Chicago’s Industrial Market Sees Strong Rebound in Q2 2025
Chicago’s industrial real estate sector experienced a notable resurgence in the second quarter of 2025, with tenant demand propelling new leasing activity to 10.7 million square feet—the highest quarterly figure in over a year. This upswing contributed to a decline in the market’s vacancy rate, which fell to 4.67%, down 12 basis points from the first quarter, according to a recent report by Colliers.
Net absorption surged to 5.1 million square feet during the quarter, aided by strong leasing activity and the completion of 2.7 million square feet of build-to-suit projects. However, despite the leasing momentum, new construction starts slowed significantly. The volume of space under construction declined for the fourth consecutive quarter, dropping to 9.3 million square feet—the lowest level recorded since 2018.
Rental rates continued their upward trajectory, with average asking rents rising to $8.20 per square foot, compared to $8.05 at the same time last year. Looking ahead, Colliers anticipates that the Chicago industrial market will maintain its stability for the remainder of 2025, supported by consistent tenant demand and a tapering of new construction completions.
