Q1 2025 Chicago Industrial Market Report
Highlights
- Chicago’s industrial market remains strong, with a 6.0% vacancy rate and 3.7M SF in logistics-driven absorption, despite falling from the national top 10.
- Rent growth outpaces the national average, rising 4.2% year-over-year due to tight supply and stable tenant demand, especially in logistics and flex centers.
- Construction and investment activity is steady, with 10.5M SF underway and $4.6B in sales over the past 12 months, focused on modern, high-utility assets.
Chicago Demographics
- Unemployment Rate: 5.4%
- Households: 3,815,482
- Current Population: 9,592,925
- Median Household Income: $89,949
Market Performance
Chicago’s industrial market showed steady performance over the past 12 months, with 3.7 million square feet of net absorption and a vacancy rate of 6.0%, which remains below both its historical average and the national rate. The market delivered 12.2 million square feet of new supply, yet only 0.7% of inventory is currently under construction—about half the national average—providing
a cushion against oversupply concerns. Logistics facilities led demand, accounting for the vast majority of absorption and move-ins.
Asking rents increased 4.2% year-over-year, outpacing the national growth rate of 1.9%, driven by constrained availability and resilient tenant retention. While leasing velocity has cooled somewhat, particularly in older assets, demand remains solid for modern, well-located space near intermodal hubs. With muted construction starts and stable tenant activity, Chicago is positioned for continued rent growth and balanced market conditions through the remainder of 2025.
By the Numbers
- Sales Volume: $1B
- Cap Rate: 8.1%
- Market Sale Price Per SF: $97.00
- Vacancy Rate: 6.0%
- Rent Growth: 4.2%
- Market Asking Rent Per SF: $9.87
- SF Under Construction: 10.5M
- SF Delivered: 15.1M
- SF Absorbed: 3.7M
Under Construction
Chicago has 10.5M SF industrial space underway—just 0.7% of inventory, trailing the national average. Roughly 56% of this pipeline was pre-leased, with active development focused in Joliet, Indiana, and the I-88 West submarkets. Projects underway include large-scale logistics facilities and specialized builds like data centers, reflecting targeted demand and restrained speculative activity.
Sales
Chicago’s industrial sales volume reached $4.6 billion over the past 12 months, with $3 billion in transactions during the third and fourth quarters of 2024 and $1 billion in the first quarter of 2025. Logistics assets accounted for $2.9 billion in sales, highlighted by institutional acquisitions such as AIC Ventures’ $26.2 million Meadow Lakes warehouse and Ares Management’s $46.3 million purchase in Aurora. While activity remains below the 2021 peak, upcoming loan maturities totaling nearly $400 million in early 2025 may lead to increased asset dispositions and capital recycling through 1031 exchanges.
