Chicago Metro Real Estate Still Going Strong

Despite a wide range of social, technological and economic changes, the metro Chicago real estate market shows resilience, according to multiple local experts.

chicago metro real estate

A panel at a mid-year 2018 Chicago year market review—held in Rosemont and attended by over 140 professionals—discussed the Chicago real estate scene. Avison Young’s principal, Danny Nikitas oversaw the panel where panelists talked about how the multifamily and industrial sectors were growing stronger. As they continued, panelists noted that retail and office properties remained steady, even though new technology makes a lot of conventional stores unnecessary and allows for a decrease in the amount of office space required.

There was an optimistic attitude in the air that the diverse, robust economy of Chicago would ensure the market continues advancing into next year and that technology would remain an important factor in commercial real estate.

Dike Realty’s vice president, Susan Bergdoll, mentioned that the industrial market is strong nationwide and that the vacancy rate continues going down each quarter. She quoted that the national vacancy rate dropped from 10.4% in 2010 to below 4% in 2018. In the Midwest, however, vacancy rates hover around 7%, while certain Chicago submarkets have a rate lower than 4%.

Executive Vice President of Cawley Chicago, Rawly Lantz, said the Chicago office market was “slow and steady” in 2017. Suburban office properties have a vacancy rate around 20%, while submarkets such as the East-West Corridor and O’Hare are around 14%, and downtown Chicago’s vacancy rate Is approximately 12% as developing office construction is going on. Lantz mentioned that property owners have experienced problems with lease renewals, although rental rates are going up, which is an indicator that there’s still strong demand.

Managing director of Integra Realty Resources, Gail Lissner, discussed the multifamily sector, noting that at the end of 2018 would result in a “really big year,” with just under 3,000 units delivered. Lissner continued, stating that the majority of developing suburban apartment buildings are located nearby Metra train station in the downtown area, and there are some fringe developments on the way. Multifamily properties in Chicago broke records in 2017, as 4,350 properties were built, and Lissner estimated that there would be three-thousand new apartment units on the market in 2018, as property owners are providing lucrative concessions to raise the number of leases.

To finish the market review, Deena Zimmerman, the vice president of SVN Chicago Commercial, mentioned that although there was a reduction in in-store sales and businesses filing bankruptcy, the retail market would continue growing. She believes that big-box store closures will create vacancies that will be filled by landlords who have a desire to change the asset class. She gave an example of property owners purchasing retail spaces of up to 60,000 square feet and transforming the former stores into distribution centers. Finally, she mentioned that many customers still prefer the experience of visiting a physical store, citing that Target aims to open just under three dozen small-size stores in the coming years.