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Did You Hear? April 2015

Did You Hear?
Collier’s International reported that industrial construction deliveries in the Chicago market, a key indicator of industrial market health, increased 30.2 percent in 2014 from a year earlier. In addition, vacancy rates fell, leasing volume increased and sale volume surpassed 20 million square feet for only the third time since 2000. The same report predicted that industrial real estate developers will “remain focused on building multi-tenant product” from 100,000 to 500,000 square feet. “Low interest rates will continue to draw buyers to the market, however, limited supply will push up pricing.”

In its U.S. Office Market Outlook report, Collier’s noted that downtown Chicago vacancy rates were at 11.9 percent as of Dec. 31, 2014, with zero new supply in 2014 year to date, and absorption at 1,096,601 square feet for the same period.

Suburban Chicago office markets showed vacancy rates at 16.9 percent as of Dec. 31, 2014, with 335,475 square feet of new supply and 397,005 square feet of absorption year to date.

Q4 2014 office cap rates for downtown Chicago were 5.5 percent and in the suburban market they were 7.5 percent on average.

CoStar Group recently released its January Commercial Repeat Sale Indices report, which indicated that prices for commercial real estate across the country continued to climb, bolstered by a growing economy, “strengthening market fundamentals” and low interest rates.

The study showed an increase of 1.2 percent for January in both the value-weighted and equal-weighted U.S. Composite indices, with an annual gain of more than 12 percent in each.

The report also noted that the sale price-to-asking price ratio tightened by 2.4 percentage points in the 12-month period ended January 2015. The average time on the market for for-sale properties fell 6.6 percent.

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