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New Supply Won’t Slow Industrial’s Gains
For all that has been said recently about the uptick in speculative warehouse development across the Chicago region, Marcus & Millichap points out that it’s actually well below average. The firm’s industrial forecast for the second half of 2018 predicts total deliveries of 15.5 million square feet, compared to the three-year average of 19.8 million square feet.
Even if the development numbers are off overall—although they’re up in the I-55 and O’Hare submarkets—then the metrics encouraging new construction continue to rise. “Steadily growing wages and accelerating household formation are enticing developers to expand Chicago’s one-billion-plus-square-foot inventory,” according to Marcus & Millichap.
The new supply isn’t creating a drag on positive movement in two key metrics for industrial owners. Vacancies are expected to decline 50 basis points by the end of 2018 for their lowest level in a decade, while rents are expected to gain 5.2% year over year.
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