Large E-commerce businesses leading to low vacancy rates
Last quarter Chicago industrial properties just had one of it’s best quarters ever, capping off what was already a solid year. Tenant’s absorbed 7.1 million square feet of space just in the fourth quarter giving a positive net absorption for 2016 up to 15.3 million square feet. The industrial market has now seen 27 consecutive quarters of growth.
The I-80 corridor has been leading the region and last quarter was a good example. Tenants last quarter absorbed 2.7 million square feet leading the way was IKEA, Samsung, and Amazon.
E-commerce is leading the way, mainly Amazon. Amazon has leased a total of two million square feet across three properties accounting for 41% of the space. Still a lot of e-commerce businesses operating below the radar, have leased smaller spaces.
Vacancy rates have been cut in half since the height of the recession. During the fourth quarter, vacancy rate went from 7.9% to 7.6%, the lowest rate in ten years. Builders are trying to keep-up with new demand with 18 million square feet underway in 53 projects and 48% of is on the speculative basis.