Mid-Year 2021 Market Watch
NAI Hiffman is pleased to present the Mid-Year 2021 Market Watch, a first look at the market statistics for the Chicago metropolitan office and industrial real estate markets.
Industrial: Insatiable Demand Spurs Supply to Try to Keep Pace
- None of the 21 submarkets across the Chicago metro area recorded a double-digit vacancy rate at mid-year.
- Leasing activity remained strong in the second quarter, as nearly 14.2 million square feet of deals were recorded.
- Chicago industrial recorded nearly 9.7 million square feet of move-ins in the second quarter of 2021.
- The Chicagoland industrial development pipeline is marching lockstep with the rest of the market fundamentals to try to meet the insatiable demand. There are currently 68 developments underway throughout the market, accounting for nearly 27.3 million square feet in the offing.
Suburban Office: New Leasing Activity Velocity Gains Momentum
- The suburban Chicago office market recorded a 24.63 percent vacancy rate at mid-year. This rate increased 539 basis points year-over-year from the 19.24 percent vacancy rate recorded at mid-year of 2020. This rate also reflected an increase of 138 basis points from the first quarter 2021 vacancy figure of 23.25 percent.
- There was -826,912 square feet of net absorption recorded in the suburban office market in the second quarter. For the fifth consecutive time since Q2 2020, the suburbs performed better in this category than the downtown office market.
- New leasing activity topped one million square feet for only the second time in five quarters. With the National Bureau of Economic Research declaring the COVID-19 recession to be the shortest, yet steepest on record, there is continued hope that pent up consumer demand and the general population’s access to vaccines will speed up the economic recovery in the second half of 2021.
Downtown Office: Supply Pressures Dampen Downtown’s Recovery, For Now
- There were another -1,843,567 square feet of net absorption in the second quarter downtown. Four of the last five quarters have had net absorption greater than -1,000,000 square feet.
- There was 1,125,130 square feet of leasing activity downtown in the second quarter.
- Despite a 5.0 percent increase in new leasing activity year-over-year, the downtown office market remains far afield from the hearty fundamentals shown at the start of 2020. As news reports trickle out regarding the return-to-office plans of corporate America, increased leasing velocity is unlikely to return before Labor Day.