The Chicago Commercial Real Estate Market

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Chicago, Illinois, thrives in the midwestern United States, perched on the southwestern shore of Lake Michigan. It is the third most populous city in the country, with over 2.7 million residents, and is a major center for culture, finance, industry, and transportation. 

Chicago brokers, buyers, tenants, and landlords close more deals faster using Crexi’s commercial real estate suite. Across the US, investors and organizations eye the Chicago property market as a thriving investment option with a growing population, stable fundamentals, and promising ROI. 

Brokers harness Crexi’s listing, lead management, and marketing tools to win deals in Chicago and the surrounding cities. Crexi’s simple, robust marketplace allows Chicago commercial brokers to directly connect with buyers and tenants who’ve already indicated an interest in the MSA. Crexi’s tools have supported more than $330 billion in property transactions and marketed properties totaling more than $2 trillion in value.

Crexi proudly serves Chicago, Naperville, Joliet, Aurora, and the entirety of Cook County as the fastest-growing online commercial real estate marketplace.

The State of Commercial Real Estate in Chicago

Located along the shore of Lake Michigan, Chicago is home to the second-largest central business district in the country and one of the most vibrant economies in the world. 

An aerial view of the Chicago central business district

The city has a diverse economy with sectors including finance, manufacturing, healthcare, education, and tourism. Home to many Fortune 500 companies, it’s a top destination for domestic and international tourists. 

There are many reasons to invest in commercial real estate in Chicago, Illinois. The city’s strong economy and diverse population provide a stable market for businesses. Additionally, the city’s central location makes it accessible to a large customer base. The city also has a well-developed infrastructure with a variety of transportation options. All of these factors make Chicago an attractive place to invest in commercial real estate.

Chicago Regional Breakdown

Chicago remains the third-largest city in the U.S., with the population up nearly 2% over the past decade. Between 2010 and 2020, the Windy City added nearly 51,000 residents, while Cook County grew by almost 81,000 over the same period:

  • Chicago is home to over 2.7 million in the city, with 9.48 million residing in the metropolitan area.
  • The population of Chicago increased by 1.9% over the past ten years, according to the U.S. Census Bureau.
  • Metropolitan Chicago includes Cook and DuPage counties.
  • Satellite cities in the Greater Chicago Region include Aurora, Joliet, Naperville, Waukegan, and Gary, Indiana.
  • The median age in Chicago is 38.5, about the same figure as Illinois and the U.S. 
  • 53% of the residents in Chicago are between the ages of 20 and 59.
Street level view of a wide street in Chicago flanked by warm street lamps.

Chicago Job Market

Non-farm employment in metropolitan Chicago increased by 201,200 in August 2022, according to the U.S. Bureau of Labor Statistics. The region boasts a local job gain of 4.4% compared to a 3.8% national increase. While the demand for blue-collar employment remains strong, there’s also an increasing demand for tech jobs. Chicago recently ranked fifth for the most tech jobs posted, slightly behind Los Angeles: 

  • GDP for Chicago-Naperville-Elgin MSA is $693 billion, an increase of 32% over the past ten years.
  • Unemployment in Chicago is 5.0% versus 6.6% one year ago (August 2022 vs. August 2021).
  • Leisure and hospitality, professional and business services, trade and transportation, education and health services, manufacturing, and construction post the biggest job gains, according to the BLS.
  • Median household incomes increased by 4.0% year-over-year, while median property values grew by 3.26% over the same period (Data USA).
  • Chicago has one of the largest central business districts in the world and is a major financial center, with dozens of Fortune 500 and 1000 companies calling the metropolitan area home.
  • Top employers in metropolitan Chicago include the City of Chicago, the U.S. Government, Cook County, Northwestern Memorial Healthcare, and Chicago Public Schools.
  • Nearly 90% of the residents are high school graduates or higher, while 41% hold a bachelor’s degree or an advanced degree.
  • DePaul University, Loyola University, and the University of Chicago are three of the many colleges and universities in the Chicagoland area.
  • Chicago is a major global transportation hub with the Port of Chicago, two international airports, seven interstate highways, and freight and commuter rail service.
The lights of a train cutting through a city captured through long exposure.

Chicago Industrial Market

Industrial leasing activity in Chicago totaled nearly 34 million SF through Q3 2022, with Uline and Home Depot each signing leases for 1 million square feet. Overall asking rents for industrial space in Chicago are on the rise as vacancy levels continue to decline, according to Cushman & Wakefield Q3 2022 Chicago Industrial Report:

  • Total industrial inventory: 1,210,372,679 SF
  • Average asking rent: $6.34/SF per year, NNN
  • Vacancy rate: 3.9%
  • Absorption: 21,895,899 SF through Q3 2022
  • Leasing activity: 33,905,091 SF YTD
  • Key lease transactions by tenant: Uline 1,048,961 SF, Georgia Pacific 1,000,560 SF, Home Depot 1,000,000 SF, RJW Logistics 814,848 SF
  • New construction: 19,823,231 SF completed through Q3 2022, with 27,524,149 SF under construction
  • Investment sales trends: $1,399,000,000 total investment acquisitions, average sales price $85/SF, market cap rate 6.8% (NAR Commercial Metro Market Reports Q1 2022)
  • Largest industrial submarkets: Chicago South, Interstate 80 Corridor, Western Cook County, Interstate 55 Corridor, O’Hare

Learn more about Chicago industrial space for lease.

