As the industrial sector moves into 2026, some Chicago businesses are shifting their leasing strategies to protect against economic uncertainty and the impact of tariff and other trade policies. While Chicago remains a top national industrial market with solid tenant demand, some companies are delaying longer-term space expansion and pursuing shorter leases or lease renewals in light of rising costs and slowing economic activity.
According to a market review by Brown Commercial Group, leasing velocity has slowed in some Chicago submarkets among tenants looking for less than 100,000 square feet of space. While many companies want to expand their businesses, they are reluctant to take on a larger or longer-term lease until there is more certainty in the economy.
“In the last six months we’ve seen a slowdown in leasing activity due to the uncertainty and other fallouts from tariffs,” said Broker Pat Crowley of Brown Commercial Group. “We’re seeing more renewals and short-term leasing transactions as companies look for solutions to support their businesses in the near term.”
In the O’Hare submarket, leasing activity has been gradually slowing since its peak in 2021, when volume reached approximately 9.7 million square feet, according to CoStar research. Over the past 12 months, the market recorded a total of 5.3 million square feet of industrial leases, with an average size of about 13,000 square feet and an average lease term of approximately 36 months.
The addition of tariffs has been particularly problematic for manufacturers, e-commerce companies and other industrial businesses that rely on foreign products, materials and trade. “There is still a lot of uncertainty around where the tariff numbers will settle and it’s caused everyone to reevaluate how they are approaching their business decisions,” said Crowley. “We’ve seen a lot of companies looking to other companies to import from, but that’s not an easy process and it typically will cost more.”
Tenants do have more options for smaller spaces in today’s market due to shifting tenant needs and new supply being added in the market, notes Crowley. “In the last several years, the market for smaller industrial space has grown from a more limited number of options to up to 15 viable buildings at a time. Tenants now have more opportunities and we are seeing more rental concessions and flexibility on lease terms.”
Among the top factors impacting leasing decisions today are:
- Tariffs and their impact on business revenue, market stability and confidence
- Interest rates, which have dropped slightly, but are still putting an additional strain on business financing and property sales. Many investors are still waiting on the sidelines for additional rate decreases.
- Consumer spending and its impact on retail and e-commerce businesses.
A look at the overall Chicago industrial market shows that leasing velocity remains steady in spaces larger than 100,00 square feet. According to Colliers research, 135 new industrial leases were signed during Q3 2025, which reflected a nearly 15 percent increase in new leasing volume on an annual basis. The annual growth was particularly strong in the 100,000 to 200,000 square foot range, which recorded a 65 percent increase, from 28 leases a year ago to 43 in 2025.
As of the fourth quarter of 2025, Chicago recorded 125 million square feet of available industrial space, bringing the availability rate to 8.7%, according to CoStar research. About 75 percent of that space is concentrated in the logistics segment.
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. The firm focuses on building relationships with clients and understanding their business model and strategic goals. As such, the firm has a strong track record of leasing and investment success within key suburban submarkets.
