"The last year the industrial market was in equilibrium was 2000 when the vacancy rate was 5.83%," adds Kahnweiler, who defines equilibrium at 7% vacancy. "In 2001, it shot up to 8.04% and has been climbing ever since."
Although the industrial market saw another 3 million sf of new construction come on line, that is down about 17% from the first quarter, according to the Colliers Bennett & Kahnweiler report. Meanwhile, the action for brokers was in sales, rather than leases. The 5.2 million sf of space leased in the second quarter was down 41% from the previous three months, Colliers Bennett & Kahnweiler reports, but sales volume totaled 5.3 million sf, up 18% from the first three months of 2004.
"The demand for industrial space in Chicago has been historically tenant-driven with leasing activity typically accounting for two-thirds of all transactions," Kahnweiler observes. "Sales activity in the I-290 North and O'Hare submarkets accounted for 34 percent of all sales during this quarter. These are both mature markets with a base of entrepreneurs and manufacturers that want to own their facilities. Also included in this quarter's sales figures are a few exceptionally large transactions."
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