The Chicago-area big box industrial market showed fresh signs of momentum during the second quarter, as stronger leasing activity, improving absorption and a new wave of construction helped push vacancies lower.
That’s one of the highlights from NAI Hiffman’s second quarter 2026 Big Box Market Report, which tracks industrial buildings of at least 200,000 square feet with 28-foot clear heights across the Chicago market, including Northwest Indiana and Southeast Wisconsin.
The report found that the vacancy rate in the region’s big box sector fell 10 basis points during the quarter to 8.4%. The market now includes about 390.3 million square feet spread across more than 870 industrial buildings.
Leasing activity was particularly encouraging. Tenants signed leases covering 8.7 million square feet during the second quarter, a 32% increase from the same period a year earlier. That brought 2026 year-to-date leasing activity to 17.8 million square feet.
Third-party logistics providers continued to be among the most active users of big box space. In all, 37 new lease deals were completed during the quarter, with the I-80/Joliet Corridor accounting for 2.8 million square feet and the I-88 Corridor another 2.1 million square feet.
Absorption numbers also pointed to a strengthening market. Chicago’s big box sector recorded 3.4 million square feet of net absorption in the second quarter, up sharply from 2.1 million square feet in the first quarter and well ahead of the 737,000 square feet recorded in the second quarter of 2025.
Several large deals helped drive those numbers. RJW Logistics Group signed a 1.2 million-square-foot build-to-suit lease in Montgomery along the I-88 Corridor. KeHE Distributors, meanwhile, committed to 1.2 million square feet at 21533 Cherry Hill Road in Joliet. KeHE initially plans to occupy 802,440 square feet before expanding into another 393,300 square feet, with that expansion expected to deliver in early 2027.
There were 16.9 million square feet of big box projects under construction at the end of the second quarter, an 80% increase from the same period last year. More than half of that construction—57.2%, or 9.7 million square feet—is build-to-suit space. Speculative construction accounted for the remaining 7.2 million square feet.
Developers broke ground on 12 new big box projects during the quarter. The I-80/Joliet Corridor led the way with 4.1 million square feet under construction, followed by Northwest Indiana with 2.3 million square feet and DeKalb County with 2 million square feet.
The largest new project was a 1.5 million-square-foot build-to-suit facility in Wilmington for Kimberly-Clark. Elion Partners is developing the project, which is scheduled for completion in the third quarter of 2027.
Despite the improving conditions, tenants still have options. NAI Hiffman reported 119 available big box buildings totaling 49.7 million square feet. Most available space falls between 200,000 and 500,000 square feet, while 12.2 million square feet of availability is in buildings of at least 750,000 square feet.
But truly massive blocks of vacant space are becoming harder to find. The report identified only two available buildings offering roughly 1 million square feet or more: a 1.2 million-square-foot multistory distribution facility in Chicago North and a 997,800-square-foot manufacturing facility along the I-55 Corridor.
Looking ahead, NAI Hiffman expects vacancy to tighten further as recently completed lease transactions translate into tenant move-ins. Class A rents are forecast to remain in the $7-to-$8-per-square-foot range, with moderate appreciation expected.
Demand is also becoming more selective. Third-party logistics companies and e-commerce operators remain major sources of demand, while manufacturers are showing increased interest in onshoring and supply-chain resiliency.
For landlords and developers, that is creating a clear dividing line in the market. Modern, well-located big box properties with the scale and functionality required by today’s logistics users are outperforming older, functionally obsolete facilities.
And with million-square-foot options particularly limited along the I-80 Corridor, NAI Hiffman expects development activity to accelerate as companies search for modern, large-scale distribution space.
