North Kane/I-90: What’s driving industrial construction growth?
October 15, 2023 — The North Kane/I-90 submarket is experiencing sizable industrial construction growth, with 3.5 million square feet (MSF) in the pipeline that will add to the nearly 50 MSF of existing space. Much of the activity is concentrated along the East-West side of Interstate 90 to the north and Route 47 going north and south. The area is a consistent draw for manufacturers, distributors and wholesalers, along with specialty industrial businesses.
A review of CoStar data by the Brown Commercial team shows the pipeline is almost triple the 10-year average for that area. In the short-term, there is concern that most of the new buildings are being built on speculation, with many delivering vacant. Given the “wait and see” mindset from some occupiers due to economic headwinds, that space may take some time to fill. Here’s a quick take on that region’s industrial construction growth.
- Year-over-year inventory change: Approximately 2.9 MSF
- 10-year average construction deliveries: 300,000 SF annually
- Deliveries scheduled by year-end 2023: 3.7 MSF
- Community development features: 7 state-approved Opportunity Zones, 55 miles of fiber optic cabling
- Largest occupiers: Logistics facilities, with approximately 33 million SF. Next is specialized industrial users (10.1 MSF) and flex space (3.6 MSF)
- YOY absorption: 1.5 MSF
A look at fundamentals
The submarket’s vacancy rate is 5.8%, a healthy level historically, but a rate that is higher than many other submarkets. The impact of new construction may keep that rate elevated for the near term.
Rents grew by 8.0% over the past year and easily exceeded the 4.9% average annual change recorded over the past decade. Industrial rents are about $9.60/SF, in line with the metro average. Check out our current listings for a look at opportunities throughout the Chicago region.
