Development on the Rise, Vacancy Drops Again
Leasing velocity increased for the second quarter in a row in Chicago's industrial market, with new leases and lease expansions totaling 10.1 million square feet during the third quarter of 2018. While this is the greatest quarterly total since 2015, 1.8 million square feet of this activity involved build-to-suit leases or pre-leased space in planned or under construction buildings, thus will not have an impact on net absorption until the buildings are delivered.
Net absorption was positive for the 26th consecutive quarter, totaling 2.4 million square feet during the third quarter of 2018, bringing the year-to-date tally to 12.9 million square feet. This is slightly below the 13.5-million-square-foot tally through the fi rst three quarters of 2017, but several pending transactions may result in a strong fourth quarter if signed.
The industrial vacancy rate decreased by four basis points between July and September to 6.40 percent, the lowest rate recorded since the second quarter of 2001.