Some good news for Chicago’s industrial sector: Despite the threat of tariffs and high interest rates and construction costs, the Chicago region still ranks third nationally when it comes to the strength of its industrial market.
That’s the takeaway from Marcus & Millichap‘s 2025 Industrial Investment Outlook. Marcus & Millichap ranked Chicago behind only number one market Miami-Dade and number two market Minneapolis-St. Paul. Rounding out the top five in Marcus & Millichap’s report were the Charlotte and Dallas-Fort Worth markets.
According to Marcus & Millichap’s research, Chicago should see the delivery of 7.5 million square feet of new industrial space in 2025. That is down about 10 million square feet from 2024. This year’s delivery volume will rank as the smallest since 2013.
Thanks in part to the limited construction activity, the Chicago industrial market’s vacancy rate is expected to dip to 5.6% this year, according to Marcus & Millichap. That would rank fifth-lowest among all major U.S. industrial markets. That vacancy rate is also 220 basis points lower than the metro Chicago area’s average industrial vacancy rate since 2020.
Joe Powers, vice president and regional manager of Marcus & Millichap’s Chicago Downtown office, said the tightening market is being driven by a shift in what investors are targeting.
“This is the tightest industrial environment Chicago’s seen in a decade, but it’s not just about low vacancy,” Powers said. “What’s driving the market now is the rediscovery of older, sub-50,000-square-foot product in well-connected corridors. These assets are appreciating fast because they’re functional, close to infrastructure and they fill a gap in the market that new construction can’t address right now.”
In more positive news, Marcus & Millichap says that industrial asking rents in the Chicago area will jump 4.2% in 2025. If this happens, this means that the local market’s annual rent growth will exceed 4% for a seventh straight year. Marcus & Millichap predicts that the industrial sector in the Chicago market will end 2025 with an average asking rent of $8.72 a square foot.
According to Marcus & Millichap’s report, logistics and related companies will drive large-scale move-ins in the Chicago industrial market this year. RJW Logistics Group, C&Y Logistics and Uline are good examples: These end users have already occupied nearly 2 million square feet in the Chicago industrial market this year and plan to collectively fill another 2.5 million square feet in the coming months.
Chicago’s western suburbs remain a focal point for investors looking to purchase industrial space. Marcus & Millichap said that the Interstate-88 corridor between interstates 355 and 39, along with the area including interstates 80 and 55 to the southwest, accounted for more than half of all industrial trades during the 12 months that ended in March of last year.
