CX Insider Blog

Written By N. Oliver Maudlin, LEED AP, IES, Regional Sales Manager at Acuity Brands- Midwest

As the saying goes, a rising tide lifts all boats. Entering 2025, there is palpable momentum, fueled by transformational and dynamic investment and development, that is raising the waters of Chicagoland construction. Momentum is powerful. Momentum persists despite current and unforeseen difficulties we encounter daily. Buoyed by a fickle market, a changing administration, and other complexities, we will press on. We weather storms, we are strong and stable in the face of adversity, and we keep moving forward. As we proceed, we’ll talk about growth in vertical markets, the resilient and consistent stalwarts, and a few mega-projects on the horizon which are all fueling this bullish attitude.

First, let’s take a quick look at some data. Nationally, the ISM’s Manufacturing Purchasing Manager’s Index remains in a state of slight contraction, however, the trend is positive. December’s report registers 49.3%, up 90bps from November. Recall that a measurement above 50% indicates an expansion while a figure below is in contraction. Overall, over the last eight months we’ve seen the rate of contraction slow which is positive. The AIA’s Architectural Billing Index nationally, through November, remained flat at 49.6%. Regionally, while we sit slightly below the national average at 48.1%, we maintained our position. However, the bulls among us can justify their position by noting a continued trend in project inquiries as credit conditions continue to ease.

The commercial market is facing a welcome expansion. Renovation and revitalization remain attractive tools for owners, developers, and lenders. Fueling this outlook is an increase in leasing activity, which reached its highest point in the last five years, a net absorption rate which continues to improve, and a sustained demand for class A/Trophy assets. In fact, Class A-Asset net absorption, which is the difference between the amount of square footage that has been leased versus the amount which has been vacated, continues to trend positively, signaling a heightened demand for the tech-driven and amenity-rich office space. Look no further than the upcoming projects in the West Loop as evidence of the market’s appetite for a transformational and modern office environment. The national organizational push to return people to the office continues to drive influence and impact in Chicagoland commercial building and CRE space. Large employers such as Google, Amazon, JP Morgan, Salesforce, AT&T, and the federal government are leading the local Return to Office charge which is helping to drive this growth.

The healthcare sector, driven largely by growth in the ambulatory space, will continue to see expansion in Chicago. Major hospital systems such as Northwestern and Advocate have formed and are executing strategies based on an expansion of their outpatient network. The geography of these new clinics allow for a more equitable distribution of healthcare access across our market while easing the overall reliance on standalone hospitals. In addition to the continued rampant growth in ambulatory care, centralized hospital campuses are once again predicted to show expansion in both new construction and renovation. An example of this is Advocate’s recently announced transformational $1B 10-year investment on the south side at a former US Steel South Works site.

The confluence of historical stalwarts, residential and renovation, continues to highlight a transformational and dynamic opportunity. The innovative LaSalle Corridor Revitalization project, whose aim is to adapt and renovate existing vacant office space into vibrant mixed-use developments, continues to press forward at an accelerating pace. Holistically, renovation opportunities across our market continue to climb. Owners and developers are responding to the times by investing in more technology and finding ways to increase productivity while adapting existing spaces.

In closing, 2025 will be anything but dull, given the announcement of several mega-projects in Chicagoland. Examples include The PsiQuantum Micro Computing Park, CTA’s Red Line Expansion, and the 1901 Project surrounding the United Center. These projects alone represent billions of dollars in private and public investment. As Chicagoland continues to be the national leader in data management, logistics, and technology, 2025 brings a heightened call for collaboration. As we said last year, collaboration between all stakeholders ranging from the design community to developers, to contractors and distributors, will only aid in pushing this momentum forward. Our business can be a transactional business. Let’s continue to be transformational leaders in a transactional world.

Here's to a prosperous and healthy 2025!