Key Points:

• After peaking in 2021, transaction volumes have softened alongside leasing demand, signaling a more cautious phase in investor activity across the region.
  
  
• Buyers are gravitating towards smaller, more flexible industrial properties, while developers have typically delivered larger ones. 
  
  
• Over time, long-term drivers of industrial demand should help close the supply and demand gap.
  
  

In this third and final installment of the Midwestern industrial property trends series, we review the state of industrial purchase markets in each city and highlight the types of properties currently attracting the most investor interest. The previous posts in the series explored the characteristics and differences among cities’ existing industrial stock, and examined leasing trends and variations by building size.

“The supply and demand mismatch has opened a gap between what’s being built and what buyers want. Over time, long-term drivers of industrial demand should help close this gap.”

Chicago Dominates on Volume, but Minneapolis is the Fastest Moving

Industrial market size and pace vary significantly across major Midwestern markets. The chart below ranks the 10 largest Midwestern markets by purchase activity. Blue bars represent industrial CRE transaction volume (in billions of dollars) on the left axis. Chicago leads by a wide margin – more than double that of the next largest market, Minneapolis. Columbus, OH, Indianapolis and Detroit round out the top five.

Because some markets have more industrial space than others, purchase activity is also scaled by inventory. Dividing transaction volume by inventory yields a turnover rate, shown as a green diamond on the right axis. Turnover provides context for headline volume and serves as a quick gauge of market liquidity. Higher turnover typically signals easier entry and exit for investors, lower execution risk, shorter listing periods, and quicker closings. It also influences negotiating leverage: existing owners typically have more leverage in faster markets, where higher turnover indicates stronger demand and more prospective buyers. Slower markets tend to favor buyers. By this measure, Minneapolis has the highest turnover, while Kansas City ranks lowest. Interestingly, Detroit – home to the Midwest’s second-largest city industrial footprint– has the second-lowest turnover among these 10 cities.

^{* Methodology: Transaction volume used is last twelve months, but inventory uses the average of the last four quarters of existing stock to account for new deliveries included in the transaction activity over time.} 

Transaction Volume Stalls Alongside Leasing Activity

Over the past five years, collective industrial transaction volume in the 10 Midwestern cities shown in the chart below has generally mirrored national trends. After peaking in late 2021, volume declined for two years, reaching a low of $8.6 billion in the first quarter of 2024. It then rebounded to $11.7 billion in the second quarter of 2025 before tailing off modestly in the third quarter of 2025 to $11.3 billion – the first decline in 18 months. This suggests that industrial property purchase demand has stalled as industrial leasing demand grapples with growing uncertainties around where, when and how much space tenants need. In commercial real estate (CRE), demand to lease typically drives demand to own, so today’s uncertainty in leasing is weighing on the purchase market.

^{The market correction is already underway—new projects are returning to pre-pandemic sizing norms.}

A Year of Gains, With Notable Exceptions

Over the past year, both property prices and transaction volume grew compared to the prior year in most of the top 10 Midwestern cities. The chart below plots annual transaction volume growth on the horizontal axis, and annual property price growth on the vertical axis. Prices and transaction volume both increased in the cities in the top-right quadrant. Cleveland led in price growth, while Kansas City topped volume growth. Detroit stands alone in the lower-left quadrant, with double-digit declines in both prices and volume. Milwaukee is the only city where prices fell as transaction volume grew. Chicago was little changed in either measure, likely due to the size of its market.

Kansas City’s surge in volume is notable because it also has the lowest turnover rate, which may seem contradictory. The explanation lies in a handful of very large transactions last year, including one large data center deal. Without these, transaction volume in Kansas City would have been much lower, which is likely why prices there have not responded as significantly to volume growth. 

Sagging Demand for Large Buildings

Across the top five Midwestern cities, buyers are favoring smaller industrial assets, though Columbus has bucked this trend over the past three quarters, and Indianapolis briefly did so in 2023 before resuming its decline. Since the pandemic, average transacted sizes have fallen in all five markets, with the sharpest drops in Columbus and Indianapolis. In Columbus, the average property size fell by 27 percent from 340,000 square feet in the fourth quarter of 2019 to 250,000 in the third quarter of 2025, while Indianapolis declined by 42 percent from 295,000 to 170,000 square feet over the same period. The last time average transacted building sizes fell this substantially in Columbus and Indianapolis over a five-year period was in 2014. 

So, What’s the X-Factor?

The Midwestern industrial market has entered a transitional phase. Peak average deal sizes post-pandemic remain on par with pre-pandemic levels, despite the surge of deliveries of larger buildings from 2021 to 2023. This suggests that demand for large spaces existed pre-pandemic and that low interest rates accelerated developer response. Today, as leasing momentum cools, investors are becoming more selective, favoring smaller properties over the massive buildings that dominated recent years. 

Developers are now starting to adjust, delivering smaller properties in 2024 and 2025, but many of the largest properties completed earlier are now facing rising vacancies. The supply and demand mismatch has opened a gap between what’s being built and what buyers want. Over time, long-term drivers of industrial demand should help close this gap. Until then, liquidity and turnover will remain key indicators of which cities are best positioned to lead the region’s next growth cycle.