Chicagoland’s industrial market remained robust in the third quarter, with DHL and Hyundai Motor Company contributing to a wave of leasing activity totaling 16.6 million square feet, up 2 million from the prior quarter.
That’s one of the key takeaways from the Q3 2026 Chicago Industrial Market Report released by Lee & Associates, which presents in-depth statistical information covering 18 of the region’s most active submarkets.
Broad demand powered more than 6.8 million square feet of net absorption during the quarter, with 15 of 18 submarkets posting positive absorption, our research found. Trailing 12-month absorption totaled more than 19.4 million square feet across the market.
These healthy levels of activity across logistics and manufacturing buildings in the Chicago area led to a vacancy rate of 5.1% and an availability rate of 8.3% – down 119 basis points and 76 basis points, respectively, compared to a year ago. Our brokers find that landlord positioning has strengthened in several submarkets where leasing has improved.
Brandon Pappas, Lee & Associates of Illinois (Photo courtesy of Lee & Associates.)
Another trend we observed is that supply activity has picked up as strong tenant demand continues to inspire developer confidence. There are over 17.5 million square feet of projects under construction, up 3.8 million square feet from the prior quarter, while 2.1 million square feet of space was delivered during the quarter.
The largest confirmed delivery was a build-to-suit logistics center spanning 1.1 million square feet in Elwood that will support global supply chain operations for CJ Logistics America and the Korea Ocean Business Corporation.
Big-box requirements played a key role in leasing activity in submarkets such as the I-57 and I-88 corridors and the O’Hare International Airport area. Global logistics firm DHL accounted for two of the region’s largest leases during the quarter, totaling 1.8 million square feet at separate locations in the I-57 corridor. Trailer manufacturer Hyundai Translead also made a notable contribution to absorption by occupying more than 907,517 square feet in the I-80/Joliet area.
“Chicago’s industrial market saw a rebound in tenant demand during the third quarter, mirroring a broader acceleration of the U.S. industrial market,” said Brandon Pappas, vice president of data analytics for Lee & Associates of Illinois, in a statement. “A growing development pipeline, including a high proportion of speculative construction, will shape market conditions over the near term.”
Some additional findings from the report include:
- Absorption along I-57 was flat, but leasing surged to 2.5 million square feet, with the strongest activity in big-box demand and much slower activity in smaller buildings.
- In Fox Valley, McMaster-Carr’s 543,6030-square-foot lease in Batavia accounted for roughly 40% of leasing volume, helping drive a sharp improvement in net absorption.
- Northwest Indiana recorded the tightest vacancy in the region at 2.8%, aided by strong demand for Class A product and recurring requirements related to data centers.
- Brokers on the ground report that tenants want newer, higher-clear buildings, while owners of older Class B and C space are getting creative with incentives.
- The average asking net rent was $8.06 per square foot, with Southeast Wisconsin offering the lowest rents and North Cook the highest.
- Speculative construction accounted for 24% of the total development pipeline across the Chicago area.
- Sales volume totaled $1.2 billion across 131 transactions during the quarter, down from $1.4 billion across 126 transactions in the second quarter. Institutional buyers such as Nuveen, Faropoint and Taurus appear repeatedly in the top-sales tables by submarket.
“Chicago’s logistics and manufacturing properties enjoy consistent demand from tenants and investors amid economic uncertainty,” Pappas said. “Solid momentum heading into the fourth quarter underscores the region’s status as a cornerstone of the national industrial market.”
Click here to download Lee & Associates’ full Q3 2026 Chicago Industrial Market Report.
Brandon Pappas is Vice President of Data Analytics & Business Development with Lee & Associates of Illinois, LLC.
