"While we haven't seen this level of activity since 2000, speculative development is a double-edged sword," says president and chief executive officer David R. Kahnweiler, SIOR. "While the development of new product creates construction jobs and offers potential tenants modern facilities, it nevertheless threatens to oversupply the market when the vacancy rate for the third quarter is already 9.41%, the highest it's been since the early 1990s."
More than 1.9 million sf was added in the regional and national warehouse market surrounding the I-55 and I-80 corridors in the third quarter, double the development seen in the second quarter. Meanwhile, demolition in the O'Hare submarket has resulted in 66,752 sf less space there in the third quarter. "Developers in this market are replacing functionally obsolete facilities with new speculative air-freight-oriented projects, given its proximity to O'Hare International Airport," Kahnweiler says.
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