Chicago’s industrial market is moderating as slower population growth and softer trade activity temper demand, though fundamentals remain comparatively healthy. Over the past year, net absorption totaled nearly 3.8 million square feet, among the strongest totals nationally, but well below prior highs. Vacancy stands at approximately 5.5%, below both the long-term market average and the national rate, despite rising steadily since early 2025.

 

Rent growth remains positive at 4.0% year-over-year, outpacing the national average, but easing tenant demand and declining pre-leasing activity are expected to increase concessions. While Chicago’s 1.4-billion-square-foot industrial base benefits from unmatched intermodal infrastructure, its heavy concentration in logistics space leaves the outlook subdued through 2026.

 

Key Findings

• Chicago recorded roughly 3.8 million square feet of net absorption over the past 12 months, while vacancy remains low at about 5.5%, below the national level.
• There is 15.4 million square feet under construction, representing just 0.8% of total inventory and well below the national average, positioning the market for one of its slowest expansion periods.
• Industrial sales volume reached $4 billion over the past year, up 15% year-over-year, with logistics properties accounting for roughly $2.8 billion of total transactions.

 

Chicago Industrial Supply & Demand Dynamics

Source: CoStar Group, Inc.

 

Chicago Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 5.0%
• Current Population: 9,577,193
• Households: 3,791,460
• Median Household Income: $92,994

 

Chicago’s economy is driven by its top-performing transportation network, several corporate employers, and a diverse industrial base, making it one of the most resilient metros nationally. The metro stands out as an industrial hub for its two international airports, railroads, and highway convergence, and it is also home to 24 Fortune 500 companies that include United Airlines and Northern Trust. Growth in life sciences and advanced manufacturing, highlighted by the Illinois Quantum and Microelectronic Park, further strengthens Chicago’s long-term outlook.

 

Top Tenant Leases

• Elogistics Service Corp
• Peopleworks
• PepsiCo
• Hyundai Mobis

 

Population, Labor Force, & Income Growth

Source: CoStar Group, Inc.

 

Chicago Industrial Construction

After its recent development surge, Chicago’s industrial construction pipeline has normalized with 15.4 million square feet underway. While availability across recent deliveries remains elevated, leasing momentum has improved, particularly in large-format logistics facilities, where vacancy has declined meaningfully. Chicago’s central location and extensive transportation network continue to attract major tenants, supporting new development despite pullbacks from some third-party logistics users. With construction starts subdued and a growing share of future deliveries pre-leased or owner-occupied, the market is positioned for a prolonged period of limited industrial expansion.

 

SF Construction Starts

Source: CoStar Group, Inc.

 

SF Under Construction

Source: CoStar Group, Inc.

 

Chicago Industrial Sales

Chicago deals gained momentum over the past year, with total annual sales volume reaching $4 billion, a 15% increase year-over-year. Logistics assets continue to dominate investor interest, accounting for $2.8 billion in trades, reflecting confidence in the market’s core distribution fundamentals. While activity remains below the prior cycle peak, Chicago’s extensive infrastructure, limited new supply, and stable tenant base continue to attract both institutional and private buyers, which together represent roughly three-quarters of transactions. Near-term loan maturities may generate additional sales activity despite broader market uncertainty.

 

Chicago Industrial Sales Volume

Source: CoStar Group, Inc.

 

By the Numbers

Q4 2025 | Source: CoStar Group, Inc.

• Sales Volume: $1.1B
• Price Per SF: $98
• Cap Rate: 8.1%
• Vacancy Rate:5.5%
• Rent Growth: 4.0%
• Asking Rent Per SF: $9.92
• SF Under Construction: 15.4M
• SF Delivered: 2.5M
• SF Absorbed: 4.9M