Patience, Problem Solving, and Client Support: Inside Meridian Design Build’s Project Playbook
By Brandi Smith
Over a period of more than nine years, Meridian Design Build kept revisiting a 40-acre infill site in Romeoville, one of the last parcels in the area available for large-scale light industrial development. During that time, a number of developers kicked the tires asking Meridian and other general contractors to help them understand construction costs and evaluate site challenges and anticipated project timelines. The well-located site had more
than its share of challenges including site balance concerns, subsurface rock conditions, and flood plain and wetlands mitigation constraints. There were also significant offsite improvements that would be required to accommodate the development including enhancements to an adjacent storm water detention facility and the construction of a public roadway and related utilities across the site frontage.
“After years of looking at the site, we were retained in 2002 by an interim owner of the site to complete design work and helped them get the project to the point where it was nearly shovel ready,” said Howard Green, Meridian’s Executive Vice President and Co-Founder. Meridian worked with Arete Design Studio and Jacob
RIM Logistics Lobby
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Patience, Problem Solving, and Client Support: Inside Meridian Design Build’s Project Playbook Over a period of more than nine years, Meridian Design Build kept revisiting a 40-acre infill site in Romeoville, one of the last parcels in the area available for large-scale light industrial development.
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From speculation to stability: The new playbook for Chicago’s industrial market Chicago’s industrial real estate market proved its resilience in the second quarter of 2025,
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From “babysitting” to business resiliency: How industrial property management grew up The building burned to the ground. It was a triple-net deal, so on paper the tenant was responsible for most things. But within 20 minutes of learning about the fire, Carrie Szarzynski’s national NAI Hiffman team had already assembled and delivered every key document the owner’s insurer needed
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5 Trends Shaping the Future of Chicago’s Transportation and Logistics Sector Chicago’s transportation, distribution, and logistics (TD&L) sector remains a critical anchor of the regional economy.
Back to a normal industrial market? That’s what NAI Hiffman report says is happening in Chicago More of a normal market? That's what NIA Hiffman says the Chicago industrial market continues to see in 2025.
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Lee & Associates report: Chicago industrial market still second largest in the U.S. The Chicago industrial market retained its ranking as the second largest in the country as of the middle of 2025, according to the latest research from Lee & Associates.
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Shifting inventory needs and tariff concerns shape O’Hare industrial market at mid-year The O’Hare industrial market is recalibrating at mid-year, as solid market fundaments intersect with shifting inventory needs.
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U.S. industrial vacancy rate rises to highest level since 2013 A rise in new construction completions and move-outs pushed the U.S. industrial vacancy rate up 26 basis points to 7.3% during the second quarter of this year, according to the latest research from Colliers.
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From speculation to stability: The new playbook for Chicago’s industrial market
By Brandi Smith
Chicago’s industrial real estate market proved its resilience in the second quarter of 2025, rebounding from a slow start to the year with a surge in leasing and a notable drop in vacancy. Still, the story isn’t just about volume; it’s about discipline in both demand and supply. According to Colliers, the market saw 10.7 million square feet of new leases signed during the quarter, the highest total since the first quarter of 2023. Overall leasing activity jumped 43.5 percent from Q1 levels, while net absorption rose to 5.1 million square feet—driven largely by robust build-to-suit deliveries.
“Vacancy is creeping up in a few of the strongest Chicago submarkets, but I wouldn’t call it a red flag,” said Dan Smith, Senior Vice President at Brennan Investment Group. “After a few slower quarters, we’re finally seeing Class A demand pick back up. The leasing market still feels disciplined.”
The second quarter was marked by significant tenant activity across the region. Colliers’ report highlights major transactions such as RJW Logistics signing a lease for 1.1 million square feet in Joliet and IKEA’s sublease of nearly 1 million square feet, also in Joliet. Large-format leases are driving momentum in corridors like I-80, where absorption doubled the two-year quarterly average. That corridor alone accounted for 2.5 million square feet of new leases, driving vacancy down to 5.79 percent.
“Chicago took longer than expected to hit those high-watermark rental rates in the newest spec buildings, but you’re starting to see more velocity," said Jack Brennan, Managing Principal for the Midwest region of Brennan Investment Group. “As we move through the summer, rental activity is heating up in a way that suggests users are regaining confidence.”
Colliers reported the overall vacancy rate fell to 4.67 percent by the end of June, down 12 basis points from the first quarter. Average asking rents of $8.20 per square foot net mark a subtle but steady rise, up from $8.05 a year ago.
While leasing surged, construction activity has continued to cool. The pipeline of active projects shrank to 33 buildings totaling 9.3 million square feet, an 11 percent decline from Q1 and the fourth consecutive quarterly drop. This pullback is helping the market avoid speculative overhang and keep fundamentals tight.
“While it did see an increase, Chicago did not experience the same postCOVID supply rush that took place in
"Chicago continues to outperform other Midwestern markets in our portfolio. Chicago has the scale, transportation network and labor base that make it stand out."
coastal port markets, and that’s been a blessing for the region,” Brennan said.
“Now we’re poised for a wave of new construction starts, but it’s coming from a position of stability rather than oversupply.”
