In the first quarter of 2025, Chicago\u2019s industrial market saw the start of 1.5 million square feet of new construction \u2014 a sharp decline from the 11.4 million square feet that was underway during that timeframe last year.<\/p>\n
At the same time, asking rents continued their upward trend, rising 4.6% year-over-year to reach $6.36 per square foot. However, the industrial vacancy rate climbed to 10.6%, marking the second-highest rate among major Midwestern markets and signaling a departure from the tight conditions seen between 2021 and 2023.<\/p>\n
Meanwhile, leasing activity remained steady in key areas with companies continuing to realign supply chains to be closer to end markets. Significant deals included Flextronics\u2019 335,000-square-foot lease in Libertyville, Ill., and Uline\u2019s ongoing expansion into southeast Wisconsin.<\/p>\n
Of course, discussions around potential tariff policies under the Trump administration have renewed attention on reshoring U.S. manufacturing. Yet, while Chicago offers robust transportation infrastructure, a central geographic location and strong access to energy, some analysts remain skeptical that tariffs alone will drive large-scale reshoring. Rather, they argue that rising costs may push companies to seek alternative trade environments, as opposed to bringing operations back to the U.S.<\/p>\n
Despite these mixed signals, investment interest has held strong. Industrial property sales in Chicago totaled $616 million in Q1 2025. This volume was the third-highest nationally (surpassed only by New Jersey at $832 million and Dallas at $711 million) and made it the top-performing market in the Midwest. Specifically, properties traded at an average of less than $100 per square foot, which is notably affordable as they rest below the national average ($126 per square foot through Q1 2025).<\/p>\n
Among the largest transactions of the quarter, SL Industrial Partners picked up a 925,000-square-foot portfolio of industrial flex space across three Chicago-area business parks for $76.4 million from Stockbridge. Another notable sale involved G3 Enterprises\u2019 $34.4 million acquisition of a 380,000-square-foot warehouse on a 19-acre site in Bedford Park.<\/p>\n