Industrial demand is coming back, and the market has less new space to absorb it than at any point in a decade. This week's Research Round-Up looks at a tight Great Lakes market that is building to order, the national supply picture and the big-box corridor that keeps leasing.
1. Cushman & Wakefield: Cleveland is building to suit
1.8 million square feet. That's Cleveland's industrial construction pipeline at the end of the third quarter, nearly double the 957,547 square feet underway in the second, according to Cushman & Wakefield's Q3 MarketBeat, published Oct. 7. Nine projects totaling 1.1 million square feet broke ground, led by a 650,000-square-foot build-to-suit in Walton Hills for a Cleveland Clinic operations center. All five buildings delivered in the quarter were build-to-suit.
What the numbers say: Demand is mixed. Leasing rose 28% to 3.1 million square feet across 149 deals, but net absorption turned negative, at minus 176,070 square feet, because 431,180 square feet of sublease space came back on the market. Vacancy edged up to 4.0% from 3.8%, still tight by national standards, and average asking rent rose 8 cents to $5.76 a square foot. Speculative construction picked up, too, to four projects and 238,370 square feet from 22,000 in the second quarter.
Why it matters: Cleveland shows what a tight Great Lakes industrial market looks like. Vacancy is low, rents are modest by coastal standards, and very little space is being built without a tenant attached. For a manufacturer that wants to expand there, the likely path is a build-to-suit and a longer timeline, which makes communities with ready sites more valuable.
2. Colliers: Demand is outrunning new supply
59 million square feet. That's U.S. net industrial absorption in the second quarter, Colliers reports, the first time since 2022 that demand exceeded new supply. National vacancy fell to 7.3%, and completions dropped to their lowest level since 2016. Colliers says the improving fundamentals are "laying the groundwork for the next industrial cycle."
What the numbers say: The building boom of 2022 and 2023 left a cushion of empty space. That cushion is now shrinking from both ends, with tenants taking more space just as developers add less. When few new buildings are arriving, even a modest pickup in demand shows up quickly in vacancy.
Why it matters: When supply tightens, companies that need modern space quickly are the first to run short of options. That tends to push more projects toward build-to-suit and toward communities that can deliver a graded, served site on a schedule. National third-quarter numbers should arrive in the next few weeks, and they'll show whether the turn held.
3. JLL: Chicago's big boxes keep leasing
4.5% vacancy. That's where JLL put Chicago's industrial market at the end of the second quarter, down from 4.7% in the first quarter and 5.0% a year earlier. Leasing reached 10.6 million square feet, below the first quarter's 14.4 million but the fourth straight quarter above 10 million.
What the numbers say: The I-80 corridor around Joliet did much of the work. KeHe Distributors leased 1.2 million square feet of speculative space at Cherry Hill Business Park, and Hyundai Translead signed for 906,500 square feet at Clarius Park Joliet, its second major Chicago lease this year. Developers noticed. Speculative starts reached 2.0 million square feet, the most since the third quarter of 2024.
Why it matters: Chicago is the country's biggest test of demand for large distribution and industrial buildings, and it keeps passing. Interstates, rail and a huge consumer market still win occupiers. It's also the other side of the Cleveland story: in a market this deep, developers will build without a tenant, and companies can move fast.
The Location Decision takeaway
Three markets point the same way. New industrial supply has slowed sharply, and the space that's left is getting taken. Where developers trust demand, as along I-80, they're building on spec again. Where they're less sure, as in Cleveland, the next building waits for a signed tenant.
That makes readiness the advantage for economic developers. A community with a graded site, power at the property line, transportation access and a workforce plan can hand a company the months it would otherwise lose waiting on a build-to-suit. In a tightening market, that time is worth as much as an incentive.
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