CHICAGO, IL – The Chicago industrial market continued to improve in the third quarter as vacancy dropped 10 basis points to 11 percent.
The market recorded nearly 2.5 million square feet of positive net absorption, bringing the year-to-date total to more than 6.6 million square feet absorbed.
The Central Will submarket led the way with more than 860,000 square feet of positive absorption
Monthly asking rental rates for general industrial and incubator space increased $0.09 and $0.11 to $4.35 and $6.51 per square foot, respectively. Rental rates for R&D/flex and warehouse/distribution space decreased $0.05 and $0.01 to $7.90 and $3.90 per square foot, respectively.
Construction activity remains low with just over 1.7 million square feet currently in progress. Key transactions of the third quarter include Molto Capital LLC’s purchase of 3451 S Chicago Street in Joliet, Ill. for $18.2 million, and Electrolux’s lease totaling 495,000 square feet of space at 801 NW Midpoint Road in Minooka, Ill.
Analysis and Forecast: Industrial activity gained momentum in the third quarter, as manufacturers and warehouse users absorbed more than 2.5 million square feet of space.
Leasing activity remained strong this quarter, as rents for large deals totaling 200,000+ square feet ranged between $1.75 and $2.80 per square foot, a significant discount from pre-recession levels when rents averaged $3.72 per square foot.
Although the Great Recession has ended, low consumer confidence and an elevated jobless rate continue to plague the nation. In the Chicago metro area, the unemployment rate increased to 10.4 percent, up 70 basis points since July 2010.
Despite continued economic woes, the Chicago industrial market’s overall activity remains buoyant and should stay positive throughout the remainder of 2011. Intermodal development growth is expected to increase demand for rail-accessible warehouse properties in Will County, while continued demand for freezer and cold storage space prevails in the South Cook and Chicago City markets. Lease rates should remain flat through the end of the year.
To access the full Chicago Metro Trends reports and other Grubb & Ellis research publications, visit www.grubb-ellis.com/research.
Contact:
Damon Elder
Senior Director, Communications
Grubb & Ellis Company
714.975.2659 office
714.356.1460 cell
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