REmark: Spread Between Vacant & Available Space in Chicago's Industrial Market
In our latest REmark, we examined the gap between the vacancy and availability rate for each submarket in Chicago. “Vacant space” is unoccupied, while “available space” reflects speculative construction underway, including anticipated inventory due to departing tenants. If this gap is increasing, then supply is outpacing demand. If the rate is decreasing, then demand is outpacing supply.
We surveyed each Chicago industrial submarket from 2012 to today. During that time period, the average spread was 2.9%, representing the 5-year equilibrium between vacant and available space.
Leasing activity picked up dramatically at the end of 2012, which caused the spread to drop significantly. As overall vacancy continued to drop, developers recognized a need for new space and construction activity began to increase in 2014 and 2015.
Below, we take a closer look at the performance of the 5 submarkets that have received the most post-recession new construction.