chi-14908S.GougarRd_hccc3 (2) 14908 South Gougar Rd. in Lockport was finished last year and already has one tenant to fill it completely.

CHICAGO—The Chicago industrial market put up some impressive in the first quarter, and has gotten considerably stronger in the past year, especially when it comes to rental rates. That’s according to the latest market report from Cushman & Wakefield.

Leasing activity totaled more than 5.7 million square feet in the first quarter, and although that was a 17.3% decrease from the 6.7 million leased at this time last year, overall absorption totaled 3.9 million square feet, a 78% increase over the results from last year’s first quarter. Furthermore, the firm says it is tracking several large users in the market, and “leasing activity is expected to pick up in the coming quarters.”

The largest lease signed this past quarter was by Reviva Logistics, which took 728,000 square feet at 25850 S. Ridgeland Ave. in suburban Monee. RJW Logistics signed a deal for all 512,000 square feet of Itasca, IL-based ML Realty Partners’ new spec at 14908 S. Gougar Rd. in Lockport, the second largest lease. And Hub One Logistics rounded out the top three by leasing 470,000 square feet at 1251 Schmidt Rd. in Romeoville.  

Other major tenants that occupied a significant amount of space in the market at the beginning of 2016 include: Ghiradelli, which took 382,000 square feet in Bolingbrook; Nufarm Americas with 377,000 square feet in Sauk Village; Fresh Thyme with 317,000 square feet in Bolingbrook; and Custom Goods, which occupied 219,000 square feet, also in Bolingbrook.

Warehouse and distribution space really led the way, both in terms of new leases and rental rates. Direct net asking rental rates for all building types increased 7.5% to $4.90 per square foot over last year’s $4.56 per square foot. But for warehouses and distribution space rates increased the most year-over-year, improving 9.9% to $4.87 per square foot. “With increasing construction prices, developers and investors need achieve higher rental rates – and tenants are willing to pay up for state-of-the-art buildings that fit their needs,” according to the report.   

Investment sales volume totaled more than $158 million with about four million square feet trading hands. This is 49.4% 1ower than the $236 million that investors spent in the first quarter of 2015. C&W researchers believe that investors were a bit nervous due to some economic uncertainty. “However, investor allocations have not changed and the lower activity is mainly attributable to the investors holding on to their well-performing assets,” the researchers say. “Despite the lower activity in the beginning of the year, pricing will remain stable and we will see more sales of class B product as fundamentals for the asset class improve further.”