Premium Chicagoland Industrial Rent in Demand

The Chicagoland area has long since been a sought after destination for industrial real estate. With it’s midwestern location allowing for easy transportation to any coast, the railroad infrastructure, and the many interstates in the vicinity, it is clear to see why towns like Addison, Park Ridge, and those in the O’Hare market have consistently been in industrial real estate demand.

According to a recent report in Bisnow, the demand has increased even more in the first quarter of 2022. The Bisnow report states”asking rents [for industrial space in the Chicagoland area] in Q1 2022 rose 7.5% over the last three months of 2021, pushing to $5.76 per SF, while almost 7M SF of industrial space was absorbed — nearly double the five-year quarterly average. As it has for four quarters running, vacancy dropped, falling from 9.4% in Q1 2021 to 6.8% a year later.”

In fact, the Chicago area is experiencing the largest growth in the United States, alongside California’s Inland Empire, Dallas-Fort Worth and Central Pennsylvania.

With such high demand, options for large industrial tenants are scarce in desirable markets, such as O’Hare. Either tenants are faced to pay higher than expected rental rates, seek more rural industrial space, or convert existing non-industrial buildings (in prime locations) to fit their industrial/warehouse needs.

For instance, Dermody Properties, a national industrial real estate developer, acquired the Northbrook, Illinois Allstate office campus for $232 million in late 2021 with a proposed plan for the 120-acre site to convert it to over 3 million square feet of warehouse buildings.

Others are choosing more rural options for their industrial headquarters, not only due to the size availability but also the lower rents and property taxes. The graph below shows the vacancy of far suburban McHenry County at 15.3% versus the sought after markets of Joliet (2.7%) and O’Hare (3.3%.) When vacancy is greater, rental rates are lower.

Graph from via Savillas

If your business is looking for Chicagoland industrial space, now is the time to act before the supply crunch really hits the market. Our firm assists industrial, warehouse, logistics, e-commerce, and flex users find commercial real estate throughout the Chicagoland area. We also represent land owners looking to sell to industrial developers. Most recently we represented DuPage Airport Authority in the sale of Pheasant Run of St. Charles, Illinois to a local industrial real estate developer.

Contact us if you’re looking to buy, lease, or sell industrial space in Chicago or the suburbs. Call us at 630.444.0444.