first time in the market’s history. 59 percent of that space are build-to-suit projects while the remaining 41 percent are being built on a speculative basis. Nine buildings greater than one million square feet are actively under construction.
- New leases and lease expansions totaled 15.4 million square feet during the second quarter, a new record.
- The industrial vacancy rate has dropped by 44 basis points over the past six months, returning to pre-pandemic levels. Vacancy in several submarkets is at or near all-time lows.
- More than 30 million square feet is under construction, a new record. 59 percent of that activity are build-to-suit projects.