Chicago’s industrial market has maintained a healthy supply-demand balance in the first quarter of the year, research from NAI Hiffman shows.
The activity stands out from other sectors that have gone haywire since the pandemic. Chicago’s office market is still facing significant over-supply concerns and the multifamily and residential markets are dealing with a severe lack of new supply.
But investors were not always sure the industrial market would come out of the pandemic unscathed. The sector saw a massive building boom as work-from-home policies and other changes to consumer habits increased demands for warehouses and distribution centers.
Since then, fears of oversupply appear to have been overstated.
Vacancy across the region improved by 10 basis points quarter-over-quarter to 5.9 percent, the report found. In the first quarter of 2020, before the full effects of the pandemic had been felt in Chicagoland, the region’s vacancy rate was just over 6 percent.
Now, new construction is following suit. A balance between built-to-suit and speculative development continues to even out, data from NAI Hiffman indicates. In the first quarter, about 53 percent of industrial developments were speculative and 47 percent were built-to-suit.
By comparison, in the second quarter of 2020, about 90 percent of new developments underway were speculative.
“I think the moves from tenants are more thoughtful and strategic now than maybe in the past few years,” said Denes Juhasz, director of research at NAI Hiffman. “[The market] seems like it’s transitioning into more of a sustainable growth cycle.”
Leasing activity among existing properties also remains steady, according to the Oakbrook Terrace, Illinois-based firm.
In the first quarter, new leases totaled 11.9 million square feet compared to 10.9 million square feet leased in the first quarter of 2025.
One of the most notable transactions of the first quarter was Hyundai Translead’s 1.3 million foot lease signed earlier this month at Industrial Realty Group’s manufacturing facility at 2700 Channahon Road in Joliet.
A San Diego-based subsidiary of the South Korean carmaker Hyundai, Hyundai Translead manufactures semi-trailers and heavy duty trucks for the North American market. It will set up shop at the former Caterpillar site, along with a nearby site that was formerly owned by Lion Electric, for a combined 52-acre manufacturing facility in Will County.