Colliers noted that 2.7 million square feet of build-to-suit space was delivered during the quarter, accounting for the majority of the net absorption gain. Speculative development is slowly gaining traction, with 10 new projects totaling 2.4 million square feet breaking ground in Q2. The pivot toward smaller speculative projects shows developers are testing demand cautiously rather than flooding the pipeline.
Despite challenges in other parts of the country, Chicago remains a top performer among Midwest industrial markets. Its central location, intermodal network and diverse labor pool keep it attractive to national and global logistics players.
“Chicago continues to outperform other Midwestern markets in our portfolio,” Brennan said. “We’re still very active in
places like Indianapolis, Columbus and Cincinnati, but Chicago has the scale, transportation network and labor base that make it stand out.”
This competitive advantage has helped Chicago weather the slowdown in speculative construction and capitalize on user-driven demand. Submarkets such as I-88 and O’Hare have benefited from their proximity to key transportation hubs, while the I-80 Corridor remains a focal point for large logistics and e-commerce deals.
Institutional investors have become more selective, prioritizing stability over short-term upside. Deals with longer weighted average lease terms are getting premium attention, while assets with near-term rollover are facing tougher underwriting. Colliers’ report notes that capitalization rates have held relatively steady even as borrowing costs remain high, with investors favoring deals tied to strong tenants and longer lease terms.
“Capital has pivoted,” Brennan said. “Two years ago, everyone wanted shortterm leases with big mark-to-market upside. Today, investors are favoring longer WALTs and cash flow stability until we see a more predictable path forward.”
Land acquisition and user sale activity have also remained strong, a trend Brennan attributes to both long-term confidence in Chicago’s fundamentals and the scarcity of prime industrial sites.
“We’re seeing very aggressive behavior when it comes to land acquisitions and the user sale market,” Brennan said. “That level of appetite speaks to how much institutional capital still believes in Chicago as a long-term industrial hub.”
The remainder of 2025 is expected to bring steady tenant demand and moderate construction activity. Colliers forecasts continued interest in mid-sized spaces between 100,000 and 500,000 square feet, with build-to-suit projects remaining a key driver of absorption. The balance of cautious development and rising demand suggests the market is entering a phase of sustainable, not speculative, growth.
“If there’s one thing Chicago has proven, it’s that our fundamentals hold steady even in uncertain capital markets,” Brennan said.
By the end of the second quarter, the balance of disciplined construction, robust leasing, and investor confidence had set the stage for a stable second half of the year. With capital markets focused on predictable cash flow and tenants continuing to absorb new space, Chicago’s industrial sector appears well-positioned to maintain its momentum into 2026.
Jack Brennan
Dan Smith
No more "babysitting": How industrial property management grew up
By Brandi Smith
The building burned to the ground. It was a triple-net deal, so on paper the tenant was responsible for most things. But within 20 minutes of learning about the fire, Carrie Szarzynski’s national NAI Hiffman team had already assembled and delivered every key document the owner’s insurer needed — fire safety vendor, HVAC contractor, as well as the tenant and vendor insurance certificates. The paperwork was in the right hands before the smoke cleared and the owner’s response moved just as fast.
“Within 20 minutes of finding out, we were able to get all that information to our client and their insurance compa-
ny,” said Szarzynski, Hiffman’s Senior Managing Director & Head of Management Services.
That moment says everything about how industrial property management has changed. What used to be dismissed as “babysitting” is now a data-heavy, compliance-driven, NOI-protecting business that depends on tight relationships with both owners and tenants.
“What’s really changed in the past five years is that tenants of industrial buildings want the same level of service and relationship with the property management team as office buildings do,” Szarzynski said.
The shift is evident in everything from lease language to day-to-day expectations. Prologis’ Clear Lease model, for example, conditioned some tenants to expect the landlord or manager to handle HVAC, fire life safety and roll it through common area maintenance (CAM). Hiffman’s managers have drawn a line: partner, guide and educate — but don’t absorb tenant risk.
“We’ve trained our teams to truly partner with tenants and provide support, but without taking on liability,” Szarzynski said.
This philosophy carries over to operational decisions. If a lease states the
tenant handles HVAC, Hiffman’s managers won’t hire the contractor and push the invoice through CAM, which could inflate operating numbers for the next lease cycle. Instead, they provide a vetted short list, document the request and, only with written authorization and client approval, step in to arrange for the work billing it back as a tenant billback, not a CAM expense.
Two big priorities now separate top-tier industrial property management teams from the pack: risk and compliance first, maximizing NOI second. The fire story illustrates the first. The second is about discipline: holding tenants to their obligations, mapping five-year capital plans
Photo by Paul Hanaoka on Unsplash
and sequencing work so value and cash flow are protected.
“Most people who own commercial assets own them as an investment,” Szarzynski said. “A good property management team works with the asset manager to keep the building value up, ensuring the tenant is being held accountable for their requirements per the lease.”
Neglected dock doors, HVAC or fire life safety systems can cost hundreds of thousands to fix when a tenant moves out. Szarzynski’s team makes sure those systems are maintained during occupancy, not after the fact.
All of this only works if the relationships are right with the owner and with the tenant.
“It’s critical. In my opinion, it’s a partnership,” Szarzynski said. “Owners look to us to be their boots on the ground.”
