Trinity Scurto: Mid-Year Industrial Market Update
July 2023
Industrial Market Update
By Trinity Scurto, Partner
Here’s an industrial market update as we head toward the second half of 2023. We are seeing a slight uptick in availability of industrial space in some submarkets, yet there is still strong demand and a rush to secure space. Our most recent industrial market update shows Cook County with a lot of activity from REITs and other investors who are purchasing properties in the 10,000 to 50,000-square-foot range. The focus is on buying properties to renovate and bring back to the market. This is adding some space back to the market, but is also pushing up rents and investment pricing.
In this competitive industrial market environment, tenants should:
- Start the search from a strong financial position — Find a lender and get financing approved early. This can help you get in the door quickly when a space becomes available. (Reach out to us for lender recommendations if needed)
- Narrow down requirements on location and size — Businesses should think about 3 to 5-year growth plans, how much space they might need and which submarkets are best suited for their operations. Do they need to tap into a certain submarket to be near their client base or labor pool? Is public transportation important?
- Be flexible — Consider options that might be a little outside of your target location or size range. Weigh all the variables to see if the deal makes sense.
- Use cash if possible — Cash is still king, as those deals are quicker to complete and can often help you bypass other tenants.
What’s Ahead?
The Chicago industrial market has seen record activity over the past several years, given overall e-commerce growth and the expansion of online shopping during the pandemic. Given economic conditions, there is talk of a price correction in commercial real estate overall, but the industrial market outlook remains strong. Industrial is expected to outperform other asset classes despite some economic headwinds.
