Increased leasing activity in Chicago has some jumping for joy in that market, while other more conservative experts warn of a flat market. Quarter one 2011 showed minimal job growth and a 16 percent vacancy rate going nowhere do not suggest celebration. But, there are positive variables to look at as well.
For some real estate forecasters a lack of planned development in a market might be a negative sign, but in cities like Chicago occupancy for existing developments should always take precedence over expansion – at least in this economy.
In fact, Dan McCarthy, a representative with Jones Lang LaSalle said as much when talking about tenancy for 2011. His term for the current situation was “cautiously optimistic” – which seems about right barring something dramatic there. In Chicago, and other cities hit hard by the Great Recession, getting back in the game and “sustaining” is what it’s all about.
So, “movement” as defined as businesses exerting more confidence would seem to indicate Chicago is on the way back where commercial real estate is concerned. And, research like that of Marcus & Millichap, seems to hold water too. One paper I found which has a logic to it, Self Storage Market Trends (PDF), clearly indicates room for growth in the region. If you look at the graphic below, its easy to see (at least where storage units are concerned) Chicago is lacking on the supply side of the equation compared with other Midwest markets.
Where some of these markets are concerned, the trends for self storage rentals can be a superb indicator for growth, or even the “health” of the overall market. Why, you ask? Because if people have the disposable income and where with all to rent these spaces, even business’ ability or willingness, this is a clear sign more critical markets are on the move. If you doubt this, look at Marcus & Millichap’s report paying close attention to occupancy trends since 2006 – the direct correlation is there.
Is Chicago ready for a leap forward where commercial property is concerned? Jones Lang LaSalle’s “guarded optimism” should probably be your guide here.