“Infill areas in and around Chicago, along with West and Southwest suburbs, are seeing the most activity,” Ryor said. “The I-55 and I-80 corridors continue to be leaders due to the availability of developable land for industrial based buildings.”
Financing is now the central constraint on new construction. Deals are still getting done, but capital partners are applying stricter underwriting standards and choosing carefully.
“Financing for new deals is getting better but securing both debt and equity remains a challenge,” said Steve Schnur, chief operating officer at CRG. “Capital partners have plenty of opportunities and can be more selective on what deals they fund.”
That selectivity is reshaping the scale of projects that move forward. Smaller buildings are easier to finance, require fewer approvals and fit neatly into infill locations. Industrial developers are also competing with acquisitions and distressed opportunities in other asset
classes, making it harder to win the attention of cautious investors.
Capital is also flowing toward multifamily acquisitions and distressed office,
forcing industrial developers to fight for the same pool of funds. That competition has raised the bar on what qualifies as a financeable deal, especially in Chi-
cago where investors remain cautious despite strong fundamentals.
“Capital partners are also being very diligent in underwriting projects which
Image by EFAFLEX Schnelllauftore from Pixabay
DEVELOPERS (continued from page 1)
results in costs, rents, cap rates being further challenged and scrutinized with higher levels of conservatism,” Schnur said. “Some equity and debt groups appear to be more interested in smaller projects that require less levels of approval.”
For a fully integrated builder like Clayco, which operates through subsidiaries including design-build firm Lamar Johnson Collaborative and developer CRG, this environment favors experience, scale and efficiency. Firms that can streamline costs and deliver quickly are more likely to push projects across the finish line.
At the same time, tenants are exerting more influence over how projects are designed and where they are built. Flexibility has emerged as the defining requirement, shaping decisions around power, parking and expansion capacity.
“Tenants are prioritizing flexibility,” Ryor said. “Key features include expansion ability, power availability to the building site, multiple entrance access points and trailer parking or ability to add more.”
Manufacturing users in particular are making high-capacity power a non-negotiable. As automation and advanced production processes reshape the industrial landscape, developers who
can deliver reliable power access hold a clear advantage. This has eliminated some otherwise attractive sites and reinforced the selective nature of today’s cycle. Those constraints are shaping not only which projects move forward, but also how developers design buildings to ensure they can adapt as tenant requirements evolve.
While the slowdown has raised concerns in some corners, Clayco leadership views
restraint as a stabilizing force. Chicago’s market avoided the kind of overbuilding that plagued other metros during the post-pandemic boom, and that discipline is now a competitive strength.
“There are definitely opportunities,” Ryor said. “Development in Chicago has shown quite a bit of reserve over the past couple of years which has helped avoid oversupply.”
That restraint is paired with enduring fundamentals that make Chicago one of the nation’s most important logistics hubs. Its combination of airports, rail networks, interstate highways, utilities, and skilled labor provides a foundation few markets can match.
“Fortunately, greater Chicagoland has attractive amenities such as multiple airports, a network of interstates and railroads, land, ample resources such as water and power, and an educated and strong workforce,” Ryor said. “These assets position Chicago to continue to be a big industrial market with opportunities for years to come.”
The Chicago industrial pipeline may not be surging, but it is far from stagnant. Developers are responding to tenant needs, capital constraints, and vacancy levels with precision rather than speed. That selectivity could prove to be the market’s greatest strength in the years ahead.
For Clayco, which has delivered major industrial, manufacturing and logistics projects nationwide, Chicago’s current cycle is less about volume and more about positioning. Projects that do move forward are designed to last, aligning with tenant requirements and market fundamentals that have kept the region competitive for decades.
Trevor Ryor
Steve Schnur
Surging demand for neocloud solutions? It’s happening now, and it’s big news for data centers
By JLL
An insatiable appetite for artificial intelligence by consumers across the globe and a limited supply from traditional providers is fueling a surge in demand for neocloud solutions.
Neoclouds are defined as specialized cloud providers offering flexible and on-demand access to graphics processing units (GPUs) critical for AI, blockchain, gaming and scientific workloads. Neoclouds are also known as GPU-as-a-service (GPUaaS) by merit of their ability to allow customers to select tailored solutions and lower costs than hyperscalers through direct hardware partnerships and focused service offerings.
The rise of neocloud infrastructure, which provides a clear alternative to
hyperscalers, will continue, according to JLL, as customers demand flexibility, scalability and cost advantages for specialized AI infrastructure that some traditional data centers cannot adequately support.
JLL analysis shows that the global neocloud segment will potentially expand by a compound annual growth rate of 82% between 2021-2025, as competition for AI capacity intensifies and access to GPU resources surges.
