Economy
The Chicago metro area remained relatively stable through Q3 2026 despite a challenging economic environment, with unemployment up 90 basis points (bps) year-over-year (YOY) to 5.1%. Nonfarm employment held steady at 3.8 million jobs, up 7,600 YOY. As of August 2026, employment trends across office-using sectors were mixed, with government (+3.7%), education and health services (+1.0%), and professional and business services (+0.6%) posting YOY gains, while information (-3.6%) and financial activities (-5.0%) declined.
Demand
New leasing activity moderated across the Chicago suburbs in Q3 2026, bringing year-to-date (YTD) leasing volume to 3.2 million square feet (msf), a 10.3% decline from the previous year. This decline was largely driven by a slowdown in larger deals, with only 22 new leases for spaces of 25,000 square feet (sf) or more signed through Q3 2026, compared with 26 at the same point last year. As a result, the YTD 2026 average deal size dropped 12.8% YOY to 5,616 sf. Demand was largely concentrated within the Central North/Tri-State, Western East/West Corridor and O’Hare submarkets, which accounted for 65.9% of new leasing activity this quarter.
Flight to quality remained strong through Q3 2026, with nearly half (47.4%) of all new leasing, or 1.5 msf, occurring in Class A space. These leases tended to be larger, with an average lease size of 12,470 sf, 93.8% larger than the overall suburban average. Class A leasing was concentrated in the Central North/Tri-State and Western East/West Corridor submarkets, which together accounted for 54.8% of Class A leasing activity during Q3 2026.
Overall net absorption totaled negative 1.4 msf through Q3 2026, a slight improvement from the negative 1.6 msf of space absorbed at this time last year. Occupancy gains were offset by 25 newly vacant availabilities of 25,000 sf and greater that were added to the market over the past three quarters, totaling 1.7 msf. As demand for suburban office space continues to moderate, developers are increasingly looking at underutilized office properties for conversion into other property types, such as multifamily, retail, and industrial, leveraging their locations with prime access to major transportation networks.
Supply
Chicago's suburban office vacancy rate rose 180 bps YOY to 24.1% in Q3 2026. Inner suburban markets, including O'Hare, the Eastern East/West Corridor, and Near North, continued to outperform the broader market. Although vacancy in these submarkets rose 110 bps YOY to 21.5% as of Q3 2026, it remained below the market average of 24.1%, with Near North the strongest performer at 17.7%.
All property segments reported an increase in vacancy rates. The Class A vacancy rate increased 210 bps YOY to 26.0%. Class B vacancy increased 210 bps to 25.4%, while Class C increased just 30 bps to 16.3%.
Available sublease space remained elevated at 1.3 msf, up 15.5% YOY, with 33.3% currently vacant and the remainder scheduled to become vacant in the future. Sublease availability is heavily concentrated in the Central North/Tri-State and Western East/West Corridor submarkets, which together represent 54.8% of all subleases. Class A space dominates the sublease market, totaling 654,322 sf and accounting for 50.9% of total availabilities.
Pricing
Asking rental rates for suburban office space continued to vary dramatically across building classes and submarkets. The overall suburban gross asking rental rate ended Q3 2026 at $26.92 per square foot (psf), an increase of $0.14 psf (0.5%) YOY. Class A asking rates remained elevated, up 2.1% YOY to $32.34 psf. Class B and Class C asking rents both reported minor YOY declines, decreasing 0.2% to $24.19 psf and 1.8% to $19.02 psf, respectively.
The inner suburban markets command some of the highest Class A asking rates within the broader market, recorded at $35.92 psf as of Q3 2026. This is largely due to heightened Class A asking rents in O’Hare and Near North, which recorded rates of $39.78 and $36.01 psf, respectively.