That partnership mindset needs to extend to tenants too, especially in triple-net structures where they carry most operational responsibility. If tenants feel the manager is just policing them, the relationship turns adversarial and standards slip.
“Tenants have to feel like you are their partner, that you’re there to help them and not just police them,” Szarzynski said.
Environmental, Social and Governance (ESG) initiatives are another area where industrial property management has caught up fast. Five years ago, Szarzynski’s teams weren’t collecting or reporting utilities portfolio-wide. Now they are, and it has become a differentiator. Tenant engage -
ment has also migrated from office towers to warehouses.
“We’re collecting utilities and reporting back to our clients, something we never did five years ago,” Szarzynski said. “We’ve also seen more tenant events, whether that’s an ice cream truck, taffy apples or holiday gifts.”
Specialized asset classes such as data centers and cold storage add another layer of complexity. These assets can’t be managed like standard bulk warehouses. Different risk profiles, regulations and engineering needs require specialized teams and training.
“Data centers are a very different type of management,” Szarzynski said. “A typical industrial manager may not have the experience to manage a data center. It’s the same with cold storage.”
To keep pace, Hiffman invests in continuous education.
“We recently held a full team training on the rules and changing laws related to warehouses, trade classifications, tariffs and what’s changing in the market,” Szarzynski said.
That readiness mindset extends to state and federal legislation. Tornado preparedness requirements. Solar panel language. Evolving codes and compliance standards can catch owners off guard if their management team isn’t staying ahead of new laws.
“There’s a lot of legislation out there right now nationally, Illinois in particular,” Szarzynski said. “We stay connected to industry groups and make sure our people are educated about anything that could impact properties and owners.”
Put it all together — the fire drill precision, the tenant partnership without the liability, NOI discipline, ESG reporting, specialized expertise and policy vigilance — and you have a blueprint for what industrial property management means in 2025. It’s not babysitting. It’s business continuity, value protection and relationship management under increasingly complex demands.
When the alarm goes off, success means having the right keys, the right vendors, the right data and the right instincts before the flames die down.
Mark Ptacek mptacek@hbtbank.com
Ryan Kastner rkastner@hbtbank.com |
Carrie Szarzynski
and Hefner Associates to generate permit drawings that maximized the building footprint while addressing the various site specific challenges. In late 2022, the project lost momentum for various reasons including uncertainty around wetland permitting timelines and rising interest rates.
Early this year, NAI Hiffman helped the interim owner bring the site to market and there was a another flurry of budgeting and schedule discussions. Ultimately, Reno-based developer Dermody stepped in, moving quickly to creatively clear a few remaining entitlement hurdles and close on the property. After a final round of competitive bidding, Dermody tapped Meridian Design Build to construct the 460,000 square foot speculative facility that they had helped design back in 2022.
“We’re thrilled to be working with Dermody to make this long-awaited project a reality,” Green said. “Mass grading work has already been completed and we’ll be standing wall panels at the site within the next several weeks as we move toward an early 2026 project completion.”
That Romeoville narrative, assisting with creative problem solving during the preconstruction phase, providing multiple rounds of budgeting assistance to help clients generate proformas, and delivering competitive pricing and an
aggressive construction schedule when a developer is ready to move forward, captures how Meridian helps its clients succeed. The firm is a full-service construction company with professional project managers who run point from site due diligence and conceptual planning through the budgeting, design, construction and turnover.
When asked about planning for other upcoming projects, Green noted that their clients’ site-selection calculus has
shifted at bit in recent years. Access to highways, rail, and intermodal is still important, but the hidden chokepoint in today’s market is often power. “Availability, timing and costs related to getting power infrastructure to potential development sites has become a major factor in site selection,” Green said. “There are a number of sites that we’ve looked at recently for clients where lack of power utility capacity has been a factor in derailing or delaying developments.”
“Sustainability and accommodations for renewable energy are also considerations on all of our projects,” Green said. “We continue to see increased interest in upsizing the roof structure on new buildings to make them solar ready. Most corporate clients and large developers are incorporating LEED design standards into their buildings and a many of our recent projects have incorporated provisions for EV charging stations.”
CONSTRUCTION (continued from page 1)
Romeoville Aerial
2700 York Road - Rendering
Meridian also does a significant amount of design-build work for corporate users. The company recently completed a 400,112 square foot corporate headquarters project for RIM Logistics in Bartlett, delivering roughly 40,000 square feet of two-story office space, a customer experience center, a café with 30-foot ceilings, a fresh market, bike storage and a fitness center. The project was designed to LEED standards and incorporates EV charging, natural daylighting, and IP addressable lighting controls among other sustainable elements.
Other Meridian projects underway in the area include a 123,000-squarefoot speculative industrial development for Logistics Property Company near O’Hare International Airport, a 130,000-square-foot food production facility in Huntley for Silesia Flavors and developer Venture One Real Estate, and a 50,000-square-foot tire maintenance/ tire storage facility in Bartlett.
The firm has a national reach that extends well beyond Chicago to markets as far away as Florida, New York, Texas, and California. Meridian has delivered 13 projects totaling more than 2.6 million square feet in the Indianapolis area alone since 2013, including a recently completed 125-door cross-dock truck
terminal on a 43-acre site in Greenwood, Indiana for Scannell Properties and a leading North American LTL carrier.
