Q4 2022 Industrial Real Estate Report: Chicago, IL
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
Chicago is home to nearly 35 Fortune 500 companies and houses the company headquarters of many notable businesses, including McDonald’s, Sysco, and Home Chef.
The metro area population of Chicago reached 8.9 million in 2022. The unemployment rate in the city reached 4.2% in Q4 2022.
Chicago’s industrial real estate market led the nation in positive absorption at 40.6 million square feet for the year. The city also saw record-low vacancy rates by Q4 2022.
General Area Overview & Demographics
Chicago is highly diverse, with nearly equal numbers of White (45%) and African American (32%) residents. Other ethnic groups represented are Hispanic (29%), Asian/Pacific Islander (10%), Native Americans/Alaskan Natives (2%), and those of mixed race (4%).
Chicago Median Household Income & Population
The median household income in the Chicago metropolitan area is $62,241. The median for White households is $78,662 compared to $39,593 for African American households and $41,919 for Hispanic households. Many Chicago residents, as of Q4 2022, struggle to keep up with rent payments.
Chicago’s median age for its population is 34.3 years old as of 2019. Around one-third (31%) of residents are under the age of 18, while around 18% are over 65. The median age for White residents is 43, while the median age for African American and Hispanic individuals is 28.9.
Many prestigious universities are located in the city, including the University of Chicago and Northwestern University. Additionally, the city has a variety of public and private colleges, as well as community colleges that serve both local and non-local students.
Popular destinations in the city include the Navy Pier, Millennium Park, and the Magnificent Mile. Many museums such as The Field Museum, Shedd Aquarium, and Adler Planetarium provide educational entertainment for all ages.
Summer temperatures average around 75 degrees Fahrenheit (24 Celsius), while winter temperatures typically range from 20 to 30 degrees Fahrenheit (-7 to -1 Celsius). The winters bring much snowfall. The city also experiences strong winds, which can be dangerous during the colder months.
Summary of Chicago Industrial Space Performance in Q4 2022
Vacancy rates for Chicago industrial real estate have steadily declined since Q2 2022, with Q4 posting rates at 4.5%.
The McHenry County submarket had the highest industrial vacancy rates for the quarter at 9.77%.
Industrial absorption for the quarter reached 9.86 million square feet, bringing the year-to-date total to nearly 40.6 million square feet.
The I-290 South submarket posted the only negative industrial absorption for the quarter at -1 million square feet.
What are industrial real estate rents like in Chicago?
The average asking rent for Chicago industrial real estate rose to $5.80 per square foot in Q4 2022. This was a $0.24 increase quarter-over-quarter.
The North Chicago submarket posted the highest average asking rate at $8.28 per square foot. Rents were lowest in the DeKalb County submarket at $4.05 per square foot.
Purchase & Leasing Activity
Sales activity reached 1.7 million square feet for the quarter. This was a decrease from Q3 2022, which saw 2.3 million square feet in industrial sales volume.
The average sales price per square foot for Chicago industrial real estate in Q4 2022 was $56.81, with the highest price per square foot occurring in the Central DuPage submarket at $79.44 per square foot.
New industrial leasing activity amounted to 9.3 million square feet in the fourth quarter. This was a decline from the previous quarter’s activity of 10.9 million square feet.
Notable Industrial Space Deals in Chicago in Q4 2022
There were several notable deals that took place for Chicago industrial real estate in Q4 2022:
- Cabot Properties, Inc. bought 347,440 square feet in the Central DuPage submarket.
- IDI Logistics bought 827,458 square feet in the Chicago North submarket.
- PrimeSource Building Products leased 1 million square feet in the I-80 Joliet Corridor submarket.
- Prinova USA leased 356,177 square feet in the Central DuPage submarket.
These are select examples among other activity.
New Industrial Space Development Activity in Chicago in Q4 2022
Construction completions for Chicago industrial real estate reached 31 million square feet in 2022. Approximately 9.8 million of those completions occurred in Q4.
At the close of Q4, 35.6 million square feet were being added to the pipeline across 96 different buildings.
Market Forecast for Chicago’s Industrial Space Market
While Chicago’s industrial vacancy rate reached record lows in Q4 2022, it’s expected to climb as mass amounts of new deliveries are added to the market in 2023.
Expect new leasing volume and demand for space to remain steady. Rental rates should increase as inflation continues to grow and until supply catches up with demand.
Takeaways for Industrial Space Investors
Industrial investment sales in Chicago’s industrial real estate market were quite prevalent in 2022.
The city reached its second-greatest absorption rate in history in the past year. Tenant requirements have remained strong and new leasing activity declined, showing how tight the market currently is.
Stay diligent, do your research, and happy investing.
Find & Connect With Commercial Agents & Brokers in Chicago for Free on MyEListing.com
MyEListing.com maintains one of the largest national directories of commercial agents & brokers. Use it for free to find an agent or broker in Chicago, IL.
Other recent articles
Article Search
Share
All Article Categories
