Chicago Industrial Remains Resilient, Despite Pandemic

October 12, 2021

Chicago has long been an established hub of commerce in the United States and plays an important role in the global supply chain. The industrial markets surrounding the Windy City make Chicago a key connection point for distribution and warehousing as companies seek to move goods throughout the country, a prominent position that was only further solidified during the COVID-19 pandemic.

The Chicagoland market houses a massive consumer base and a vital rail system that facilitates the movement of goods across established national logistics corridors flow through the suburban industrial markets. As a result, Chicago’s submarkets ranked high for industrial activity in 2021. There’s strong demand for suburban warehouse and distribution space that is driving robust growth and attracting capital from investors to the region.


That insatiable appetite is fueling development, too. Chicago ranks as the No. 3 U.S. market for industrial deliveries in 2021 after Dallas and Phoenix, according to CommercialEdge. Researchers there found that Chicago industrial completions in 2021 are expected to total nearly 17 million square feet in 41 buildings.

Challenging suburban sites or overlooked infill locations are now hot commodities for developers seeking to meet demand. The suburban sites developers are pursuing allow companies to get closer to larger workforce resources, as well as are resulting in shrinking footprints for industrial buildings.

Market Stats

Overall, Chicago’s industrial markets reported mid-year 2021 vacancy rates in the low 5% range or lower depending on the report, and experienced roughly 10 million square feet of absorption, a nearly five-year high. Those tight conditions were reflected in the fact that no double-digit vacancy rates were reported across the region’s 21 submarkets.

New leasing activity in Q2 increased to roughly 14 million square feet, and rental rates increased as well. Some reports pegged increases in base rents of more than 10% since the start of COVID, which only served to continue attracting investors to industrial properties across the Chicagoland area. Those conditions are also driving construction activity, which rose to more than 32 million square feet across the Chicago region.

Amazon Effect

E-commerce was a significant driver of record industrial demand and growth starting in the early days of the pandemic, with Amazon leading the way. That growth in online shopping appears to be sustainable, too. Now that the economy is reopening, e-commerce is expanding at an even greater rate, to nearly double pre-COVID-19 levels, which is driving the industrial markets.

Amazon has two projects in Chicagoland that reflect a continued push into the region. Amazon is planning a new warehouse delivery station on Chicago’s Southwest Side on a recently acquired 70-acre Central Steel & Wire factory site. The Seattle-based e-commerce goliath also plans to build a 140,000-square-foot delivery station on 26 acres in the West Side’s West Humboldt Park neighborhood.

National Supply Chain

A trend to keep an eye on in the coming months is how Chicago’s industrial markets fare because of a massive goods backlog and delays being experienced at the nation’s two busiest ports of Los Angeles and Long Beach. That severe congested condition in the national supply chain could eventually be reflected in decreased volumes handled by Chicago’s intermodal terminals.

Send this to a friend