Chicago industrial landlords might be running out of leverage, as vacancy climbed by 20 basis points from the first quarter to reach 5.1 percent in the three months through June, according to a report from JLL.
"With the uptick in Chicago’s vacancy rate, landlords will be more likely to use rental abatement to fill space rather than compromise on pricing," the CRE firm predicted, while analyzing the current landscape.
JLL also predicts that rents, which averaged $7.55 per square foot, will "flatten out," and not fall because of scant speculative deliveries coming, with the segment seeing 1.1 million square feet hit the market in the three months through June.
Meanwhile, as of now, demand remains favorable to landlords. Leasing improved by 1.8 million square feet to reach 9.8 million square feet in the second quarter. Also, net absorption was positive at 460,300 square feet.
"Occupier demand, compared to Q1, was strongest in the 100,000 s.f. to 150,000 s.f. size range (nine leases versus four leases) while demand in the small bay segment was weaker in the 20,000 s.f. to 50,000 s.f. size segment (36 leases compared to 42 leases)," JLL said.
Third-party logistics firms were a key driver for activity during the second quarter, totaling 2.9 million square feet in signings. In fact, the top deal of the first half was recorded by 3PL company, RJW Logistics Group, which leased a 1.1 million square foot property at Third Coast International Hub in Joliet, during the second quarter.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.