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No End In Sight For Industrial Boom As ‘Off The Charts’ Demand Continues
September 29, 2021
Brian Rogal, Bisnow Chicago
Activity in the logistics and warehouse sector keeps accelerating, and construction crews seem likely to keep breaking ground on new projects no matter what obstacles appear for the rest of the economy. Developers are already breaking Chicago-area records for new construction, while tenants keep popping up, ready to lease new buildings almost as soon as they appear.
Elion Partners last week became the latest developer to hit the accelerator. It launched a $1B partnership with Brookfield Asset Management to develop up to 15M SF of additional industrial properties at its Elion Logistics Park 55 in southwest suburban Wilmington. And experts say more such announcements are likely in the months and years ahead.
“I have always tried to [forecast] the end of a cycle, and in the past, I would usually say, ‘We’ve got another year, and that’s it,’ but in this cycle, I don’t see an end approaching,” Colliers International Executive Vice President Mike Senner said.
The Chicago region is not an outlier, he added. All the major distribution and logistics hubs, including Dallas,Atlanta, New Jersey and many others, are also seeing bursts of development. And although much of the boomin the past two years was driven by the need to serve millions of consumers left homebound by pandemic-driven shutdowns, the good times for logistics should last long after Covid-19 recedes. Shoppers found out how easy it was to order goods and deliveries online with a few clicks, permanently altering consumer behavior and sustaining the long-term need for modern warehouses.
“There has been no slowdown in demand,” said WBS Equities CEO Wendy Berger, whose Chicago-based firm specializes in developing food related industrial buildings. “It’s off the charts.” Multiple records were broken by Chicago-area industrial developers and tenants in the second quarter of 2021, according to Colliers. By the end ofJune, more than 30M SF of buildings were under construction, eclipsing the previous record of 29.6M SF hit at the end of 2020 and marking the first time that number exceeded 30M SF. And tenants leased about 5.1M SF inspect buildings delivered since 2013, the most ever. That helped push down the overall vacancy rate to 6.29%, continuing a nearly five-year declined espite 60M SF of spec space coming online during that period.
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