Chicago Office Market

Although the office market in Chicago appears less front-and-center than other gateway markets, deals in the Windy City are still getting done. The NAR reports over $1.5 billion in office buildings changed hands in Q1 2022, with a transaction sale price of $208/SF and a market cap rate of 7.5%.

Chicago skyline on the water.

Central Business District

Employment trends in Chicago are moving in the right direction, creating a slow but steady increase for office space in the Chicago Central Business District. According to the most recent report from Cushman & Wakefield, leasing activity in top-tier assets is driving the CBD, surpassing more than 4.5 million square feet year-to-date:

  • Total office inventory: 143,514,345 SF
  • Overall average asking rents: $42.21/SF per year, full service gross
  • Vacancy rate: 21.9%
  • Absorption: -2,231,331 SF (through Q3 2022)
  • Leasing activity: 4,520,961 SF YTD
  • Key leases by tenant: Morningstar 266,167 SF, Cook County 106,402 SF, Optiver US LLC 99,586 SF, Constellation Energy 44,379
  • New construction: 2,063,546 SF currently under construction
  • Largest CBD office submarkets: West Loop, Central Loop, East Loop, River North

Suburban Office Market

Leasing activity in Suburban Chicago has soared by nearly 30% year-over-year, with the office submarkets of O’Hare and Eastern East/West Corridor accounting for nearly half of the deals this year. Here are the most recent stats for the Chicago suburban office submarkets from Cushman & Wakefield as of Q3 2022:

  • Total office inventory: 99,383,465 SF
  • Overall average asking rents: $24.76/SF per year, full service gross
  • Vacancy rate: 24.8%
  • Absorption: -916,795 SF YTD
  • Leasing activity: 3,798,653 SF (through Q3 2022)
  • Key leases by tenant: Life Fitness 56,769 SF, Regal Rexnord Corporation 19,994 SF, International Contractors 17,746 SF, Tecta America 17,356 SF
  • New construction: 0 SF currently under construction
  • Largest suburban office submarkets: Eastern East/West, Central Northwest, Central North/Tri-State, Western East/West

Learn more about Chicago office space for lease. 

Interior of a clean and minimalist clothing store.

Chicago Retail Market

Average rental rates for retail space in Chicago are gradually increasing, with foot traffic picking up in both urban and suburban centers. Lee & Associates reports vacancy in the Chicago retail market decreased to 5.8%, with absorption totaling more than 3.3 million square feet over the past 12 months:

  • Total retail inventory: 583,661,167 SF
  • Average asking rent: $17.74/SF per year, NNN
  • Vacancy rate: 5.8%
  • Absorption: 3,341,684 SF (12 month net absorption)
  • Key leases by tenant: Wayfair 152,000 SF, Macy’s 120,000 SF, Pete’s Market 87,445 SF
  • New construction: 1,313,067 SF under construction
  • Investment sales trends: $925 million in acquisitions in Q1 2022, average sales price $167/SF, cap rates 7.3% (NAR Commercial Metro Market Reports Q1 2022)
  • Median household income: $78,166, with 67% of households earning $50K per year or more

Learn more about Chicago retail space for lease.

Chicago Multifamily Market

Multifamily rent growth in Chicago increased by over 16 year-over-year, about four times the historical average. Matthews Real Estate Investment Services reports that 41 of Chicago’s 43 submarkets posted rent gains, many of over 10%. Downtown Chicago has seen the most prominent rent increases, and also one of the highest gross sales volumes over the past year. 

Street level view of a Chicago traincar.

Here are the most recent Chicago multifamily performance statistics, according to the Q2 Multifamily Market Insights report from Northmarq:

  • Total housing units: 3,956,161
  • Renter occupied: 34%
  • Multifamily inventory: 1,542,903 units
  • Average asking rent: $1,748
  • Rent growth: 16.2% year-over-year
  • Vacancy rate: 4.8%
  • New construction: 9,317 units delivered through Q2 2022, with 2,678 units under construction
  • Investment sales trends: Median $160,800 per unit, up 15% from 2021
  • Median household income: $78,166
  • Per capita income: $42,380
  • Median age: 38.5 years

Learn more about Chicago multifamily property for sale.

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Shanti Ryle
Shanti Ryle

Content Marketing Manager

Shanti leads Crexi's content marketing strategies with 7+ years of content development experience, creating everything from blog posts to award-winning podcasts. Previously, she worked on content teams at Snapchat, Weedmaps, and HopSkipDrive as well as developed copy, articles, and media for freelance publications.

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