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Rent Spreads Remain Wide for Chicago’s New Industrial
Connect Industrial is coming up on July 11 in Chicago. Here’s a link for more information about the conference and to register.
Industrial development remains a safe bet for the Chicago market, judging by the spreads between pro forma and break-even rents on new product, according to CBRE. At a 43% average spread, Chicago is the best positioned for future development out of 10 major markets CBRE studied, although the spread was at least 20% in all 10 markets.
“This huge gap implies that if demand slows and the market cools a bit, there’s still a lot of cushion there,” said David Egan, CBRE global head of industrial & logistics research. “This means that the development market is quite healthy, underwriting remains conservative, projects under development should perform quite well and the incentive is there for continued development.”
After Chicago, the top five includes Atlanta (38% spread between pro forma and break-even rents), Phoenix (35%), Pennsylvania’s I-78/I-81 corridor (30%) and Los Angeles (27%).
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