The country’s hottest industrial real estate market became hotter in the first quarter of 2022, partly fueled by exciting data from one of the submarkets.
In the first quarter, Chicago’s vacancy rate fell to 4.9%, the lowest vacancy rate ever recorded in the market, according to a report released Tuesday by real estate advisory firm Colliers International Group Inc. (NASDAQ: CIGI). The vacancy rate in Chicago has fallen by 53 basis points since the fourth quarter alone and has fallen by almost 175 basis points compared to a year ago.
Net absorption – the amount of occupied space for the period minus the amount of vacated area – was 11.7 million square feet, well above the 7.1 million square feet of net absorption in the first quarter of 2021 and thus to meet the total of 44.9 million square feet for the entire 2021 year, Collers said. Net acquisitions were nearly 50 million square feet in the last four quarters, the highest in a 12-month period in market history.
About 16.5 million square feet of new leases were signed last quarter, the second-largest in the quarter after the fourth quarter last year, Colliers said. The average requested rental rate was $ 5.17 per square foot, which is 8 cents per square foot higher than in the fourth quarter.
According to Colliers, five of the 22 submarkets in Chicago’s industrial zone reached record low vacancies in the quarter. But nowhere has the surge been stronger than in Corridor I-55, a 45-mile stretch connecting the city with Joliet in the southwest. About 4 million square feet were leased this quarter, raising the corridor’s vacancy rate to 1.73%. A year ago, the vacancy rate of the corridor was 11.4%.
Craig Hurwitz, vice president of market research for Collier of Chicago, said that as of the end of March, eight projects with a total area of 2.4 million square feet were being built along the I-55 corridor. Six of them were speculative buildings, meaning they are being built without a confirmed tenant. “There are still many planned projects under implementation,” he said in an email.
Data released last week by real estate advisory agency CBRE Group Inc. (NYSE: CBRE) showed even less space in a Chicago industrial tavern. The vacancy rate at the end of the first quarter was 2.3%, while the vacancy rate, which combines vacant space with space that is occupied but currently available for rent, was 3.9%. Chicago was the leader in net acquisitions with 10.6 million square feet, CBRE said.
Colliers and CBRE can use different methodologies that can take into account discrepancies in data, according to Mark Toman, a CBRE spokesman.
The only seemingly obstacle to Chicago’s continued industrial growth is access to accessible land. According to the CBRE, Chicago ranked ninth in the size of square feet under construction with 20.5 million square feet. The Dallas / Fort Worth market was a distant leader with 57.4 million square feet under construction at the end of the quarter. California’s Inner Empire East of Los Angeles was second with just over 34 million square feet under construction
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