Chicago’s Strong Industrial Market

From “Trammel Crow JV Sells Chicago Industrial Complex” – Commercial Property Executive

“Chicago industrial tenant demand remains strong, vacancy rates are still low, and rents continue to rise,” Schlanger said. “These market fundamentals led to robust pricing for industrial investment opportunities in 2024 and should produce a very active 2025.”

Suburban Chicago is experiencing a significant boom in industrial development, driven by several key factors, Doug Ressler, business manager at Yardi, told Commercial Property Executive.

“The surge in online shopping has increased the demand for last-mile warehouses and distribution centers,” he said. “Companies like Amazon are expanding their footprint with large facilities in suburban areas like Markham and Matteson.”

Developers are constructing industrial spaces on speculation, anticipating high demand, Ressler added. “For example, a major 880,000-square-foot speculative facility is being built in Monee.”

According to Ressler, some suburban office spaces are being converted into industrial use due to changing market dynamics and the need for more warehouse space.

“Many new developments are strategically located along key transportation corridors like Interstate 55 and I-80, facilitating efficient logistics and distribution. These developments are part of a broader trend to meet the growing needs of businesses and consumers in the region.”

Tenants have a deep demand for shallow-bay industrial products, especially when the space is proximate to end-customer rooftops, according to Palladius Capital Management CEO Nitin Chexal.

“The Chicago MSA is one of the strongest in the country for this kind of product. We recently sold Woodridge Commerce Center in July of 2024. We are selling a large shallow-bay portfolio across the Great Chicago metro that closes in December and will be closing on another acquisition in January 2025.”

The fundamentals within the Chicago industrial market have shown substantial resilience over the past 12 months where some markets across the country have not fared so well, Erik Foster, principal & head of industrial capital markets for Avison Young, told CPE. “This will lead to continued industrial asset optimism in the Greater Chicago area, which is positive for landlords and future investors.”

With the Federal Reserve lowering interest rates and industrial remaining one of the strongest property types, the metro Chicago industrial investment sales volume rose to $774.4 million in the third quarter, according to Nick Schlanger, director of research at NAI Hiffman.

This represents a 16.5 percent increase from the third quarter of 2023 and is significantly higher than the first-quarter figure of $370.7 million and the second quarter’s $454.5 million.

“Chicago industrial tenant demand remains strong, vacancy rates are still low, and rents continue to rise,” Schlanger said. “These market fundamentals led to robust pricing for industrial investment opportunities in 2024 and should produce a very active 2025.”

Trammell Crow Co. this month broke ground on the first building at Plainfield Business Center, a more than 8 million-square-foot industrial campus in Plainfield, Ill. The 788,000-square-foot speculative warehouse is forecast to be delivered by next fall.

Standard deals
Recently, Standard invested in several industrial projects, including the Apopka Business Center in Orlando, Fla., in partnership with TCC; Veterans Memorial Business Park, a 463,000-square-foot speculative, Class A industrial park in Houston in partnership with IDV; and a 180,000-square-foot industrial project in Reno, Nev., in partnership with Mohr Capital.

In addition to these projects, Standard targets transactions with a preference for shovel-ready warehouse/logistics properties of approximately 150,000 to 500,000 square feet in major logistics markets nationwide.

About Hiffman National: 

Based in the Chicago area, with an additional five regional hubs and 30 satellite offices, Hiffman National provides superior property management, project services and accounting services to a diverse portfolio including office, medical office, retail and industrial properties nationally. The firm’s comprehensive property management platform and attentive approach to service contributes to client NOI and has helped the firm to more than double in size in five years. Hiffman National is an award-winning company with more than 250 employees strategically located throughout North America.

About NAI Hiffman:  

NAI Hiffman is one of the largest independent commercial real estate services firms in the US, with a primary focus on metropolitan Chicago, and part of the NAI Global network. We provide institutional and private leasing, property management, tenant representation, capital markets, project services, research, and marketing services for owners and occupiers of commercial real estate. To meet our clients’ growing needs outside of our exclusive NAI Hiffman territory, we launched Hiffman National, our dedicated property solutions division, which provides property management, project services, and property accounting services across the country. NAI Hiffman | Hiffman National is and award winning company headquartered in suburban Chicago, with more than 250 employees strategically located throughout North America.