Cap rates for industrial and office buildings in the Chicago suburbs vary widely by quality, tenant, and lease term, but the broad pattern in late 2026 is clear: industrial trades at lower cap rates, meaning higher prices relative to income, than suburban office. According to our data, the average Chicago industrial cap rate was 7.47 percent in the third quarter of 2026, with average pricing near a record $108 per square foot. Well-leased, modern industrial with strong tenants trades well below that average, while older and multi-tenant buildings trade above it. Suburban office cap rates run higher still, and many vacant or distressed office buildings are priced on price per square foot or land value rather than income at all.
This article is general market commentary, not an appraisal or investment advice.
What a cap rate tells you
A cap rate is a property’s net operating income divided by its price. A building with $500,000 of net operating income that sells for $7 million trades at about a 7.1 percent cap rate. Lower cap rates mean buyers are paying more for each dollar of income, usually because they see less risk or more growth.
Industrial in the Chicago suburbs
Industrial remains the most liquid and competitive property type in the suburbs. Chicago industrial cap rates have risen gradually since their late 2021 low, while pricing per square foot keeps climbing and trailing 12-month sales volume rose sharply year over year. The Northwest suburbs posted the tightest industrial vacancy in the metro, at 3.2 percent.
Within industrial, cap rates spread out based on:
- Building quality. Modern clear heights, loading, and truck courts trade tighter.
- Tenant credit and lease term. A national tenant on a long lease commands a lower cap rate than a local tenant with two years left.
- Single-tenant versus multi-tenant. Multi-tenant small-bay buildings have more rollover but strong demand and below-market rents in many cases.
- Location. O’Hare, the Northwest suburbs, and the I-94 corridor in Lake County, Illinois draw deep buyer pools.
- Rent upside. Buildings leased below market can trade at lower in-place cap rates because buyers price in the rent increase at rollover.
Office in the Chicago suburbs
Suburban office cap rates are meaningfully higher than industrial, reflecting high vacancy and the cost of leasing. Suburban office direct vacancy of 27.9 percent in the third quarter of 2026. Within office:
- Stabilized, well-located Class A with long leases trades at the low end of the office range.
- Class B with near-term rollover trades at materially higher cap rates.
- Vacant or distressed buildings often trade on price per square foot, replacement cost, or land value, because there is little or no income to cap. Owner-users and conversion buyers often set the price.
See how to value a multi-tenant office building for more on how buyers underwrite office today.
Why averages can mislead
- Market averages blend very different buildings, from institutional warehouses to small older buildings.
- In-place cap rates can be low on buildings with below-market rent and high on buildings about to lose a tenant.
- Property taxes vary widely between Cook County and the collar counties, which changes net operating income and value.
- Sellers’ financials are not always what a buyer will underwrite. Buyers adjust for vacancy, management, reserves, and taxes after the sale.
How to estimate a cap rate for your building
- Build a realistic net operating income, including market vacancy, management, and reserves.
- Find recent sales of similar buildings in the same submarket, with similar size, age, tenancy, and lease term.
- Adjust for what makes your building better or worse: tenant credit, rollover, condition, and taxes.
- Check the result against price per square foot and replacement cost.
For current Chicagoland pricing and deal flow, see the daily-updated RFP Chicagoland Commercial Real Estate Index and our state of the Chicagoland commercial real estate market.
Get a cap rate for your building
Published averages are a starting point. The Van Vlissingen and Co. investment sales team sells industrial and office buildings across Lake County, Illinois, the northern and northwest suburbs, and Southern Wisconsin, and can tell you what cap rate buyers would actually pay for your property based on recent closed sales.
Frequently asked questions
What is the average industrial cap rate in Chicago?
The average Chicago industrial cap rate of 7.47 percent in the third quarter of 2026. High-quality, well-leased buildings trade below that average, and older or riskier buildings trade above it.
Are office cap rates higher than industrial in the Chicago suburbs?
Yes. Suburban office cap rates are meaningfully higher, reflecting high vacancy, leasing costs, and rollover risk.
How are vacant office buildings priced?
Often on price per square foot, replacement cost, or land value rather than a cap rate, because there is little income to capitalize. Owner-users and conversion buyers frequently set the price.
What makes one building’s cap rate lower than another’s?
Stronger tenant credit, longer leases, better building quality, a stronger location, and rent upside all tend to lower the cap rate buyers will accept.
How do I find the cap rate for my building?
Build a realistic net operating income and compare it with recent sales of similar buildings nearby. A broker opinion of value is the fastest way to get a market-based answer.