Chicago office sector splits as trophy towers outperform lower-tier buildings
Updated
Updated · REjournals.com · May 6
Chicago office sector splits as trophy towers outperform lower-tier buildings
5 articles · Updated · REjournals.com · May 6
In Q1 2026, CBD vacancy rose to 27.0% and suburban vacancy to 28.7%, while West Loop captured over 60% of new Class A leasing and Fulton Market posted 221,384 square feet of positive absorption.
River North vacancy reached 34.4% and East Loop 31.8%, while O'Hare led suburban demand, including Claire's Essentials leasing 43,214 square feet at Columbia Centre III.
Landlords are investing in amenities and flexible lease structures as hybrid work reshapes demand, and with no new CBD office projects under construction after 919 W. Fulton, Class A supply could tighten before 2030.
With new office construction frozen, will a future space shortage force Chicago’s top companies to consider leaving the city?
Can converting offices to apartments solve the vacancy crisis, or will it just shift a massive tax burden onto homeowners?
Are tariffs and record construction costs creating a permanent class of 'zombie' buildings that can never be revived?
Chicago Office Market in Early 2026: Record 28.6% Downtown Vacancy Highlights Deep Divide
Overview
Chicago's office market in early 2026 shows a sharp divide: overall vacancy is high at 24.7%, with downtown reaching a record 28.6% due to major corporate departures. This vacancy contrasts with stronger suburban areas and newer, high-quality downtown submarkets like Fulton Market. Tenants are driving a 'flight to quality,' favoring premium, amenity-rich spaces such as Salesforce Tower, while older buildings face severe challenges. Limited new office construction intensifies demand for trophy towers, pushing rents higher. Meanwhile, hybrid work and high interest rates worsen conditions for lower-tier buildings, leading to distress sales and growing interest in adaptive reuse. Despite risks, the market is gradually stabilizing, with prime assets key to recovery.