The O’Hare industrial market is recalibrating at mid-year, as solid market fundaments intersect with shifting inventory needs, a shortage in some space categories and a more cautionary approach to business decision-making. According to a market review by Brown Commercial Group, here are the top factors driving the market heading into the latter half of the year:
Demand-Supply Imbalance – Solid demand and a limited supply of small to mid-sized industrial space continue to shape activity in the O’Hare submarket. The market has seen an increase in industrial space for lease, as new construction delivers and some businesses shift their locations. Investment activity remains constrained, however.
“Investors and business owners looking for smaller spaces in the O’Hare submarket are challenged with limited options and this is constraining sales activity,” said Candace Scurto, a Vice President with Brown Commercial Group. “There is less inventory and we also are seeing a more cautious approach from business owners as they weigh the impact of tariffs and general economic conditions.”
Many submarkets, including O’Hare, have a limited amount of available industrial space under 50,000 square feet for sale. This dynamic is good news for sellers, however. “Prices are still high so for those in a position to sell or who were planning to sell in a year or so, it’s a good time to capitalize on the current market,” said Scurto.
Tariff Policies Create Uncertainty – Given new tariff policies, many businesses are waiting for more clarity on the financial impact before moving ahead with ordering goods or expanding their businesses. “There is a general sense of uncertainty, similar to what we saw during the pandemic, that is slowing down some activity,” said Scurto. “This is particularly apparent in the manufacturing sector and for businesses with a significant reliance on foreign parts and goods.”
Strong Market Fundamentals Remain – According to CoStar research, the O’Hare submarket continues to benefit from its position as a major national logistics hub. The submarket is posting a 4.6% vacancy rate at mid-year, well below its all-time average of 7%. With little land to build on, the submarket is more protected from oversupply concerns than other U.S. industrial markets.
Demand for small to mid-sized industrial space continued to increase throughout the Chicago market during the quarter, following a similar pattern experienced in Q4 2024, according to Q1 2025 research from Colliers. Leases for spaces under 80,000 square feet saw a 5.7 percent increase, totaling 2.7 million square feet across 94 deals, compared to 89 leases amounting to 2.6 million square feet signed in the fourth quarter of 2024.
Brown Commercial Group, Inc. is a privately held commercial real estate company specializing in the leasing, sale and acquisition of industrial and office properties throughout the Chicago market. The firm also assists clients with land acquisition and new construction projects.
