There are currently 14.7 million square feet under construction across 50 projects, according to Colliers research. This is up more than 61 percent from the second quarter’s 9.1 million square feet and the greatest quarterly tally since the second quarter of 2017.
And the development looks to continue for some time as 26 projects started this quarter, representing 7.2 million square feet—the largest quarterly new construction start total in over two years and significantly surpassing the anticipated start total of 6.4 million square feet. A new surge in development starts is well underway following a slowdown during the past 12 months. Is there still a hunger for speculative space?
Of the space under construction, spec development accounts for 11.1 million square feet, or 76 percent. Though deliveries were down this quarter, even more of what was completed was done on spec at 81 percent. Since the current development cycle started in 2013, 374 buildings totaling nearly 96 million square feet have been added to the overall inventory. Of the speculative space delivered in that time—51.4 million square feet among 192 projects—approximately 65 percent of it is leased. This figure has increased each of the past five quarters, indicating that demand for spec warehouse space has kept up with new supply and the market is not being overbuilt.
Most of the development activity has occurred in the I-80 Joliet Corridor and I-55 Corridor submarkets, where 45.6 percent of the overall completions and 51.8 percent of the speculative completions have occurred. The largest construction start this quarter was the development of a 879,040-square-foot speculative facility in the Bailly Ridge Corporate Center in Monee, Illinois.