What’s Ahead for Lake County Rent Growth?

September 14, 2023 — What’s ahead for North Lake County’s industrial rent growth? This popular Chicago industrial submarket stretches north from Lake Bluff, IL to the Wisconsin border (and west to the Fox Lake to Antioch areas) and supports many large warehouse and manufacturing employers. Medline Industries, Abbvie, and Amazon each has more than 1 million square feet of space in this submarket.

The North Lake County submarket, which has experienced strong rent growth for many years, provides convenient access to the Port of Chicago, the leading intermodal container handler in the Western Hemisphere. And, the location allows industrial businesses to tap into both the Wisconsin and Chicago-area workforces.

A review of CoStar research from September 2023 shows vacancy and availability rates are historically compressed at 4.0% and 7.5%, respectively. These numbers are well below the submarket’s historical averages by over 200 and 300 basis points each.

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Lake County Rent Growth Overview

Lake County rent growth has been strong, reaching 7.5% psf over the last 12 months. This is a healthy level, but a little shy of the rates seen in other high demand submarkets, such as O’Hare, which recorded 7.9% rent growth in the same period. Current industrial rents in North Lake County are about $8.60 psf, which is moderately below the metro average, according to CoStar. A similar pattern holds for logistics space, which at $8.40 psf is less than the $8.90/SF metro average for that subtype. Looking ahead, overall industrial rents in this submarket are expected to rise to $9.10 in 2024, $9.51 in 2025, $9.95 in 2026 and $10.25 in 2027, according to CoStar.

North Lake County’s massive inventory base of 45.3 million SF places it among the nation’s largest industrial submarkets. As in the Chicago metro, logistics properties account for the largest proportion of local supply, and these properties contain nearly 28 million square feet. There also is another 15.7 million square feet of specialized space and 1.8 million square feet of flex space in this submarket.

Lake County Industrial Sales

Industrial properties traded with regularity last year, consistent with the generally high level of activity over the past three years. There were 35 industrial property sales in 2022, totaling $172.7 million, with an average cap rate of 5.5%. Year-to-date figures for 2023 total 28 properties, valued at $94.2 million and trading an average cap rate that jumped to 10.1%. The average price also declined, from $5.6 million in 2022 to $4.9 million so far in 2023.