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“We were confident in the functionality, location, and aesthetics of this building. We set a high bar and challenged our team as well as our construction and brokerage partners, and they exceeded expectations on the CIC’s flagship development and lease-up."
- Brian McKiernan, SVP of Development, Central Region
Distribution centers as the new battleground: Chicago developers sharpen focus on logistics hubs.
Chicago’s industrial market is no stranger to cycles, but the current one has a defining feature: distribution centers have become the market’s battleground. As construction volumes ease and financing tightens, developers are homing in on the product type that remains most resilient — logistics hubs that tie tenants directly to highways, airports and dense population clusters.
The result is not a slowdown so much as a recalibration. According to NAI Hiffman’s Q2 2025 Construction Report, speculative projects now make up nearly 70% of new construction in the metro, a dramatic shift from the pandemic era when build-to-suit dominated. Developers are wagering that distribution centers in proven submarkets can draw tenants even without pre-leasing commitments.
That confidence is not unfounded. While overall absorption has slowed, demand for strategically located space has persisted. Infill parcels and corridors around O’Hare and I-55 remain magnets for logistics users. Smaller, midsized facilities are also outperforming, catering to regional distributors and third-party logistics firms that need space fast.
Hiffman’s Industrial Market Report underscored the point: leasing velocity in sub-200,000-square-foot buildings is holding up better than in the bulk sector. Vacancy across the metro stands near 6%, well below national averages, and distribution centers continue to anchor much of the activity.
Examples from active developers show how these trends are translating into deals.
CenterPoint Properties recently leased a newly constructed distribution center to a Chicagoland-based third-party logistics provider. The lease highlights one of the cycle’s defining themes: logistics firms are still expanding, but they are choosier than before. The fact that the project was delivered speculatively and leased quickly shows that tenant appetite remains intact in the right locations.
“We were confident in the functionality, location and aesthetics of this building,” said Brian McKiernan, CenterPoint’s Senior Vice President of Development for the Central Region. “We set a high bar and challenged our team as well as our construction and brokerage partners and they exceeded expectations on the CIC’s flagship development and lease-up.”
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