Chicago Industrial Construction Surges, Vacancy Climbs

The Chicago industrial sector remained active through the third quarter, with construction activity accelerating and investment holding steady, according to Yardi Matrix. The metro’s development pipeline expanded to more than 11 million square feet underway, marking a significant increase from last year’s limited construction volume.

Industrial deliveries, however, slowed to about half of 2024’s level, while vacancy climbed to one of the highest rates among major industrial markets. Despite rising availability, demand continued to support leasing and investment, with more than $1.9 billion in properties trading hands through September.

Construction activity accelerates across metro Chicago

Year-to-date through September, 11.3 million square feet of Chicago industrial space was under construction. A total of 13 projects are set to come online, accounting for 1 percent of the total stock. This marks a major increase from last year, when just 1.5 million square feet across four properties was underway.

Dallas (31.8 million square feet) and Phoenix (17.2 million square feet) led all markets, while Atlanta (11 million square feet) remained close. Indianapolis (4.6 million square feet) and Kansas City (3.6 million square feet) trailed.

Hillwood Investment Properties and Clarius Partners are developing a 970,123-square-foot speculative facility in University Park, Ill. Spanning 75 acres, University Park Logistics Center is expected to be completed by the third quarter of 2026.

In September, Mohr Capital announced a 1 million-square-foot build-to-suit project in DeKalb, Ill., with expansion potential up to 1.5 million square feet. Also this fall, Mapletree Investments broke ground on two developments—one at 3600 Houbolt Road in Joliet, Ill., and another at 1360 Schiferl Road in Bartlett, Ill.—both slated for completion next year.

Delivery pace slows, but remains solid

As of the end of September, Chicago delivered nearly 6 million square feet of industrial space across 19 properties, representing 0.5 percent of total stock, below the 1.1 percent national average. Deliveries were down sharply from the same period last year, when 32 facilities totaling 11.3 million square feet were completed.

The metro recorded similar delivery totals to Atlanta (4.2 million square feet) and New Jersey (4 million square feet), while Dallas (14.7 million square feet) and Phoenix (14 million square feet) led all markets.

Investment volume steady amid price gap

Chicago’s industrial sales volume reached $1.9 billion as of the end of September, according to Yardi Matrix. Some 198 facilities totaling 22.6 million square feet changed hands, with the metro’s average price at $90.13 per square foot.

New Jersey led the nation at $224.37 per square foot, while Indianapolis ($97.83 per square foot) and Kansas City ($87.46 per square foot) posted lower averages.

LBA Logistics purchased Principal Real Estate Investors’ 413,112-square-foot Niles Industrial Center in metro Chicago for $55.5 million. The complex includes two buildings of 210,458 and 202,654 square feet.

Vacancy climbs as tenant demand persists

Chicago’s industrial vacancy rate stood at 12.6 percent at the end of September, according to Yardi Matrix. Among major metros, Dallas (11.8 percent), Indianapolis (10.9 percent) and New Jersey (10.9 percent) had the next-highest levels of available space. Despite the elevated rate, leasing remained active.

The Missner Group signed a 197,587-square-foot lease with third-party logistics provider Hearn Industrial Services at its newly developed facility at 1200 W. 145th St. in East Chicago, Ind. The tenant will use the space for automotive parts storage and distribution supporting Ford Motor Co.’s South Side Chicago plant.

In another notable transaction, Link Logistics renewed Axis Warehouse & Logistics’ lease at 500 Country Club Drive in Bensenville, Ill. The full-building commitment, spanning more than 300,000 square feet, was the largest lease renewal in the O’Hare submarket in the first half of 2025.