US Logistics Facility Vacancy Rate Hits Record Low... Demand Surges Due to COVID-19

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The COVID-19 pandemic has led to a surge in e-commerce, resulting in logistics facility supply failing to keep up with demand even in the vast United States.

On the 28th (local time), Chicago local media cited the latest report from global real estate services firm 'JLL,' reporting that the logistics warehouse vacancy rate in the Chicago area hit a record low of 4.4% in the third quarter.

From the beginning of this year until the end of September, the net increase in leased logistics warehouse space in the Chicago area totaled 27 million SF (approximately 2.5 million ㎡), surpassing last year's net increase of 25 million SF (about 2.3 million ㎡), yet demand continues to outpace supply.

Developers are rushing to establish commercial facilities at transportation hubs, but the Chicago area's third-quarter logistics warehouse vacancy rate dropped further from 4.9% in the second quarter.

Medical glove manufacturer 'U.S. Medical Glove' recently signed a lease contract for a 94,000 SF (about 8,700 ㎡) former Caterpillar manufacturing facility located in Montgomery, a southwestern suburb of Chicago, to convert it into a logistics warehouse.

The total area of logistics facilities currently under construction in the Chicago area is 27.8 million SF (approximately 2.58 million ㎡), more than double the 13.2 million SF completed this year. Last year, the total newly supplied logistics warehouse area was 24 million SF.

Real estate specialized media 'The Real Deal' reported that large-scale new facilities are being constructed near Interstate 80 (I-80), which connects Chicago and Indiana, as well as in southeastern Wisconsin, linking to Chicago's northern suburbs.

The volume of commercial real estate transactions in the Chicago area in the first half of this year reached $1.5 billion (about 1.8 trillion KRW), and the annual cumulative total is expected to easily surpass last year's record of $2.13 billion (about 2.5 trillion KRW).

Meanwhile, the logistics warehouse vacancy rate in the Long Island area adjacent to Manhattan, New York, fell to 2.6% in the third quarter. According to local media, this figure is more than 30% lower than the pre-pandemic rate of 4.5%.

In Columbus, the capital of Ohio, the third-quarter vacancy rate was confirmed at 2.78%, even lower than the record low of 3.68% recorded in the second quarter.

Chicago-based commercial real estate services firm 'Cushman & Wakefield' stated, "As of the end of September, 521.4 million SF (about 48 million ㎡) of logistics warehouses are under construction nationwide," calling it a "record high."

The national average vacancy rate is 4.1%, and rents are at a record low of $7.18 (about 8,400 KRW) per square foot.

This content was produced with the assistance of AI translation services.