A report from a global real estate services firm has found that Chicago’s industrial market has remained relatively unscathed despite widespread downturns elsewhere as a result of the COVID-19 pandemic.
Colliers International’s recently issued report titled “Chicago’s Industrial Market Holds Own in Face of Pandemic, Recession” found that, although the Chicago-area’s industrial vacancy rate jumped modestly by 26 basis points to its highest rate in two years, the net absorption remained slightly positive and the market saw 14.1 million square feet of new leases and lease expansions being signed during the second quarter of 2020. That amount, according to the report, nearly sets a record for the region, and is second only to the 14.6 million square feet that were signed during the first quarter.
“During the second quarter of 2020, the Coronavirus pandemic changed all of our daily lives – entire states shut down economies, supply chain disruptions took hold worldwide, and confusion and uncertainty impacted every industry, including commercial real estate,” report author and Colliers vice president Craig Hurvitz said in the report. “Chicago’s industrial market has demonstrated its resiliency during the unfolding crisis.”
Underpinning the findings, the report noted that, despite the unfolding COVID-19 crisis, new construction starts in the Chicago area set a record during the first quarter of 2020, with 15 new projects starting, which total 12.8 million square feet. With the recently begun construction, the total for the region now sits at 27.2 million square feet, the report said, noting it is,” the most space being built at one time in the history of Chicago’s industrial market.”
Diving more deeply into the numbers, the report said that, after seeing a modest bump, the overall vacancy rate now sits at 6.4 percent, and the net absorption stayed essentially flat with 354,934 square feet. Although that number remained positive, the report said the current net absorption is a significant adjustment from the 7.2 million square feet net absorption during the first quarter of 2020.
The report also said the region saw an uptick in transaction activity, with 96 new leases and lease expansions being signed between April and June for a total of 14.1 million square feet.
According to the report, one company in particular had a large impact on the region – Amazon.com, which committed to 11 million square feet in 10 buildings. Inking 7.2 million square feet in new leases, the company accounted for 51 percent of the total new leasing volume for the quarter.
The report said that uncertainty continues to plague the industrial real estate markets, but Chicago’s has so far been very resilient.
“While the near-term remains uncertain, the industrial market continues to look to be the least impacted by the current climate,” the report said.