Benefiting from its position, robust rail and airport systems, Chicago’s industrial market remains strong and adaptable. Despite a reduction in the industrial pipeline to half of last year’s volume, the metro remains one of the most active markets for industrial development. As of the end of August, the city had 10.3 million square feet of industrial space under construction.
Chicago’s industrial market continued to demonstrate its strength this year, leading the Midwest with $1.9 billion in transactions during the first eight months, and ranking fourth nationally in sales volume. Below, we’ve compiled CommercialEdge data for a current overview of the Windy City’s industrial market performance.
Driving success in industrial sales
Chicago led the Midwest with industrial sales amounting to $1.9 billion during the first eight months of this year, ranking fourth nationally, according to CommercialEdge data. A total of 165 properties changed hands within the metro, totaling 20.8 million square feet. Assets exchanged hands at an average of $98 per square foot, the highest in the region but still well below the national average of $132.
Inland Empire ($263) and New Jersey ($230) were the priciest metros, while Cleveland ($49) and Kansas City ($48) recorded the lowest average sale prices nationwide.
Stonepeak purchased a three-building, 1.7 million-square-foot rail-served logistics portfolio in the Chicago market from CenterPoint Properties. The New York-based company paid $125 million for the fully leased portfolio. Situated in the CenterPoint Intermodal Center–Joliet/Elwood—the largest inland port in North America—the properties are in Elwood, Ill., at 26318-26634 S. Walton Drive, 21561 Mississippi Ave. and 26634 Mississippi Ave.
Development pipeline remains steady
At the end of August, Chicago had 10.3 million square feet of industrial space under construction across 31 projects. The pipeline accounted for 0.9 percent of existing stock, below the national average of 1.9 percent. The Windy City ranked fifth nationally on a square footage basis and second regionally after Kansas City, according to CommercialEdge data.
In the first eight months of 2024, approximately 2.7 million square feet of industrial space broke ground in Chicago across 14 properties, representing 0.3 percent of the total stock. The index was lower than the national average of 0.9 percent.
In June, Dermody Properties broke ground on LogistiCenter at Pleasant Prairie, a 2.4 million-square-foot logistics park in Pleasant Prairie, Wis. As Wisconsin’s sole rail-served logistics park, the facility will be able to accommodate build-to-suit projects ranging from 250,000 to 1.8 million square feet.
Uline Inc. also started on the expansion its campus in Kenosha, Wis., with a 1.4 million-square-foot addition. The distribution center located at 3002 128th Ave. will offer racking totaling approximately 882,900 square feet, as well as 476 dock doors and 41 bays.
Deliveries slow down
Chicago’s industrial sector saw 25 properties delivered year-to-date through August, totaling 9.4 million square feet. This represents 0.9 percent of total stock, lower than the 1.3 percent national figure. The metro’s industrial pipeline fell to nearly half its year-ago volume, when 17.2 million square feet of industrial space entered the market.
Among pers markets, Chicago surpassed Indianapolis (6.1 million square feet), Atlanta (5.8 million square feet) and New Jersey (5.8 million square feet). The Inland Empire (19.2 million square feet), Phoenix (20.2 million square feet) and Dallas (22.8 million square feet) recorded the highest number of industrial deliveries.
Logistics Property Co. recently completed Oak Forest Logistics Center, a 664,453-square-foot industrial building located at 16799 Cicero Ave. in Oak Forest, Ill. The facility marked the developer’s 11th project in metro Chicago.
HSA Commercial Real Estate also delivered Highland Commerce Center of Somers, one of the largest speculative industrial buildings in Wisconsin. Located at 2655 113th Ave., the 918,884-square-foot distribution facility is situated directly off I-94 at the Burlington Road Interchange in Kenosha.
Vacancy rates surpass national average
Chicago’ industrial vacancy rate at the end of August clocked in at 7.3 percent, higher than the national average of 6.7 percent and the 3.7 percent rate registered in 2023’s same month, as CommercialEdge data shows.
Other vacancy rates higher than the national average were reported in markets such as New Jersey (8.1), Dallas (7.7 percent) and Inland Empire (6.9). Other markets recorded lower vacancy rates, such as Atlanta (5.8).
WestRock signed a build-to-suit with Dermody Properties at LogistiCenter at Pleasant Prairie in Pleasant Prairie, Wis. Upon the facility’s expected delivery next year, the company will lease more than 580,000-square-foot.
Venture One Real Estate secured a 444,600-square-foot lease with John B. Sanfilippo & Son Inc. at Venture Park 47, an industrial building totaling 729,823 square feet in Huntley, Ill. The deal is the largest industrial lease of the second quarter in Chicago’s North Kane County submarket, and the fourth largest in the Chicago metropolitan area.