Economic Overview
The Chicago Metropolitan Area remained relatively stable through mid-2026 despite a challenging economic environment. The unemployment rate increased by 60 basis points (bps) year-over-year (YOY) to 5.2% in Q2 2026. Chicago's labor pool remained steady YOY, with nonfarm employment at 3.8 million individuals. As of May 2026, employment across Chicago's industrial-using sectors were mixed, with trade and transportation employment declining 1.2% YOY, while manufacturing employment increased 1.6% YOY.
Demand: New Leasing Activity On The Rise
Chicago's industrial market reported increased demand through mid-2026, with new leasing activity totaling 21.8 million square feet (msf), up 11.1% YOY and marking the highest mid-year leasing volume since 2022. New leasing activity accelerated in Q2 2026, up 14.3% quarter-over-quarter (QOQ) from 10.2 msf in Q1 2026 to 11.6 msf. The overall increase in new leasing volume is attributed to stronger big-box demand, with seven new leases for spaces of 500,000 square feet (sf) and larger signed through mid-2026, compared to just four during the same time last year. The Interstate 80 Corridor and the Interstate 55 Corridor submarkets led the market in new leasing activity with 5.1 msf and 3.7 msf leased through mid-2026, respectively.
The overall industrial vacancy rate remained relatively stable in Q2 2026, holding at 4.8% for the third consecutive quarter and increasing just 10 bps YOY. Vacant sublease space increased 5.6% YOY to 4.6 msf in Q2 2026, accounting for 7.2% of the total vacant inventory. Sublease vacancies are primarily concentrated in Western Cook County, the Interstate 55 Corridor and Southern Fox Valley, which collectively account for 40.7% of the total. Overall net absorption totaled 5.1 msf through mid-2026, up 146.0% from this time last year. On a quarterly basis, Q2 2026 outperformed Q1 2026 with 3.3 msf of new occupancy gains recorded, an increase of 79.3% from the 1.8 msf registered in Q1 2026.
Pricing: Rates Sustain Growth
Average asking net rental rates recorded moderate annual growth in Q2 2026, up 0.9% YOY to $7.55 per square foot (psf). Annual rent growth was reported in 15 of the 20 submarkets. Southern DuPage, Western Kane County and the Interstate 80 Corridor led the market in rent growth, with asking rents increasing 58.5% to $12.54 psf, 23.1% to $9.00 psf, and 13.3% to $7.00 psf, respectively.
Supply: Pipeline Growth Signals Optimistic Outlook
Development activity accelerated during the first half of 2026, with 5.9 msf delivered and an additional 13.5 msf under construction. Deliveries reported a slight decrease YOY, while the construction pipeline nearly doubled to 13.5 msf from 6.7 msf in Q2 2025. Construction activity gained momentum in Q2 2026, as 16 projects broke ground, up from five in the prior quarter. Projects currently under construction average 306,000 sf in size across 44 facilities. Six developments exceed 500,000 sf, two of which are speculative.
The Interstate 55 and Interstate 80 Corridors led construction deliveries, collectively accounting for 59.5% of overall completions through mid-2026. The Interstate 80 Corridor and Northwest Indiana account for the largest share of projects under construction, representing 52.3% (7.3 msf) of the overall development pipeline.
Build-to-suit (BTS) deliveries totaled 2.4 msf through mid-2026, down 53.7% YOY from the 5.1 msf delivered over the same period last year. Development activity remained active, with 6.3 msf of BTS product under construction, with the Interstate 80 Corridor accounting for nearly half (48.4%) of all projects underway. Two major projects at Elion Logistics Park 55 are driving much of that activity: Kimberly-Clark's 1.5 msf distribution center, which broke ground in Q4 2025, and Greenbox Systems' 1.1 msf facility, which began construction in Q1 2026.
As of Q2 2026, 7.2 msf of speculative industrial space was under construction, accounting for 53.5% of the total development pipeline. Speculative deliveries accelerated through mid-year 2026, with 14 buildings totaling 3.6 msf delivered, a 270.2% YOY increase in completions. Speculative development remains concentrated in the Interstate 80 Corridor, Interstate 55 Corridor and O'Hare submarkets, which together account for 3.6 msf, or 49.4%, of the speculative construction pipeline. The increase in speculative development signaled growing developer confidence in the leasing prospects of newly constructed industrial facilities.
Sales: Momentum Builds
Industrial sales volume exceeded 33.0 msf in the first half of 2026, increasing 99.4% YOY. Investment sales surged in the first half of 2026, totaling 28.5 msf and accounting for 86.3% of all sales volume, a 129.0% increase YOY. User sales posted more moderate growth, increasing 9.8% YOY to 4.5 msf through mid-2026 from 4.1 msf during the same period in 2025.
