Industrial drives commercial real estate growth
July 26, 2023 — Strong industrial demand is here to stay and is driving commercial real estate growth, says Brown Commercial Group Broker Candace Scurto in a recent REJournals article. Scurto was asked to weigh in on the state of the industrial market at mid-year and why this sector continues to deliver strong returns. Here’s a recap:
- Brown Commercial Group is seeing especially high demand in the O’Hare submarket and DuPage County due to their proximity to transportation routes and comparatively lower taxes.
- There is strong demand for industrial space less than 100,000 square feet and particularly with spaces less than 50,000 square feet. Given the high cost of construction, it is not as feasible to build smaller buildings, so a shortage has occurred.
- Given the low vacancy and high demand, businesses are having to get creative by either compromising on location or finding ways to optimize their current space for the short-term
The commercial real estate story also notes that small and medium-sized users in Southeast Wisconsin are facing a similar issue. In the pandemic era, space scarcity was widespread across all industrial real estate submarkets. A surge in speculative development occurred, with a steady flow of it coming online in stages. There has been more than 10 million square feet of industrial space added in the Chicago commercial real estate market since 2020, with an additional four million square feet in the pipeline. Much of that market has focused on large warehouse spaces, however, creating a void for smaller users.
