Big Box Vacancy Decreases for First Time in Two Years
The vacancy rate for the Chicago market’s big box product, defined as modern distribution buildings 200,000 square feet and larger with ceiling clear heights of at least 28 feet, decreased by 41 basis points to 9.23 percent during the first quarter of 2018. This represents the first improvement to the vacancy rate in two years, during which vacant speculative construction deliveries resulted in a steadily increasing vacancy rate, even while net absorption remained positive.
Twenty new leases were signed in big box buildings during the first quarter of 2018, totaling 3.7 million square feet, the greatest quarterly new leasing volume since the fourth quarter of 2016. This activity, combined with two build-to-suit completions and 2.8 million square feet of new vacancies being introduced during the quarter, resulted in a net absorption total of 3.5 million square feet.
Only four big box buildings totaling 2.8 million square feet of new supply were completed during the first quarter of 2018, the least amount of deliveries since the first quarter of 2016. Fifteen big box projects are currently under construction, totaling 5.7 million square feet, about one-third of the 17.0 million square feet under construction one year ago.
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