Welcome to Episode 8.5 of Real Time, JLL Chicago’s industrial podcast. In this episode, the team previews the Chicago market’s third quarter industrial statistics, breaking down everything from vacancy and absorption to investment sales and intermodal traffic. The highlights:
- Vacancy’s up, but the good news is it’s due to spec deliveries
- Two million-square-footers going up in I-80 – that’s never happened before!
- A million-square-foot deal remains elusive this year, but things are ramping up post summer slowdown
- Intermodal traffic is up, which is a positive sign for big box demand
Keep your eyes peeled for a detailed submarket report in the coming weeks!
Hosted by: Industrial market research experts George Cutro and Chad Buch
Listen to this three-minute podcast with the player above or click here.
Full Q3 2017 Research report here.
Post to LinkedIn | Podcast archives | Episode transcript
George: Good morning everyone and welcome to version 8.5 of JLL Chicago Industrial – Real Time.
George: I, your host George Cutro, along with me, Chad Buch, want to give you a quick synopsis of what we feel like third quarter numbers are going to be on the industrial side. Right now, vacancy doesn’t look too good. We figure it will be up about 50 basis points from last quarter to roughly 7.7 percent vacant. The good news here is it wasn’t due to second-generation space returning to the market, rather the plethora of new spec projects delivering during the quarter really pushed that number up. Leasing volume sadly took a pause this quarter at 5.2 million square feet leased, which is about 2 million square feet lower than the previous two quarters. User sales volume was up roughly 2.5 million square feet, which was on par with the first two quarters. Net absorption was a positive 650,000 square feet. On the new projects side, Chad, what do you think is happening this quarter?
Chad: Interesting to note, there are two million-square-footers going up in the I-80 submarket. We’ve never seen that happen before.
George: Hold on one second, you said two million-square-footers?
Chad: Two million-square-footers. That’s coming on the heels of some other big projects that have delivered by IDI, Core5, here in the past couple months over the summer. Across the O’Hare market, we’re seeing several projects from Seefried Properties, we’re seeing Bridge Development take down a large land site, as well as Molto also has a project that they just wrapped up in Franklin Park. On the leasing side, we have yet to see a million-square-foot deal this year. Even over the summer, the third quarter, we did not see any deals over 500,000 square feet. Our largest ones to note were DCT securing a 440,000-square-foot renewal in Carol Stream and Richwell Industries took a big sublease space from Berry Plastics down in Alsip of 378,000 square feet. Overall we still feel the market is healthy and fourth quarter should roar back. Summer has a little bit of a slowdown, but here, post Labor Day, we’re full steam ahead. We should be on track for 14 to 16 million square feet of total net absorption by December.
George: I concur. I see the fourth quarter also being strong. One number that I looked at was intermodal traffic. That’s up roughly 9 percent from last year, so I see a lot of those big box users who haven’t made a decision yet landing in the fourth quarter and pushing absorption up.
Chad: Another thing that will help are seasonal requirements that are taking occupancy right around now. Whether that’s holiday retailers or 3PLs bulking up and staffing up…
George: Please come, we need your absorption!
Chad: We should have a good fourth quarter.
George: Well that wraps it up for another rendition of JLL Chicago Industrial – Real Time. Goodbye!