Brown Market Review: Positive outlook for O’Hare industrial

February 2025 — Just two months into 2025, the O’Hare industrial market is in expansion mode again, with small to mid-sized businesses and data centers leading market activity. A February Market Review by Brown Commercial Group points to steady leasing activity, positive net absorption and stable or declining vacancy rates across O’Hare and the overall Chicago industrial market for the balance of 2025.

The largest share of new leasing transactions in the Chicago industrial market during 2024 was in the 10,000 to 60,000-square-foot range. The 8.6 million square feet of leases in that size range accounted for 28 percent of all new leasing activity last year. Many submarkets, including O’Hare, have a limited amount of available industrial space under 50,000 square feet for sale. While some companies are finding off-market space to lease or buy, others have been forced to delay new acquisitions. “We expect space availability for smaller tenants to increase moderately in 2025,” said Candace Scurto, a Broker with Brown Commercial Group.

O’Hare Industrial Fundamentals

According to Colliers Q4 2024 research, among the key fundamentals shaping the O’Hare industrial market are a 4.4% vacancy rate, which is lower than the overall Chicago average of 5.4%. Rent growth over the past 12 months was 3.4%, close to the Chicago rate of 3.3%.

Since, 2018-2019, the O’Hare submarket has seen gross rents for buildings of 50,000 square feet and smaller increase from $8 to $9 per square foot (psf) to $12 to $14 psf. Those lease rates are higher than rates in larger buildings, were rents average close to $11 psf, a 15% increase from the overall Chicago market, according to CoStar.

O’Hare Industrial Rents

Industrial tenants are now seeing rental rates stabilize at the higher levels, as many leases signed before the pandemic have recently renewed at the higher rates. “Moving into 2025, tenants that have been waiting on the sidelines now have a clearer path forward and can make decisions about space usage and whether they want to expand their operations,” said Mason Hezner, Vice President of Brown Commercial Group. “We think Chicago’s dynamic industrial market, with its ties to O’Hare Airport and access to strong labor pools, will benefit from these dynamics.”

Industrial sale pricing is also leveling off and is trending toward $90 to $110 psf versus the $50 to $70 psf range recorded before the pandemic. Despite interest rate decreases in the last half of 2024, there is widespread consensus that rates will remain “higher for longer.” While some companies are now accepting the higher rates as the new normal, others may scale back or delay decisions until rates drop further.

For more on the O’Hare industrial market, contact Candace Scurto or Mason Hezner.