The diversity of Meridian Design Build’s current project load is telling. The company’s capabilities are not limited by product type, geography, or a specific client base. Its strength is leveraging its
“We put our market expertise to work to empower our clients and help maximize their growth.”
For over 45 years, Darwin Realty has been a leader in industrial and commercial real estate. The company specializes in brokerage, property management, investment and development services primarily in the Midwest. Darwin’s highly qualified professionals are problem solvers and utilize a breadth of tools and knowledge to serve our clients best.
construction expertise to help clients find cost effective and time sensitive solutions project specific challenges. Being selected by Dermody to construct the Romeoville project was less a lucky break than the result of years of hard work blended with perseverance, creative problem solving, and strategic partnership.
Chris Mergenthaler Vice President
When asked where the company’s priorities lie for the balance of 2025 and the years ahead, Green pointed to Meridian’s clients. “More than 90% of our projects are the result of repeat business”, Green noted, “helping our clients navigate the planning stages of their upcoming projects has, and always will be, what drives the success and growth of our business.”
Silesia Flavors - Rendering
5 Trends Shaping the Future of Chicago’s Transportation and Logistics Sector
By Brandon Pappas
By Brandon Pappas, Vice President of Data Analytics and Business Development, Lee & Associates of Illinois
Chicago’s transportation, distribution, and logistics (TD&L) sector remains a critical anchor of the regional economy. Chicago leads the nation with the most industrial real estate square footage and ranks second in logistics employment. While there is a labor shortage, TD&L quarterly employment growth is up 0.4% from last quarter, totaling 272,000 employees, according to World Business Chicago.
However, economic pressures, shifting supply chains and changing U.S. policy has left many industrial occupiers hesitant to make real estate decisions. But is that hesitation warranted in the TD&L sector?
In the following article, we will touch on five key trends that are shaping the
future of logistics real estate in Chicago, and what those trends mean for market fundamentals and investment.
1. Resilience, Nearshoring and Reshoring Bring the Supply Chain Closer to Home
Chicago’s logistics has shown its resilience and has an established infrastructure and diverse industrial base that supports strong demand, even as companies continue to figure out changing trade dynamics.
Chicago is also a major logistics hub, ranking as the nation’s #1 “port” by value of goods in recent years, due to the high-value freight flowing through O’Hare International Airport and the region’s rail network. In fact, Chicago’s rail
network is so extensive that 25% of all U.S. freight trains and 50% of intermodal trains pass through Chicago, and 2025 intermodal volume is up 7.8% year over year, with 7.8 million containers originating/terminating in the metro. In addition, Union Pacific and CPKC launched high speed intermodal services, helping move Chicago’s cumulative $3 trillion in goods into and through the region faster and more efficiently.
For all these reasons, Chicago stands to benefit from increased nearshoring and reshoring efforts, as firms look to reduce dependence on overseas suppliers and improve supply chain reliability.
2. AI, Predictive Analytics, Automation and Robots Reduce Costs and Grow Efficiency
Chicago has also emerged as a national leader in logistics technology, with 100plus logistics-tech firms based in the city. Industry surveys show that 61% of supply chains face delays due to understaffing, and AI is filling these gaps by automating planning and forecasting.
For example, Project44 launched new AI tools like virtual assistants and data cleansing agents to automate and optimize supply chains and FourKites introduced AI-powered yard management using cameras and computer vision to improve trailer and gate flow. These types of tools are helping reduce costs, forecast disruptions, and address labor shortages.
Warehouses and fulfillment centers in Chicago are also adopting automation
Photo by CHUTTERSNAP on Unsplash
at scale. Companies like Amazon and Walmart are upgrading their facilities to accommodate drones for inventory, automated sorting systems, autonomous forklifts, and automated storage and retrieval systems. Local startups like Ware, as well as Vecna Robotics, which is investing in ground-to-ground and low-lift workflow capabilities and development of new robots, are examples of smaller companies that are also driving innovation in this space.
3. Labor Market Pressures and Regulatory Challenges Require Action
While there is a labor shortage in Chicago, which does remain a key constraint, TD&L quarterly employment growth is up. In addition, approximately 37% of logistics organizations report significant staffing gaps—especially those in trucking and warehouse roles. Another labor market pressure is the high turnover and rising wages, which companies are attempting to address through signing bonuses, automation, and workforce training.
Trade policies are also presenting some challenges. For example, emissions regulations and wage mandates are increasing compliance costs, and carriers who are operating across state lines face stricter rules from states like Cal-
ifornia. International trade agreements may further impact freight flows in the future. In addition, volatility of fuel prices also remains a threat due to global events and Illinois’ inflation-linked fuel tax. On that front, fleets are investing in fuel-efficient equipment and piloting alternative fuels like CNG and electric trucks to reduce long-term exposure.
4. Tariff Uncertainty and Trade Risk Driving Up Container Volume
Proposed 2025 tariffs on imported goods—particularly from China and other select emerging markets—are creating uncertainty across the warehousing and logistics sectors, which is another key trend to watch in the coming year. As retailers and manufacturers brace for potential cost increases, many of them have already started front-loading inventory to take advantage of current tariff-free or lower-duty pricing.
