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C H I C AG O I ND USTR I AL P R O P E R T I E S N OV E M B E R / DE C E M B E R 2 02 4
Sustainability, strategic sites shape 2025 industrial outlook in Chicago By Brandi Smith
Image by wal_172619 from Pixabay
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s the Chicago industrial market heads into 2025, developers are navigating a landscape of tempered construction activity, rising demand for strategic locations and a growing emphasis on sustainability. They’re refining their focus on projects that align with market demand and provide long-term value. “We’re very content to see industrial construction has slowed because it’s occurring at a time when the market is still very healthy in the greater Chicago market,” Neal Driscoll, Partner at Dermody, said, emphasizing that Dermody would build more if more land were entitled and ready. This moderation in construction is consistent with broader trends. According to JLL’s Q3 2024 Chicago Industrial
Market report, leasing demand dropped significantly, with just 6 million square feet leased compared to 10.2 million square feet in Q2. However, deliveries surged in Q3, totaling 5.3 million square feet—a marked increase from earlier quarters—reflecting a mix of built-to-suit and owner-built projects.
Strategically located sites continue to drive development decisions as tenants seek proximity to key transportation hubs and urban centers. Driscoll highlighted Dermody’s focus on sites offering strategic geographic advantages, avoiding commodity real estate that competes solely on price.
submarket posting the highest rents at $14.09 per square foot. Rachel Agba-Novak, Vice President of Transactions and Development at Hillwood, added that projects with specific transportational advantages such as proximity to airports or rail access are more likely to justify speculative development.
Adam Moore, Senior Regional Director at First Industrial, noted that monitoring submarkets for supply and demand remains critical as some areas approach potential shortages of available space. Meanwhile, Michael Brazeal, Manager of Development Transactions for CenterPoint Properties’ Central Region, emphasized the importance of aligning speculative projects with long-term tenant demand.
“We are seeking irreplaceable infill locations to accommodate current and new tenants within our portfolio who are looking to significantly increase their supply chain efficiency,” Brazeal said, noting that many projects focus on last-mile logistics and bulk distribution.
Sustainability initiatives are reshaping industrial development, too, with tenants prioritizing energy-efficient and eco-friendly facilities. For First Industrial, environmentally conscious practices are longstanding priorities.
This trend aligns with JLL’s data, which shows that infill markets continue to push up asking rents. The average asking rent increased to $7.57 per square foot in Q3, with the Chicago North
“We have deployed energy-efficient lighting across our portfolio and are committed to building all of our new developments to LEED Silver, or better,” Moore said.