Industrial real estate is a vital sector of the overall Chicago real estate market, especially in the scope of the overall commercial real estate market. The Windy City’s industrial market is currently quite strong, especially compared to the markets in other parts of the United States and the country as a whole.
How does Chicago stack up when it comes to industrial real estate deliveries, including leases, sales, and properties under construction? What does the latest data show?
In this guide, you will learn more about the state of the Chicago industrial market, the current trends in industrial real estate deliveries, and what experts believe the future holds for Chicago and the rest of the country.
Chicago Industrial Market Statistics
The Chicago industrial market’s data can be divided into three primary categories: Leases, Sales, and Construction / Development. The information featured below from our Chicago Industrial Real Estate Report explains how the city’s market is currently performing.
We’ve broken the Chicago industrial real estate market summary into the three main categories to give some quick perspective: leases, sales, and properties under construction in the Chicago area.
Chicago Industrial Leases
As of the third quarter of this year, Chicago’s industrial real estate lease statistics are as follows:
- Vacancy Rate: 4.5%
- Absorption: -2,082,983
- Asking Rate / SF: $9.30
In the past 12 months, Chicago industrial has also seen the following industrial real estate market outcomes:
- 12-Month Deliveries in Square Feet: 31.1 million
- 12-Month Net Absorption in Square Feet: 22.1 million
- Vacancy Rate: 4.5%
- 12 Month Rental Growth: 7.5%
Per the data, the following are the city’s top industrial leases signed in the last year:
- 101 W Compass Blvd
- Submarket: Joliet Area
- Tenant: Target
- Size: 1,218,120 square feet
- 2250 Berens Ct
- Submarket: Joliet Area
- Tenant: Unilever
- Size: 1,159,200 square feet
- 7450 McCormick Blvd
- Submarket: North Cook
- Tenant: Tenneco, Inc
- Size: 1,052,637 square feet
- 5000 183rd St
- Submarket: Near South Cook
- Tenant: Solo Cup
- Size: 1,033,450 square feet
- 555 S Pinnacle Dr
- Submarket: South I-55 Corridor
- Tenant: Solo Cup
- Size: 1,033,450 square feet
Chicago Industrial Sales
During the last 12 months, there have been 1,044 comparable sales in the Chicago industrial market with an average cap rate of 7.7%. The average price per square foot of these sales was $102, and the average vacancy rate was 5.6%.
The following are the city’s top industrial sales in the last year:
- CH2 Data Center (2299 Busse Rd)
- Price: $176,458,584
- Size: 336,000 Square Feet
- Price per square foot: $808
- Vacancy: 0%
- CH1 Data Center (2299 Busse Rd)
- Price: $154,270,236
- Size: 485,000 Square Feet
- Price per square foot: $489
- Vacancy: 0%
- CH3 Data Center (1400 Devon Ave)
- Price: $152,221,180
- Size: 305,000 Square Feet
- Price per square foot: $768
- Vacancy: 0%
- I-88 Gateway Logistics Center (1200 Orchard Gtwy)
- Price: $55,500,000
- Size: 604,565 Square Feet
- Price per square foot: $92
- Vacancy: 0%
- 7450 McCormick Blvd
- Price: $53,294,000
- Size: 1,052,637 Square Feet
- Price per square foot: $51
- Vacancy: 0%
Chicago Industrial Properties Under Construction
Currently, 88 industrial properties are under construction in the Chicago area, adding nearly 30 million square feet (27,788,805) of new products to the industrial market. These properties represent 2.1% of the city’s total industrial real estate inventory. Just over 31% of the entire industrial space under development is pre-leased.
National Industrial Market Statistics
Now that we have some perspective on how the Chicago industrial market is doing, it’s time to look at Chicagoland’s numbers alongside those of the country as a whole.
A recent report from Colliers covering industrial real estate across the country ranks Chicago in the top 5 markets for: 1) net absorption, 2) SF under construction, and 3) total inventory vs vacancy rate.
Here is a breakdown of how the country’s industrial real estate market is performing, divided in the same way as the data shared above for easier comparison.
National Industrial Leases
According to our National Industrial Real Estate Report, as of the third quarter in 2023, national real estate lease statistics are as follows:
- Vacancy rate: 5.3%
- Absorption: -22.1 million
- Asking rate per square foot: $11.75
Meanwhile, industrial leasing statistics from the last 12 months are as follows:
- 12-Month Deliveries in Square Feet: 502 million
- 12-Month Net Absorption in Square Feet: 206 million
- Vacancy Rate: 5.3%
- 12-Month Rental Growth: 7.5%
National Industrial Sales
While sales have declined from their highs in the last two years, they still outpace the market prior to the pandemic. According to a recent report by CommercialEdge, Chicago is in the top 10 markets for year-to-date industrial real estate sales, and it logged the largest sales volume in the Midwest overall with $1.63B in deals.
It will be interesting to see how Chicagoland closes out the year compared to the national market and major markets nationwide.
National Industrial Properties Under Construction
Data from Colliers (featured in the same report linked in the previous section) regarding the national industrial market shows that 54.7M SF of industrial assets are currently under construction.
The list below from the national industrial report shows how Chicago’s industrial real estate under-construction stats compare to the top real estate markets countrywide:
- New York, NYC
- Industrial Buildings/Assets: 94
- Pre-Leased %: 26.7%
- Los Angeles, CA
- Industrial Buildings/Assets: 45
- Pre-Leased %: 45.6%
- Chicago, IL
- Industrial Buildings/Assets: 88
- Pre-Leased %: 31.3%
- Dallas, TX
- Industrial Buildings/Assets: 275
- Pre-Leased %: 26.2%
- Houston, TX
- Industrial Buildings/Assets: 238
- Pre-Leased %: 28.6%
Chicago is clearly performing relatively well compared to other major markets in the United States, especially when you consider the size difference between Chicago and these other cities.
To give further context, Chicago has a population of 2.697 million, whereas New York City, Los Angeles, Dallas, and Houston’s populations are 8.468 million, 3.849 million, 1.288 million, and 2.288 million, respectively.
Industrial Real Estate Expert Insights
Industrial real estate experts have varying opinions and insights into the current state of the industrial real estate market, as well as how it may change in the future. However, they generally agree that the market is strong and will remain strong even as the country’s economy goes through inevitable changes.
In an interview with BisNow, Dominic Carbonari, Managing Director at JLL, noted that the current Chicago industrial real estate deliveries indicate the industrial sector’s overall strength and health. He described the number as “massive” and went on to say that in his career, “it’s the biggest number.”
With regard to concerns about how the market might change in the future, Carbonari also pointed out that while demand is not as high as it was two or three quarters previously, “it’s still very healthy and very strong,” especially with manufacturing companies interested in occupying big-box buildings.
In the same article, George Cutro, the JLL Director of Industrial Research, spoke specifically on the increase in vacancy rates. Cutro explained that he believes the increase has to do with a high volume of new space being introduced to the market (as opposed to companies giving up space altogether).
Put simply, it appears that Chicago’s industrial market, as a whole, is going strong and will continue to do so. Even if professionals in the industrial real estate sector proceed more cautiously amid rumors of a potential recession, they will nonetheless see positive delivery outcomes.
Final Thoughts
As you can see from the statistical data shared above, Chicago’s industrial real estate market has held firm for quite a while now and is, in many ways, performing above the national market. It’s also expected to continue performing well in the coming years, even with a possible cooling off that may occur in the near future and affect businesses across multiple industries, including the real estate sector.
We’ll see what the outlook is like as the year comes to a close and people gear up for another one on the horizon.