That preparation has also temporarily led to higher container volumes at O’Hare International Airport and the region’s extensive intermodal network, particularly for consumer electronics, machinery and apparel. If these tariffs are enacted as they are currently proposed today, the impact could be dampened by long-term import demand, especially in those key categories—all of
Built for the Road Ahead
which are currently main contributors to Chicago’s freight economy.
Shifting supply chains, nearshoring trends, as mentioned earlier, and tariff-driven route changes could redirect some freight away from Chicago if not counterbalanced by domestic production or new trade lanes.
5. Infrastructure, Weather and Economic Concerns Disrupting Freight Flow
Despite major infrastructure investments, legacy bottlenecks persist throughout the transportation network. Rail congestion, highway delays—particularly on I-294 and I-55—and grade crossing issues remain prevalent. Additionally, extreme weather such as snow, flooding, and temperature swings continues to disrupt freight flows and highlight the long-term impact of climate volatility.
Slower economic growth, elevated inflation, and high interest rates are tempering freight demand. Retail inventories remain high, and Midwest manufacturing output has softened. An oversupply of trucking capacity has depressed rates, though a rebound in consumer or industrial activity could quickly reverse this trend.
By the Numbers
The question remains—how are these key trends impacting the TD&L real estate fundamentals? Overall, Chicago’s logistics sector remains resilient, powered by geographic advantage, industrial scale, and technological innovation. This sector has been right-sizing and returning space to landlords since the COVID-era real estate boom, when 3PL firms rapidly expanded due to e-commerce demands. In the first quarter of 2025, the TD&L sector absorbed nearly 4.4 million square feet of space, an encouraging sign. The vacancy rate stands at 6.4%, just slightly above Chicago’s all-industrial average of 5.8%.
However, as we move forward in 2025, companies’ ability to navigate workforce constraints, regulatory shifts, and economic uncertainty will be key. Continued investment in automation, infrastructure, and training will help ensure Chicago retains its position as the nation’s logistics command center.
Lee & Associates of Illinois’ full First Quarter Chicago Industrial Market Report is now available for download.
Principle Construction breaks ground on Orozco Trucking’s new 55,468-sq-ft Elgin facility at 2580 Mason Road. This build, for a specialist in climate-controlled and dry freight, features a 26-foot clear height, 4 docks, and 4 drive-in doors for in-house maintenance and storage.
The 11.95-acre site offers significant expansion capacity with approx. 229 total parking stalls (91 car, 75 for 75’ trailers, 63 for 55’ trailers) and space for a future office.
55,468 SF
Back to a normal industrial market? That’s what NAI Hiffman report says is happening in Chicago
By Dan Rafter, Editor
More of a normal market? That's what NIA Hiffman says the Chicago industrial market continues to see in 2025.
NAI Hiffman recently published its second quarter 2025 Chicago Industrial Market Report for metropolitan Chicago. This report showed a market that while not booming is still seeing steady absorption and demand.
Just don't expect the absorption and development numbers that the Chicago-area industrial market saw during the record-setting year of 2021. Those days are gone, and today's Chicago industrial market has reverted back to more of a normal pace of activity.
According to NAI Hiffman's report, the Chicago-area industrial market saw more than 1 million square feet of positive net absorption during the second quarter. That's a dip from the 2.3 million
square feet of positive absorption in the first quarter. Year-to-date, though, the Chicago-area industrial market recorded 3.3 million square feet of positive net absorption during the first half of 2025.
That figure remains consistent with the first half of 2024, when the market saw 3.4 million square feet of positive net absorption.
Despite the steady absorption numbers, the vacancy rate for the Chicago industrial market inched up to an overall 6.4%. That's a small jump from the overall vacancy rate of 6.1% in the first quarter of this year. NAI Hiffman pointed to large tenant relocations and the delivery of new speculative buildings as the reason for this increase.
The second quarter's industrial vacancy rate was up from 5.8% in the second quarter of 2024, NAI Hiffman reported.
Leasing activity wasn't in boom mode, but it was steady. NAI Hiffman reported that the Chicago-area industrial market recorded 12.1 million square feet of new leasing activity during the second quarter of the year. That is an increase from the nearly 11 million square feet registered in the first quarter of 2025.
Year-to-date, the Chicago market has recorded almost 23.1 million square feet of new industrial leasing volume. This is a solid number, but is, of course, much lower than the 81.1 million square feet of industrial leasing activity in 2021.
The Interstate-80/Joliet Corridor submarket outpaced all others during the second quarter with 3.9 million square feet of new industrial leasing activity. This was highlighted by RJW Logistics' lease of 1.1 million square feet at NorthPoint Development's Third Coast Intermodal Hub at 201 W. Compass Blvd. in Joliet.
In an interesting shift, for the first time since the first quarter of 2024, speculative industrial construction in the Chicago market outpaced build-to-suit development in the second quarter. Out of a total of 11.4 million square feet of Chicago-area industrial space under construction, speculative construction accounted for 5.7 million square feet, or 50.5% of all industrial properties being built. Build-to-suit amounted for 5.6 million square feet of new industrial construction in the market during the second quarter.
