Sector Update: State of the Industrial Real Estate Market
Industrial real estate continues to represent a very active commercial segment.
In Chicago, as the nation’s premier freight hub, Manufacturing and FIRE (Finance, Insurance, and Real Estate) industries largely drive the economic engine.
According to the Chicago Metropolitan Agency for Planning, about 25% of all freight trains and 50% of all intermodal trains in the U.S. pass through Chicago, serving as a primary interchange point between coasts.
The city’s nation-leading intermodal infrastructure and relatively affordable rents should keep tenant demand high and its year-over-year average rent growth stable through 2025. Our team at CBIZ Gibraltar is always monitoring market conditions, and there are several indicators shaping the 2025 industrial landscape.
The tight industrial vacancy rate underscores that current area landlords should face less supply-side competition than others across the country.
While e-commerce and distribution sectors continue to show strength in the industrial space, there is favorable momentum from users in food processing, manufacturing, and data centers. Improved leasing activity has also come with stronger demand for larger requirements and consistent positive net absorption that is expected to rise in 2025.
Newer, well-located spaces are driving premiums with higher construction costs impacted by strained labor forces. In fact, deliveries of new construction have been limited, with major developments expected to slow.
While companies face prolonged decision-making due to market uncertainty and the impact of expected tariffs, notable deals have continued to take place.
As the leading provider of integrated real estate services with a 100% commitment to advocating the interests and needs of tenants, CBIZ Gibraltar understands that no two companies are alike and works to deliver the best possible solutions for our clients. Together, we uncover the potential of your work environment, maximize human capital and map the path to critical business success.