Chicago’s industrial market spent most of 2025 looking more complicated on the ground than it did on paper. Activity appeared constant, yet the correlation to executed deals was weaker than anyone expected. Brokers who anticipated a midyear acceleration instead watched activity cluster without translating into the absorption that typically follows. The headline story wasn’t a lack of interest; it was a backlog of decisions that kept getting pushed just out of reach.
“Liberation Day threw a wrench into demand around most submarkets within Chicago,” said Ben Dickey, Vice President at Stream Realty Partners, whose team saw the mismatch create a sense of suspended animation: a market that looked and felt engaged but kept failing to commit. “There were many cases of buildings that had the perfect unit size for the submarket, or well-priced, functional assets, not seeing any tenant demand for months at a time.”
That pause is now beginning to unwind. By late 2025, brokers were reporting renewed energy across leasing channels. Tours began converting. O’Hare saw a noticeable uptick in deal flow. Users who sat out most of the year began revisiting previously shelved moves, a trend several brokers described as most visible in the airport submarket.
“O’Hare has really flipped from a demand perspective over the past three months compared to the first six in 2025,” Dickey said. “Today, we are seeing renewals and new deals signing with more tours and RFP velocity behind them across all sizes and building class ranges.”
Still, the year’s uneven momentum reset expectations around leverage. Older commodity space lost ground, especially in suburban corridors where second-gen supply grew quickly.
“We are seeing TI allowances and free rent increase and, in some cases, aggressive phase-in rent schedules to maintain a higher base rent that hits developer underwriting,” Dickey said.
Owners waiting for the urgency of the prior cycle found less traction and many faced pressure to adjust underwriting or offer more flexible terms.
“The biggest surprise was how busy the market felt versus how little of that activity translated into true absorption,” said Ken Franzese, Principal at Lee & Associates of Illinois. “Tours, RFPs and renewal discussions were strong. However, trade policy, interest rates and inflation stretched decision timelines and kept users cautious.”
That contrast helped define 2025: a market with plenty of activity but inconsistent follow-through. Some brokers argue that oversupply in mid-tier submarkets could keep certain owners concession-heavy into next year. Others point to stronger-than-expected big box activity along I-80, Joliet and Southeast Wisconsin as evidence that demand is already on the move.
“Big Box activity, which I would define as 200,000 square feet or larger, seems to be picking up again,” said Dan Prendergast, Vice President of DarwinPW Realty/CORFAC International. “A lot of the fortune 500 tenants made big expansion moves pre-pandemic or early on during that fun time, and then the middle market tenant followed. But during the last 24 months some owners, or developers that delivered late, were left carrying substantial vacancies. The rumblings across the market point to a bounce back on big box activity.”
The market’s split personality is likely to define early 2026: tight and competitive in infill, improving but selective in bulk corridors and still challenged for older legacy product.
Investors spent 2025 with a similarly cautious hand. Capital focused on predictable asset profiles and passed on anything with unusual characteristics or execution risk. Yet when buyers did act, pricing showed real conviction, especially for infill portfolios. Brokers expect that selectivity to hold, though they anticipate a wider range of buyers returning as debt stabilizes and underwriting becomes more predictable.
“Buyers stayed very disciplined in 2025,” said Kurt Sarbaugh, Managing Director of JLL Capital Markets. “Opportunities that hit specific buyer profiles were very competitive, while deals that had some uniqueness in the profile had shallower bid pools. Investors were willing to push pricing in certain spots, but the fairway remained narrow.”
That discipline is likely to loosen at the margins next year. Banks are lending again under tighter structures and several capital sources that sat out most of 2025 are showing early movement. Larger portfolio deals are reappearing. There’s growing confidence that Cook County assets, long dismissed by some investors, remain too central to ignore in a region where labor, logistics and rooftops drive every decision.
On the leasing side, tenant outlooks are also shifting. Companies that entered 2025 with caution now cite improving business confidence, a steadier understanding of tariff impacts and a more predictable interest rate environment. For many, 2025 functioned as a recalibration year that clarified real estate priorities after two volatile cycles.
“Overall tenant activity in 2025 was sluggish,” Prendergast said. “New customer engagement remained flat, and cautious decision-making with increased price sensitivity was a regular theme throughout the year.”
A major wildcard for 2026 is how fast second-generation space is absorbed. That supply kept renewal rates lower in 2025 and pressured asking rents in certain suburban corridors, particularly for buildings that lacked modern clear heights or trailer capacity. If leasing momentum accelerates as expected, that inventory could tighten faster than the market anticipates, especially with speculative development still muted.
But the most durable momentum remains in the city and its first-ring suburbs. In those locations, multimodal infrastructure, labor access, and proximity to consumers outweigh temporary uncertainty. Franzese’s broader framing of the year reinforces that divergence.
“Today, the story is less about demand going away and more about the market sorting winners and losers by location and quality,” Franzese said.
“The influx of second-generation space in the 2025 market led to a notable decrease in renewal rates compared to previous years,” said Jackie L. Shropshire, Chicago Industrial Lead at JLL.
The consensus from Chicagoland experts is that 2026 will be defined by a release of pent-up demand rather than a redefinition of market fundamentals. Tenants who hesitated will move. Investors who circled will bid. And landlords who adapted in 2025 will be first to benefit.
The year ahead won’t erase the complexities of the past twelve months, but it will mark a pivot, a shift from waiting to acting, from caution to recalibrated confidence and from surface-level activity to real transactions that reshape the market.
