Windy City’s Expected Development Boom Discussed At Bisnow's Chicago State Of The Market Event

Chicago is starting to see a spike in the development pipeline, with sectors like industrial and multifamily projected to recover further next year. 

And with factors working in their favor like interest rate cuts and strong commercial real estate fundamentals in industrial, Chicago developers are regaining confidence and have started to make plans for 2025.

Benjamin Skelton, CEO and co-founder of Cyclone Energy Group, a Chicago-based firm that specializes in energy-efficient building design and optimization, has been in Chicago’s CRE sector for 15 years. He has new developments in the works in the city and nationwide that will take advantage of these positive trends.

“I expect to see some major groundbreakings in late Q1 2025 in Chicago and nationwide with multifamily, data centers, industrial and other sectors,” he said. 

Skelton shared his thoughts at Bisnow’s Chicago State of the Market event on Oct. 24, where he joined other panelists speaking about the city's transformative projects.

Bisnow spoke with Skelton about Chicago’s development trends, what to expect with the recent interest rate cut, and some of the projects in Cyclone’s pipeline. 

Bisnow: What development trends are you seeing in Chicago?

Skelton: Multifamily is on the edge of gearing back up. There is a new wave of property entitlements happening, and a large rental market is predicted over the next four years with developers beginning to act early in 2025.

In the industrial space, we’ve seen a leveling of speculative developments but a marked uptick in the build-to-suit market. 

Nationally, we are seeing a similar trend with e-commerce, grocery and last-mile delivery. These types of centers tend to have users with strong environmental, social and governance goals around sustainability and carbon accounting. Decarbonization is a hot topic because it is about to impact everyone in Chicago and will affect our collective future. 

Nationally, data center development seems to be nearing a plateau, but it is a very strong market for the foreseeable future.

Bisnow: What was one of the hot topics discussed at the event?

Skelton: One topic addressed was: “What will be the next hot market, and what neighborhood will it be?” 

Also, we're seeing a lot of activity in Fulton Market, but I'm interested to see what happens in the Loop with Google coming in and JPMorgan Chase staying.

Bisnow: How do you think the recent interest rate cut is affecting real estate development in Chicago?

Skelton: There is a lot of entitlement activity, which is a good sign that further rate cuts will start shaking loose bigger developments, particularly on the multifamily front and even potentially Fulton Market offices. We have a couple of large developments scheduled to break ground between now and the end of Q1 as an early indicator.

Bisnow: What strategies does Cyclone Energy Group use to operate with Chicago’s traditionally strict building protocols?

Skelton: While we’ve had no lack of new opportunities, a lot of projects in the city for the past 15 months have had a common theme of hurry up and wait, where they’ve been halted because of Chicago bureaucracy. We are fortunate that we have a nationwide reach and have taken on large developments in other markets, particularly in Miami and Nashville. Chicago is the market I love, and I want it to always be the place where we are building smartly, but there are some economic and political struggles we need to solve here, most notably the permitting process.

Bisnow: What projects does your company have in the works?

Skelton: In Chicago, we are in the final stages of finishing Helmut Jahn’s iconic tower off Grant Park, 1000M. We are particularly proud to have been part of this project for the late legendary architect. It is a great developer that we've had a great relationship with on past projects.

We are finishing decarbonization planning for an iconic Chicago supertall building. It is a real challenge to take a 50-plus-year building and try to reinvent how it can make deep cuts to its energy signature.

In the Miami market, we are finishing the large rental tower Forma for Crescent Heights, which is also the developer of the 80-story Nema at the southern focal point of Chicago’s Grant Park. We are starting a massive two-tower condo development just down the street in Miami for Fortune International Group.

We also have several hyperscale data centers in early design phases that we are expecting to get under construction in 2025.

Bisnow: How do you see Chicago’s development landscape shifting over the next 10 years, and how is Cyclone Energy Group preparing for the future? 

Skelton: There will be strong rental growth in the next four years, so multifamily development will continue to rise throughout the skyline.

Last quarter, the downtown vacancy rate of office space was at a massive 29%. The trend is also impacting new buildings in popular areas like Fulton Market. That should be a concern, as it is unclear what will reinvigorate the Loop market.

I could see the move-in of Google at the Thompson Center being the beginning of making the Loop a cool place to be again. With law firms and banks moving out of the Loop to current hot spot areas, maybe that will make them a bit saturated and drive the tech spaces back into the Loop. 

We’ve also seen the start of what will be an explosive trend in decarbonization. Like New York’s Local Law 97, the city will implement an ordinance that impacts new development and, most importantly, existing buildings. 

While it isn’t clear yet which sticks or carrots the city may employ, everyone is going to be asked to reduce their energy consumption. Similar ordinances and laws have been introduced in New York, Denver and St. Louis, which have fines and penalties, many of which have been a shock and raised objections. 

Chicago is a second city in more ways than one: We are not on the leading edge of these policies, but we are very good at learning from what other cities have done. Chicago's ordinance is likely to be put into place by 2027, so we'll see what comes of that. 

This article was produced in collaboration between Studio B and Cyclone Energy Group. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.