Chicago Industrial Market Report

A substantial delivery slate tests historically tight vacancy. Chicago’s industrial inventory, already the largest of any market in the country, is slated to expand by a considerable margin this year. As a key link in national distribution efforts, large-scale build-to-suit warehouse facilities account for a notable portion of this construction and leasing activity, led by Walmart and Amazon’s commitments to a combined 2.8 million square feet. Retail sales growth, however, slows this year as consumers reduce discretionary spending amid recession concerns, which may extend to lower shipping and distribution volumes. This trend has already started to manifest at O’Hare International Airport, where the metric tonnes of cargo transported dropped by 13 percent last year. The combination of a large delivery slate and near-term downward pressure on the retail commerce sector results in rising metrowide vacancy in 2023, ticking up from a two and a half decade low. The Southwest-I-55 Corridor highlights this trend with more than 3 million square feet underway, accounting for roughly one-third of the active pipeline.