If you’re any way involved in commercial real estate investment in Chicago, you’re likely wondering what 2019 will bring in terms of real estate trends. After all, by the time you realize something is a trend, it’s usually too late or risky to try and capitalize on it. Fortunately, though, if you’re able to keep your ear to the ground—as we are at Frontline Real Estate—you can foresee many of these trends.
And since we want to help spur our clients to succeed in their endeavors into commercial real estate investment in Chicago, we’re ready to share what may be coming down the pipeline for the rest of 2019.
The Chicago Glut: Fact or Fiction?
Read any publication about real estate in Chicago and you’re likely to hear murmurs that Chicago is becoming overbuilt.
The worries aren’t unfounded, of course. From hotels to office buildings and apartments, the past few years have seen significant growth in Chicago’s commercial real estate supply. Moreover, since—at some point in time—any given market will become overbuilt, it’s natural to worry about overbuilding in Chicago.
However, even with Chicago’s strong growth over the last few years, rents have risen, and vacancy rates are still relatively low. In other words, the job market is managing to support the influx of new office space and apartments. So, while no investor would be foolish to consider the possibility of an overbuilt market when they make commercial real estate investment decisions in Chicago, that doesn’t mean they should overreact.
Retail Vacancy Keeps Rising
In reality, softening demand in the retail market is not unique to Chicago. Large chains who’ve gone bust or significantly scaled back their businesses left gaping holes in retail demand throughout the nation. Of course, this doesn’t mean that retail is dead, it just means that the winds have shifted. Smaller businesses and shops may be able to fill the holes left by big retailers, but shopping center owners will need to reconfigure their spaces to suit the new reality.
Industrial Wait and See
If you’ve been watching commercial real estate investment in Chicago closely, you’ll have noticed a strong few years of growth in industrial properties. Certain areas have attracted plenty of new tenants to justify that growth, but other areas have not been so lucky. However, as more and more retail goes online, industrial properties will see a continuing surge of demand for warehousing and other supply chain needs. So, don’t sleep on this asset class yet.