There is no end in sight for the post-COVID industrial real estate boom. Chicagoland industrial vacancy fell to 6.2% in Q2, as tenants leased more than 15 million SF – the most ever in a single quarter. Net absorption and new construction have also surpassed all previous market records. Nationally, the average asking price for industrial properties has increased by 15% since the pandemic’s start.
Apartment demand is also surging in Chicagoland. Renters absorbed 10,000 Chicagoland apartments in Q2, the most in 10 years. Households continued to seek larger, lower-cost apartments in suburbs. Despite an overall reduction in vacancy, the average effective rent fell slightly over the year to $1,550/month. Rents increased by 4% in the suburbs but dropped by 5% in Chicago. Demand for suburban units has drawn more out-of-state investors.
The office sector’s performance is firmly tied to the resolution of the pandemic. The U.S. has shed 171 million SF of office space (3.1% of total inventory) since the pandemic started. While office usage crept up earlier this summer, it has since fallen as fears of the delta variant caused tenants to extend remote work policies. Office tour activity has returned to 85% of pre-pandemic levels, suggesting that vacancy will peak in the middle of 2022.