“Demand for AI infrastructure is growing at an exceptional pace, and the global data center market has become capacity constrained. Neoclouds have developed an advantage over traditional cloud providers by moving faster and pricing lower with flexible terms. As AI shows no signs of slowing, its success
will rely on accessibility to GPU infrastructure, which neoclouds specifically cater to,” said Andrew Batson, JLL Head of Data Center Research, AMER.
The appeal for neocloud infrastructure globally is multi-faceted and will remain front-of-mind as AI usage accelerates further. According to JLL, a major advantage for neoclouds is their ability to quickly deploy high-density GPU infrastructure versus multi-year builds common in hyperscale data centers.
However, the rise of neocloud infrastructure is not expected by JLL to be a detriment of hyperscalers. Given the specialization in AI-workloads that characterize neoclouds, hyperscalers will be better equipped to provide the diverse range of computing services preferred by many global enterprises.
From an investment standpoint, the risk profile of neoclouds differs from hyperscalers. Neoclouds are characterised by higher capital requirements and sometimes shorter lease terms, creating more immediate risks. However, risks are balanced with the rental rate premium associated with neoclouds versus traditional data center tenants.
“Funding will be a major factor to translate the potential of neoclouds into a reality capable of handling the AI load. Building GPU infrastructure is capital-heavy, and investors should have a clear vision for delivering a viable business model and support from key clients before undertaking an entry into the neocloud space”, said Muhd Syafiq, Director of Data Center Research, Asia Pacific, JLL.
Image by kp yamu Jayanath from Pixabay.
Industrial absorption numbers take a dip
By NAIOP
Economic uncertainty caused by shifting tariff policies and persistently high interest rates have taken their toll on industrial real estate activity, according to the latest report from the NAIOP Research Foundation.
NAIOP reported that only 27 million square feet of industrial space were absorbed in the first half of 2025 and demand shrinking by 11.3 million square feet in the second quarter –the first quarterly decline since 2010.
According to the NAIOP Research Foundation’s latest Industrial Space Demand Forecast, net absorption is expected to be nearly flat over the second half of 2025, but demand will begin to grow again in 2026.
Demand for industrial space is expected to recover somewhat after occupiers have time to adjust to a new tariff regime, according to the report. But higher tariffs and slowing employment growth will likely result in slower demand growth than that experienced from 2020 to 2022 or in the six years that preceded the pandemic.
Absorption is expected to rebound beginning in the second quarter of 2026, with full-year absorption totaling 119.3 million square feet. Another 109.7 million square feet of absorption is expected in the first half of 2027.
Demand for industrial real estate has been influenced by several factors, according to the report:
• Changes in U.S. trade policy, which could alter the strategies of occupiers that import raw, intermediate and finished goods, as well as those that export products abroad.
• Slow employment growth from May through July that suggests a broader slowdown in the economy is underway.
• Higher interest rates in recent years. Many expect the Federal Reserve to cut the federal funds rate by the end of 2025 if the employment market remains soft. The report notes that “falling rates and greater clarity on tariffs could reduce uncertainty and spur greater demand for industrial space, leading to a return to positive absorption in early 2026.”
“While the latest forecast reflects the impact of tariffs and a cooling economy, history has shown that industrial real estate remains a resilient sector,” said Marc Selvitelli, president and chief executive officer of NAIOP.
“We anticipate a measured recovery in demand beginning in 2026 as markets adjust and fundamentals stabilize, positioning the sector for a return to stable growth.”
The semi-annual report is authored by Hany Guirguis, Ph.D., dean, O’Malley School of Business and professor, economics and finance, Manhattan College;
"While the latest forecast reflects the impact of tariffs and a cooling economy, history has shown that industrial real estate remains a resilient sector."
Image by Freepik.
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
P: 847.392.6900
Website: victorconstruction.com
Key Contact: Zak Schuttler, President, ZakS@victorconstruction.com
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.
ECONOMIC DEVELOPMENT CORPORATION OF MICHIGAN CITY
Two Cadence Park Plaza
Michigan City, IN 46360
P: 219.873.1211
Website: www.edcmc.com
Key Contacts: Clarence Hulse, Executive Director, chulse@edcmc.com Karaline Cartagena Edwards, Economic Development Manager, kcedwards@edcmc.com
Services/Demographic Info: Up-to-date inventory of commercial buildings, site selection and orientation tours
Incentives: Tax-Increment Financing, Façade Improvement Grants, Property Tax Abatements, Enterprise Zones, Job Training Programs
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.
FINANCE FIRMS
MARQUETTE BANK
10000 W. 151st Street
Orland Park, IL 60462
P: 708-364-9131
Website: emarquettebank.com
Key Contact: Gene Malfeo, Senior Vice President, gmalfeo@emarquettebank.com
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.
