Economy
The Chicago Metropolitan Area remained relatively stable through mid-2026 despite a challenging economic environment. The unemployment rate increased by 60 basis points (bps) year-over-year (YOY) to 5.2% in Q2 2026. Chicago's labor pool remained steady YOY, with nonfarm employment at 3.8 million individuals. As of May 2026, most office-using employment sectors reported YOY declines in employment, with only the education and health services and government sectors posting employment gains of 3.0% and 1.2%, respectively.
Demand
New leasing activity moderated across the Chicago suburbs in Q2 2026, bringing mid-year leasing volume to 1.9 million square feet (msf), a 30.4% decline from the same period a year ago. This decline was largely driven by a slowdown in larger deals, with only seven new leases for spaces of 25,000 square feet (sf) or more signed through mid-2026, compared with 16 at the same point last year. As a result, the average deal size dropped 31.3% YOY to 5,198 sf. Demand was largely concentrated within the Central North/Tri-State, Eastern East/West Corridor and Central Northwest submarkets, which accounted for 68.8% of new leasing activity.
Flight to quality remained strong through mid-2026, with nearly half (46.0%) of all new leasing occurring within Class A space, totaling 878,447 sf. These leases tended to be larger, with an average lease size of 8,139 sf, 56.8% larger than the overall suburban average. The majority of Class A leasing activity occurred within the Eastern East/West Corridor, Central North Tri-State and O'Hare submarkets, which together accounted for 73.7% of all Class A activity.
Overall net absorption totaled negative 1.3 msf through mid-2026, a slight decrease from the negative 1.2 msf of space absorbed at this time last year. Occupancy gains were offset by 19 newly vacant availabilities of 25,000 sf and greater added to the market over the past two quarters, totaling 1.2 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 prime access to major transportation networks.
Supply
Chicago's overall suburban office vacancy rate increased 230 bps YOY to 24.2% in Q2 2026. Inner suburban markets, including O'Hare, the Eastern East/West Corridor and Near North, continued to outperform the broader market. As of Q2 2026, vacancy in these submarkets stood at 21.8%, up 180 bps YOY, but remained below the market average, supported by Near North's relatively low vacancy rate of 18.0%.
All property segments reported increased vacancy rates. The Class A vacancy rate also rose during the period, increasing 180 bps YOY to 26.1%. Class B recorded the largest increase, up 330 bps to 25.2%, while Class C increased 30 bps to 16.7%.
Available sublease space remained elevated at 1.3 msf, up 5.1% YOY, with 29.7% 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 54.5% of all subleases. Class A space dominates the sublease market, totaling 712,958 sf and accounting for 53.6% 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 Q2 2026 at $26.86 per square foot (psf), an increase of $0.65 psf (2.5%) YOY. Class A asking rates remained elevated, up 1.3% YOY to $32.06 psf. Class B and Class C asking rents both reported YOY gains, increasing 4.3% to $24.26 psf and 3.2% to $18.92 psf, respectively.
The inner suburban markets command some of the highest-Class A asking rates within the broader market, recorded at $35.38 psf as of Q2 2026. This is largely due to heightened Class A asking rents in O'Hare and Near North, which recorded rates of $39.47 and $33.56 psf, respectively.
