Chicagoland Industrial Market, Q3 2026: Transcript
Gordon Lamphere: At the start of this year, the industrial doomers finally had their headline: Chicagoland’s slowest absorption year since the Great Recession. Six months later, that narrative is dead. Chicago just put up its strongest mid-year leasing totals in years. Absorption is up triple digits from last year. And the vacancy we originally saw spike is holding, still near historic levels. If you traded out of Chicago industrial based on that 2025 headline, this segment is going to hurt.
First, I’m Gordon Lamphere, a broker, advisor, and Vice President at Van Vlissingen and Co. We’re deep into another meaningful transaction volume year across every asset class we’re going to talk about today. And that volume matters, because it means the analysis you’re about to hear isn’t just assembled from press releases. It comes from lease negotiations we’re sitting in, sale processes we’re running, and site searches we’re conducting.
Absorption and Vacancy
Net absorption through mid-2026 totaled roughly 5.1 million square feet, up 146% from the same point last year, contributing to about 3.3 million square feet of reduced vacancy on our aggregated read. What we’re seeing is vacancy in the high fours and low fives, a range that, although there’s some disagreement, which I talked about in the opening of the show, even the most conservative published numbers leave Chicago meaningfully tighter than the national average. The national average just posted its first vacancy decline since 2022 and still sits around 6.5% to 6.9%.
As a result, Chicago is one of the tightest major logistics markets in the country, with less slack than almost any metro of a similar size. And the O’Hare and Elk Grove corridors remain arguably the tightest major industrial submarkets in America.
Big Box Is Still Doing the Heavy Lifting
It’s still important to understand that big box deals are doing much of the heavy lifting. RJW Logistics took 1.2 million square feet in the Fox Valley, and Hyundai signed for more than 900,000 square feet in the I-80 corridor. Deal sizes, as a result, are growing after two years of shrinking, and lease terms are lengthening. Tenants are signing seven- and ten-year commitments instead of the defensive threes and fives we saw during the uncertainty around tariffs. When occupiers extend their duration, they’re telling you what they believe about their own demand.
Reshoring Converts to Leases
The reshoring thesis I’ve been walking you through for a year keeps converting from theory to leases. That doesn’t necessarily mean the tariff regime worked. But what we are starting to see is meaningful American onshoring. The operators who spent 2024 and 2025 studying the math of the global economy are now bringing real requirements to site select in Chicago, specifically manufacturing that needs what Chicago has: heavy power, water, freight infrastructure with six Class I railroads, a deeply skilled trades workforce, and central geography that puts you a day’s truck from almost all of America’s population.
Some of the low-complexity assembly plant requirements tend to go further south. What Chicago is winning is advanced manufacturing, food production, and components with real infrastructure requirements. In our own site selection searches this year, the share of requirements that are production rather than pure distribution is the highest I’ve seen in my entire career.
Power Is the Primary Differentiator
The questions those users are asking are different. It’s not necessarily what’s the rent, but what’s the power? What’s the ceiling on the power? And how fast can the utility deliver? That brings us to another major theme of the episode: power is the primary differentiator in this market. The buildings that can deliver heavy power compete on power first and price second. The buildings that can’t compete on price alone, and rent is a deteriorating position. So when we evaluate an industrial acquisition or run a site comparison for a client, the utility conversation is sometimes happening before the rent conversation.
The Nuance Under the Headlines
Here’s some of the nuance beneath the headlines. The strength is concentrated in Class A and big box product, which is getting absorbed at a pace we haven’t seen since 2022, while small bay and commodity space is where some of the move-outs are starting to occur. Sublease growth is going live. Vacant sublease space is up around 5.6% year over year, concentrated in Western Cook, the I-55 corridor, and the southern Fox Valley. Tenants coming off mid-pandemic five-year leases are right-sizing and consolidating from several older buildings into newer ones.
That’s not weakness. That’s the market repeating, louder, what it’s been saying for over two years: power, clear height, location, and infrastructure get paid. Everything else competes on price.
Rent growth tells the same story. The market average is up a modest 1% year over year to roughly $7.55 per square foot. But the submarket dispersion underneath that rent growth is enormous, with corridors like Southern DuPage posting massive gains while commodity corridors have gone flat or backwards. Averages are hiding more than they reveal right now, which is exactly why we built the RFP Index.
If You Need Power, Start Early
Last, and this is absolutely critical: if you have an above-average power requirement, my advice is simple, and I’m going to say the same thing I said last quarter. It’s essential that you start early. It takes 12 to 24 months to get power upgrades, and the users competing with you for that same capacity are often willing to pay more than you are. If you’re looking in this market with a high power requirement, start early and start a focused search at least 12 to 24 months out.
Van Vlissingen and Co. has been the Midwest’s oldest commercial real estate brokerage, development, and management firm since 1879, and today is independently ranked the #1 commercial real estate agency in Chicagoland, home to the #1 independently ranked agent, Gordon Lamphere, and the region’s #1 ranked commercial property management team. If you own, manage, or invest in energy-adjacent, mixed-use, or transit-oriented property across Lake County, the North Shore, the Northwest and O’Hare corridors, DuPage and the I-88 corridor, Will County, or southern Wisconsin’s Pleasant Prairie, Kenosha, and Racine markets, contact Van Vlissingen and Co. at 📞 847-634-2300 or 🌐 vvco.com. For a market-wide view of where these dynamics sit today, see our State of the Chicagoland Commercial Real Estate Market for Q2 2026.