Chicago’s industrial market posted steady leasing momentum in Q3 2025, supported by solid demand and tightening conditions despite pockets of softness in older inventory. Vacancy held at 5.9%, well below the national average, reflecting continued absorption of modern logistics and build-to-suit space. The quarter saw 1.2 million SF of net absorption and 1.7 million SF of new deliveries, with an additional 14.1 million SF under construction. Leasing demand was strongest for newer facilities, while buildings constructed before 2010 continued to shed tenants, contributing to elevated churn in legacy stock.

 

Asking rents climbed to $9.67/SF, supported by 3.6% annual rent growth, as smaller and mid-size spaces leased more quickly than large big-box options. Overall, Q3 performance indicates a resilient yet bifurcated market. Modern logistics assets continue to outperform, supporting overall fundamentals despite rising vacancy and slower leasing velocity among older properties.

 

Key Findings

• Signs of deceleration emerge in the metro as slow population growth and reduced trade activity weigh on fundamentals.
• Demand has slowed significantly in 2025, with net absorbed SF posting 1.2M in Q3, in comparison to 3.9M the year prior.
• Despite a recent demand decrease, Chicago remains the U.S.’s largest industrial market with 1.4 billion SF of inventory, supported by extensive intermodal infrastructure and relatively affordable rents.

 

Chicago Industrial Supply & Demand Dynamics

Source: CoStar Group, Inc.

 

Chicago Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 3.9%
• Current Population: 9,580,814
• Households: 658,614
• Median Household Income: $92,760

 

Chicago’s economy is defined by its unparalleled connectivity, diverse industry base, and deep pool of talent. As North America’s primary freight interchange, with two international airports, six of the seven largest U.S. railroads, and ten interstate highways, the city is a major hub for logistics, distribution, and corporate headquarters activity. Its economic diversity, with no single industry representing more than 15% of the market, supports long-term stability and resilience across office, industrial, and mixed-use sectors. Strategic public initiatives, from LaSalle Street office-to-residential conversions to the pioneering Illinois Quantum and Microelectronic Park, further reinforce Chicago’s position as a forward-leaning economic powerhouse poised for sustained growth.

 

Top 5 Busiest U.S. Airports

2024 | Source: WorldAtlas

 

Chicago Industrial Construction

Construction activity remained active but measured in Q3 2025, with 1.7 million SF delivered during the quarter and 14.1 million SF under construction, reflecting restrained but steady development consistent with pre-pandemic norms. Large modern logistics facilities continue to dominate new supply, supported by major commitments from operators such as Uline, RJW Logistics, and Expeditors International. Despite elevated availability among recently delivered projects, absorption has kept pace: of the space completed since early 2024, more than 9.5 million SF has been leased, helping stabilize vacancy even as oversized facilities face longer lease-up timelines. With construction starts staying muted and over 6 million SF of fully leased or owner-occupied projects slated for 2026–27, Chicago is on track for one of its slowest periods of industrial inventory growth in more than a decade.

 

SF Construction Starts

Source: CoStar Group, Inc.

 

SF Under Construction

Source: CoStar Group, Inc.

 

Chicago Industrial Sales

Sales activity strengthened with quarterly activity contributing to an annual sales volume of roughly $1 billion and pricing averaging $97/SF. Cap rates held near 8.0%, reflecting investor preference for stability amid a moderating capital markets environment. Demand was driven largely by logistics facilities, which continue to attract both institutional and private buyers thanks to the metro’s strategic distribution infrastructure, tight vacancy, and consistent rent growth. While overall deal flow remains below peak 2021 levels, investors are gravitating toward well-leased, modern assets with durable cash flows, as evidenced by strong interest in large distribution centers and specialized facilities such as data centers. With maturing debt expected to bring additional product to market later in the year, Q3 signaled a steady but disciplined investment climate supported by Chicago’s resilient industrial fundamentals.

 

Chicago Industrial Sales Volume

Source: CoStar Group, Inc.

 

By the Numbers

Q3 2025 | Source: CoStar Group, Inc.

• Sales Volume: $1B
• Price Per SF: $97
• Cap Rate: 8.0%
• Vacancy Rate: 5.9%
• Rent Growth: 3.6%
• Asking Rent Per SF: $9.67
• Under Construction: 14.1M SF
• Delivered: 1.7M SF
• Absorbed: 1.2M SF