NAI Hiffman reported that 45.4 million square feet of speculative industrial inventory has been built in the Chicago market since the start of 2023. Of that space, 23.4 million square feet, or 51.5%, has been leased.
Image by usertrmk on Freepik
Lee & Associates report: Chicago industrial market still second largest in the U.S.
By Dan Rafter, Editor
The Chicago industrial market retained its ranking as the second largest in the country as of the middle of 2025, according to the latest research from Lee & Associates.
Lee & Associates released its Mid-Year 2025 Industrial Market Report, exploring the market fundamentals for the 18 most active Chicago-area submarkets.
According to the report, the Chicago industrial market is the second largest in the country with more than 1.4 billion square feet of existing inventory. The region’s unmatched interstate and intermodal connectivity has insulated it from some of the volatility other regions have experienced.
“National headlines are being dominated by tariffs, interest rates and other macroeconomic conditions,” said Brandon Pappas, vice president of data analytics for Lee & Associates of Illinois,
in a statement. “However, Chicago’s industrial fundamentals remain some of the most stable and strategically positioned in the country.”
Key findings from the report include:
• Net absorption reached positive 4.6 million square feet, signaling a decisive
rebound that reinforces investor confidence
• The I-88 Corridor recorded more than 607,000 square feet of absorption in the second quarter, which is more than 8 times greater than the prior quarter
• Elevated availability in high-growth corridors like I-55 and I-80/Joliet re-
flects a need to absorb excess speculative product built in the past few years – not a lack of demand
• Construction is active with 10.8 million square feet of projects underway across all submarkets. New deliveries for the quarter totaled 4.3 million square feet.
• Investment sale activity is still slow, with just 1.6% of the total inventory trading hands year-to-date
Chicago’s centrality, scale, and structural demand drivers continue to reinforce its position as a cornerstone of institutional industrial investment.
“As occupiers remain disciplined and developers target high-conviction sites, Chicago’s industrial market is not just weathering macroeconomic shifts—it’s adapting, evolving, and laying the groundwork for future outperformance,” Pappas said.
Photo by Chait Goli.
Shifting inventory needs and tariff concerns shape O’Hare industrial market at mid-year
By Brown Commercial
The O’Hare industrial market is recalibrating at mid-year, as solid market fundaments intersect with shifting inventory needs, a shortage in some space categories and a more cautionary approach to business decision-making. According to a market review by Brown Commercial Group, here are the top factors driving the market heading into the latter half of the year:
Demand-Supply Imbalance – Solid demand and a limited supply of small to mid-sized industrial space continue to shape activity in the O’Hare submarket. The market has seen an increase in industrial space for lease, as new construction delivers and some businesses shift their locations. Investment activity remains constrained, however.
“Investors and business owners looking for smaller spaces in the O’Hare submarket are challenged with limited options and this is constraining sales activity,” said Candace Scurto, a Vice President with Brown Commercial Group. “There is less inventory and we also are seeing a more cautious approach from business owners as they weigh the impact of tariffs and general economic conditions.”
Many submarkets, including O’Hare, have a limited amount of available industrial space under 50,000 square feet for sale. This dynamic is good news for sellers, however. “Prices are still high so for those in a position to sell or who were planning to sell in a year or so, it’s a good time to capitalize on the current market,” said Scurto.
Tariff Policies Create Uncertainty – Given new tariff policies, many
businesses are waiting for more clarity on the financial impact before moving ahead with ordering goods or expanding their businesses. “There is a general sense of uncertainty, similar to what we saw during the pandemic, that is slowing down some activity,” said Scurto. “This is particularly apparent in the manufacturing sector and for businesses with a significant reliance on foreign parts and goods.”
Strong Market Fundamentals Remain – According to CoStar research, the O’Hare submarket continues to benefit from its position as a major national logistics hub. The submarket is posting a 4.6% vacancy rate at midyear, well below its all-time average of 7%. With little land to build on, the submarket is more protected from oversupply concerns than other U.S. industrial markets.
Demand for small to mid-sized industrial space continued to increase throughout the Chicago market during the quarter, following a similar pattern experienced in Q4 2024, according to Q1 2025 research from Colliers. Leases for spaces under 80,000 square feet saw a 5.7 percent increase, totaling 2.7 million square feet across 94 deals, compared to 89 leases amounting to 2.6 million square feet signed in the fourth quarter of 2024.
Brown Commercial Group, Inc. is a privately held commercial real estate company specializing in the leasing, sale and acquisition of industrial and office properties throughout the Chicago market. The firm also assists clients with land acquisition and new construction projects.
Image by G.C. from Pixabay.
U.S. industrial vacancy rate rises to highest level since 2013
By Dan Rafter, Editor
Arise in new construction completions and move-outs pushed the U.S. industrial vacancy rate up 26 basis points to 7.3% during the second quarter of this year, according to the latest research from Colliers.
That's one of the key takeaways from Colliers' second quarter 2025 U.S. industrial market report.
Another big one? Despite the rise in vacancy, tenant demand was positive in the second quarter. That marks 60 consecutive quarters or 15 years of continuous occupancy growth in the U.S. industrial sector, according to Colliers.
