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Chicago Industrial’s Robust Pipeline May Pressure Rent Growth
All of the metrics for Chicago’s industrial have been trending upward, including net absorption and asking rents. However, inventory, the construction pipeline and the vacancy rate are also up year-over-year, says Savills, with potential long-term implications.
Anders Klein, regional research director for Savills, says in the firm’s fourth-quarter report that the Chicago market’s construction pipeline remained robust, with nearly 20 million square feet under construction at the close of 2020. “This added supply may eventually exert downward pressure on rents,” writes Klein.
“While there continues to be uncertainty with the pandemic and the resulting economy, there are signs of gradual reopening of facilities in the Chicago metro area,” said senior managing director Bruce McConnell. “As tenants are able to begin projecting future needs beyond 2021, there will be opportunities for expansion and / or rightsizing due to the significant amount of new construction coming on line this year.”
- ◦Development
