CBIZ Gibraltar Insights And Resources

Industrial Real Estate Market Update: Chicago Q2

Industrial real estate continues to represent a very active commercial segment.

In this video, CBIZ Gibraltar Sr. Vice President Noah Turner shares a quick update on the state of the Industrial Sector and points to key indicators driving activity across the market, including strong absorption, development, record low vacancy rates, and record high asking rents.

In 2023, Chicago’s industrial market experienced significant growth with almost 16 million square feet of positive absorption. However, demand has moderated from the pace witnessed in 2021 and 2022 due to economic pressures, elevated interest rates, rising construction costs, and labor shortages.

Although we saw positive absorption in 2023, we do anticipate absorption to moderate throughout the rest of the year. Construction slowed considerably over the last three years, and deliveries are expected to remain limited due to temper demand.

Overall, vacancy remains around 5.5%, which is the first-time vacancy has climbed above 5% in almost three years. Vacancy rates should peak around 6% over the next few quarters as expansion slows. Asking net rental rates remain elevated around $9.80 per square foot on average.

Technology innovation, such as automation, robotics, and AI have enhanced operational efficiency, and productivity among industrial users.

While the industrial market is expected to rebalance in the next several years, leasing activity in Chicago remains very high and still remains among the top five, ranking higher than markets like Dallas, Houston, the Inland Empire in California, and Route 181 in the South Central Region of Philadelphia.

A driving force behind Chicago’s market is its centralized location within the Midwest and unparalleled access to rails, highways, and airports.

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.