Even though that 7.3% vacancy rate is the highest level for this sector since 2013, Colliers says that the long-term fundamentals of the U.S. industrial market remain solid. Vacancy for U.S. industrial assets is expected to peak at 7.5% by the end of 2025.
Colliers said that the Midwest region is the closest to achieving a market recalibration, with vacancy in this region's industrial properties increasing just 11 points on a year-over-year basis to 5.4%. That is the
lowest vacancy rate as of the end of the second quarter of all U.S. regions.
The South holds the highest industrial vacancy rate, 8.6% as of the end of the second quarter, an increase of 91 basis points year-over-year.
In another sign that the U.S. industrial market is going through a period normalization, Colliers reported that this sector saw just 23 million square feet of net absorption during the second quarter. That is less than half of the 51 million square feet of net absorption recorded during the same quarter a year ago.
New industrial supply increased slightly to 71 million square feet in the second quarter as the recent surge in new development continue to deliver completions. But Colliers says that new industrial supply is expected to average closer to 45 million square feet during each of the next four quarters.
Chart provided by Colliers.
COMMERCIAL SERVICES
CONSTRUCTION COMPANIES/GENERAL CONTRACTORS
MERIDIAN DESIGN BUILD
9550 W. Higgins Road, Suite 400 Rosemont, IL 60018
P: 847.374.9200 • F: 847.374.9222
Website: meridiandb.com
Key Contact: Paul Chuma, President; Howard Green, Executive Vice President
Services Provided: Meridian Design Build provides construction and design/ build construction services on a national basis with a primary focus on industrial, office, medical office, retail and food and beverage work. Company Description: With a team of in-house professional project managers, Meridian has extensive experience coordinating the design and construction of new buildings, tenant improvements, and additions/renovations from 15,000 square feet to 1,000,000+ square feet. Meridian Design Build has been a Member of the U.S. Green Building Council since 2007.
Notable/Recent Projects: Venture Park 47, Huntley, IL - 729,800 sf speculative industrial facility for Venture One Real Estate. Lion Electric, Joliet, IL - 928,500 sf electric bus / medium duty truck assembly plant for Clarius Partners. Greenwood Truck Terminal, Greenwood, IN - 125 door truck terminal on 43 acres for Scannell Properties.
PRINCIPLE CONSTRUCTION CORP.
9450 West Bryn Mawr Ave., Suite 120 Rosemont, IL 60018
P: 847.615.1515 | F: 847.615.1598
Website: pccdb.com
Key Contacts: Mark L Augustyn, COO, maugustyn@pccdb.com, James A. Brucato, President, jbrucato@pccdb.com
Services Provided: Since 1999, Principle Construction Corp. has been a leading design-build general contractor serving the industrial markets of Chicago Metro, Southern Wisconsin, and Northwest Indiana. We specialize in designing and constructing exacting solutions for our clients, including:
• Built-to-Suit Facilities • Speculative Facilities • Warehouse and Distribution Centers • Logistics and Cross-Dock Facilities • Industrial Outdoor Storage • Industrial and Manufacturing Plant • Tenant Improvements • Expansions and Additions • Food Processing Facilities • Specialty Projects
Recently Completed Projects include:
• 8,205 SF animal shelter for Heartland Animal Shelter, at 586 Palwaukee Dr., in Wheeling, IL.
• 12,560 SF showroom and outdoor pool park for Doheny Enterprises, at 5307 Green Bay Rd., in Kenosha, WI
• Phase 1 renovation project for SMW Autoblok, at 285 Egidi Dr., Wheeling, IL
VICTOR CONSTRUCTION
2000 Center Dr., Suite East C219 Hoffman Estates, IL 60192
Services Provided: Victor Construction Co., Inc. manages projects from ground-up site developments to interior buildouts, specializing in retail, industrial, and commercial markets.
Company Profile: Established in 1954, Victor Construction Co., Inc. is a third generation general contractor that specializes in commercial, industrial, and retail construction. Victor Construction is known as one of the most efficient and dependable general contractors in the Chicago metropolitan area and has earned the reputation due to meticulous project management, cost-effectiveness, budget awareness, and prime first-rate workmanship. Commitment to the clients’ goals is what keeps satisfied customers returning to Victor Construction for all of their construction needs—We Build for Your Success!
Notable/Recent Projects: Owens + Minor Distribution – 600K SqFt distribution facility that involved a full LED lighting upgrade, new HVLS fans, 200K SqFt section that required new cooling for medical distribution, an office renovation of 20K SqFt, and a new exterior employee pavilion.
ECONOMIC DEVELOPMENT CORPORATIONS
VILLAGE OF HOMER GLEN ECONOMIC DEVELOPMENT
14240 W. 151st Street
Homer Glen, IL 60491
P: 708.301.0632
Website: HomerGlenIL.org
Key Contact: Janie Patch, Economic Development Director, jpatch@homerglenil.org
Services: Resource center for brokers, developers, site selectors and businesses providing space and property inventory, trade area demographics, site selection assistance, custom tours, coordination through entitlement process, business opening process guidance and retention services. Demographic Info: Strategic Will County location 25 miles southwest of Chicago with two I-355 interchanges between I-55 and I-80. Average household income of $154,800. Trade area population of 83,000. Prime commercial corridors include Bell Road, 143rd Street and 159th Street (State Route 7). 159th Street is improved with 4 lanes and access to Lake Michigan water and sanitary sewer.
