Chicago Industrial Market Report
Key Findings
- Manufacturing jobs in Chicago are increasing, while its office-using segment is decreasing.
- Logistic spaces are highly desired, with cap rates between 5.5% and 7.0%.
- Many multi-tenant industrial properties changed hands in 2024, with a multi-tenant facility making up the largest trade in Q4 2024 at $439 million.
Chicago Industrial By the Numbers
- Sales Volume: $1.2B
- Average Sale Price per SF: $92
- Cap Rate: 8.2%
- Vacancy Rate: 5.3%
- Rent Growth: 3.0%
- Average Market Asking Rent per SF: $9.62
- SF Under Construction: 18.7M
- SF Delivered: 1.3M
- SF Absorbed: 217K
Chicago Demographics
- Unemployment Rate: 5.3%
- Current Population: 9,423,324
- Households: 3,746,332
- Median Household Income: $86,901
Employment has remained stable in Chicago, with the manufacturing segment leading the way for job growth. Throughout August 2023 to August 2024, 8,700 new jobs were added to this sector. The uptick in employment for this segment can be attributed to companies like Mars and Ferrero Candy expanding their presence in the metro. Like other metros across the country, Chicago will see the addition of new data centers. PsiQuantum is one such example as the computer firm announced it will open a 59-million-square-foot campus in South Chicago.
Chicago Industrial Market Performance
Demand for industrial space in Chicago has increased, leading to a vacancy rate of 5.3%. The current vacancy rate is tighter than the U.S. level, and it will likely remain this way throughout the first half of 2025. Most of the industrial absorption over 2024 occurred in submarkets like Indiana and North Kane/Interstate 90 as these areas have higher levels of new supply. For example, Amazon accounted for one of the largest leases of 2024 in the Indiana submarket as it absorbed over one million square feet.
With vacancy remaining tight, rent growth has begun to accelerate. The average rent for industrial space has increased 4.2% year-over-year, which outpaces the national rent growth rate by 40%. Rent growth increases are expected to continue in 2025 as interest rates are hitting a slowdown.
Construction
The metro added around 10 million square feet of space over 2024, and about 18 million square feet is still on the way. North Chicago will see one of the greatest deliveries as a 1.1 million-square-foot property is scheduled for completion in January. The facility is Class A, and it will be the metro’s first multistory distribution property.
Sales
Sales volume for Chicago’s industrial sector declined throughout 2024, recording $3.8 billion in transactions. Private and institutional investors made up the most activity, and logistics properties notched the most sales volume at $2.4 million.
