Chicago industrial real estate market report
Q3 2021
The Chicago market has benefited from strong market fundaments observed throughout 2021 with strong leasing activity, historic low vacancy, increased investment activity and improved economic conditions. Leasing activity is expected to set an all-time high of nearly 60.0MSF, an increase of 55.5% when compared to the 20-year long-term average for the market. Developers continue to push forward with new projects to satisfy demand from industrial users, bringing the total square footage under construction to 23.3MSF.
Economic conditions
The Chicago regional economy has rebounded sharply from the effects of the pandemic with unemployment at 7.1% as of August 2021, however this is still over double the historic rate set just before the pandemic of 3.2%.
Inflation rate
Chicago-area inflation surges 4.8% year-over-year in September, with CPI less food costs increasing 1.1% year-over-year.
Industrial demand
Industrial net absorption through the first three quarters is aimed to set a new market record by year-end at the current pace.
Industrial supply
The Chicago . construction pipeline has seen a significant increase in activity. Currently 37 building over 50.0K SF are underway totaling 15.8 MSF.
Pricing trends
Base rents have increased by 11.3% since 2015, and this trend shows no sign of slowing down. Base rents initially softened slightly in the beginning of COVID but are surging past pre-pandemic pricing.
Capital markets
Industrial investment volume in Chicago through the first three quarters has outpaced the market's 5-year average volume through the first three quarters by 16.2%.
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