Recent CRE Activity: The Villas of Old Oak (46 ranch duplexes) completing full build out. New food specialty and restaurant openings include South Viet, OneZo Boba Tea, Sultan Sweets and Cervantino’s. Restaurant with drive-thru position available at Homer Glen Bell Plaza with Pet Supplies Plus, Dollar Tree and Taco Bell, SWC 143rd/Bell.
Recent CRE Activity: Double Track Northwest Indiana: $1.6 Billion development reducing train travel to Chicago to 60 minutes; The Franklin at 11th St. Station: $100 Million Development with Residential & Retail Space; “You are Beautiful”/ SoLa: $311 Million Mixed-Use Multi-Family Development with 235 boutique hotel rooms & 174 Luxury Condos; Burn ‘Em Brewing: $3 Million Expansion project with 30 new jobs.
ENVIRONMENTAL/ENGINEERING FIRMS
DEIGAN & ASSOCIATES, PLLC 28835 N. Herky Drive Lake Bluff, IL 60044
P: 847.682.7381
Website: www.deiganassociates.com
Key Contact: Michele Brady, Director Business Development & Real Estate Services, mbrady@deiganassociates.com
Services Provided: The Deigan Group provides client responsive, results oriented environmental consulting and remediation services, with a focus in land-based work, including Brownfield Redevelopment, Power Plant Decommissioning/Redevelopment, Strategic Environmental Planning, Property Assessments and Site Remediation, Compliance/Permitting, Employee Exposure Testing/Safety Monitoring
Asbestos Surveys/Mold/Indoor Air Quality, Waste Minimization/ Recycling/ Sustainability Plans, Successful Grant Writing.
Company Profile: A full-service environmental consulting organization specializing in defining environmental business risk and removing environmental uncertainties for property development sites. Our wide range of experience within the environmental industry helps us provide realistic cost-saving strategies for our clients with the goal of reducing their overall environmental liability and obstacles to redevelopment.
Services Provided: Full line of Commercial, Business and Real Estate loans customized to your individual needs including: commercial and residential construction loans, commercial mortgages, equipment loans and working capital lines of credit.
Company Profile: Marquette Bank started in Chicagoland in 1945 and is still locally-owned/operated. Expect quick decisions, competitive rates, easy application and personal service. Personal/business banking and lending, home mortgages, land trust services, estate planning, insurance services, wealth management and multifamily lending.
REAL ESTATE LAW FIRMS
REINHART BOERNER VAN DEUREN S.C.
1000 N Water Street, Suite 1700 Milwaukee, WI 53202
P: 414.298.1000
Website: reinhartlaw.com
Key Contact: Joseph Shumow, Shareholder, jshumow@reinhartlaw.com
Services Provided: Reinhart is a full-service, business-oriented law firm that delivers innovative, value-added solutions for today’s most important real estate needs, including land use and zoning; tax-incremental financing; tax credits; leasing; construction; and condemnation and eminent domain issues.
Company Profile: With the largest real estate practice in Wisconsin and offices throughout the Midwest and across the country, Reinhart’s attorneys offer clients customized real estate insight rooted in broad knowledge and deep experience to help you capitalize on opportunities no matter where you do business.
SARNOFF
PROPERTY TAX
100 N. LaSalle St., 10th Floor Chicago, IL 60602
P: 312.782.8310
Website: sarnoffpropertytax.com
Key Contact: James Sarnoff, jsarnoff@sarnoffpropertytax.com P: 312.448.5337
Services Provided: Since 1986, Sarnoff Property Tax has been a leading and recognized law firm concentrating solely in the field of property taxation. We help client’s secure favorable taxes in Illinois through property tax appeals, incentives and consulting.
Company Profile: Sarnoff Property Tax’s clients include Owners, Developers, Managers, REIT’s, Fortune 500 Companies, Private Equity Firms, etc., in connection with commercial property, high-rise and low-rise apartment buildings, condominium associations and single-family home portfolios
WORSEK & VIHON, LLP
180 North LaSalle Street, Suite 3010 Chicago, IL 60601
P: 312.917.2307 P: 312.917.2312 | F: 312.596.6412
Website: wvproptax.com
Key Contacts: Francis W. O’Malley, Managing Partner fomalley@wvproptax.com; Jessica L. MacLean, Partner jmaclean@wvproptax.com
Services Provided: Worsek & Vihon, LLP represents tax payers in Illinois by limiting their property tax liabilities through ad valorem appeals. We have over 40 years of experience and can handle basic to the most complex assessment issues while offering the dependable, personalized attention our clients deserve. We have experience representing owners of all property types. In addition to filing thousands of appeals with the Cook County Assessor, we have been involved in numerous proceedings before various Boards of Review, the Illinois Property Tax Appeal Board, and the Circuit Court of Illinois, and have appeared before the Illinois Appellate and Supreme Courts.
Company Profile: Worsek & Vihon LLP, is a team of experienced attorneys singularly focused on real estate tax law. The firm is dedicated to minimizing property tax liabilities through strategic tax portfolio management, wellresearched, creative appeal preparation and aggressive advocacy.
