US companies occupying industrial real estate, listen up! The market has pivoted to a Landlord’s market, that means you will pay more. Taking on this market without proper representation, well why not just tie a steak around your neck and walk into a Lion’s den…you’re dead meat.
Unemployment is down to 6.2%
Vacancy rate has decreased to 8.2%, lowest since 2001!
15 million square feet is under construction!
This data tells us there are more people employed, the amount of available space is lowest since 2001, and developers can’t build enough space to meet demand (or to feed their performas). What does it all mean? Asking prices are up and incentives are down like free rent, large tenant improvement dollars, and risk diversion, you are in a Landlord’s market… expect to pay more.
But you don’t have to. Embrace the approach of creating a competitive atmosphere where multiple buildings are being seriously considered you should be able to compress the rental rate and get some concessions from Landlords. Consider the vacancy rate of 8.2% it reflects nearly 90 million square feet of available space in Chicago metro!
If you have a renewal or are considering a new location:
- Engage a real estate professional who has access to on and off market properties
- Go see everything. You may not have 10 options, but there should be three or four and you need to leverage them.
- Give yourself time, 9-12 months before your back is against the wall.
This is nothing new, but its never been more important.