Chicago Big-Box Industrial Developers Slowly Turn The Spigot Back On

Chicago’s big-box industrial developers are starting to build more new construction, even as rent growth stalls and tenants take twice as long to fill new space as they did during the pandemic-era boom.

The pipeline of new construction of the city’s big-box spaces, defined as modern distribution facilities 200K SF and larger with clear heights of at least 28 feet, hit 18 projects by the end of March, according to a Q1 report from Colliers. The pipeline totaled 10.2M SF, with 10 build-to-suit developments totaling 7.2M SF and eight speculative projects totaling 3M SF. 

That’s up from the 13 projects and 8.2M SF underway in Q1 2025, with just three speculative projects.

But even though new construction has ticked up, rents have remained effectively flat year-over-year for large industrial properties. Rents are starting at $7.55 per SF, down from $7.65 per SF last year. 

Diana Perez, director of industrial research at Colliers, said landlords are offering more concessions, like free rent, and escalations are remaining flat. 

“It's coming to a plateau where lease rates are not increasing as much as they were in 2022 and 2023,” she said.

Rental rates vary depending on the size range of the big-box segment. Average starting rents are highest for smaller big-box spaces where demand is strongest, which command a premium, with 200K SF to 499K SF buildings asking $8.18 per SF. In comparison, 500K SF to 749K SF spaces are asking $6.17 per SF, and buildings of 750K SF or larger are asking $6.41 per SF.

New leases and expansions for Chicago’s big-box industrial hit 8M SF in Q1, up 110% from the 3.8M SF signed one year ago. Tenants signed 24 new leases during the quarter, including five exceeding 500K SF. The largest deal was RJW Logistics’ 1.2M SF build-to-suit lease in Montgomery.

“There's steady demand because leasing activity has continued to be steady,” Perez said. 

The steady leasing activity is still a far cry from the area’s peaks when Chicago industrial was at its hottest in 2022 and 2023. The average time on the market before big-box space leases up is currently about two years, double the leasing timeline during the city’s industrial boom, Perez said. 

Vacancy is highest in the middle tier of big-box space, with 500K SF to 749K SF buildings at 11.16%, compared with 8.40% for 200K SF to 499K SF properties and 8.09% for buildings of 750K SF or larger. 

“Tenants are not really looking for that type of space, that size range,” Perez said.

The big-box industrial vacancy rate went up in the first quarter of 2026, even though there was positive net absorption, as some of the new leases signed this quarter won’t lower the rate until tenants officially move in.

Overall vacancy rose 55 basis points quarter-over-quarter to about 8.8%, up from 8.3% at the end of last year, though still below the 9.4% mark from Q1 2025. Vacant speculative deliveries and second-generation space coming back to the market were the main drivers of the increase.

But Perez thinks the overall vacancy rate will start to dip as the year progresses and tenants that have signed large leases officially move into their space. 

“I think we'll probably be in the low eights [in Q2] because there's a couple big tenants that are not moving until the third quarter, so it all depends on when there's big tenants moving in that second quarter,” Perez said.