Chicago’s suburban office market posted largely stable conditions in the first quarter of 2026, according to a new report from Transwestern. The brokerage found that overall fundamentals held relatively steady even as the inventory of obsolete suburban office space continued to decline.
Transwestern reported that reductions in obsolete suburban office inventory helped counterbalance muted tenant demand in the first three months of the year. This dynamic supported a direct vacant available rate that remained unchanged at 18.6% in the first quarter. The report indicates that the thinning of functionally outdated space played a meaningful role in offsetting softer leasing requirements from tenants.
Total availability, which captures all space being actively marketed for lease or sublease, registered only a modest change on a quarterly basis. Availability increased by 10 basis points compared with the prior quarter to reach 25%. On a year-over-year basis, however, the total availability rate declined by 80 basis points, suggesting gradual improvement in the volume of marketed space over the past 12 months.
Net absorption in Chicago’s suburban office market reached 20,411 square feet in the first quarter of 2026. While modest in absolute terms, the positive absorption indicates that more space was leased than vacated during the period. Performance varied by quality segment, with higher-quality buildings showing more resilience than lower-quality assets.
Class A suburban properties recorded 34,874 square feet of positive absorption for the quarter, according to the Transwestern report. In contrast, the combined Class B and Class C segments experienced negative absorption totaling 14,463 square feet. This divergence underscores the relative strength of higher-quality suburban assets compared with older or less competitive buildings.
On the supply side, the suburban office construction pipeline in the Chicago area remained dormant in the first quarter. Transwestern noted that no multi-tenant office buildings larger than 40,000 square feet were under construction. The report added that since 2016, very little new multi-tenant office space has been delivered, with most recent development activity occurring as build-to-suit projects for owner-occupiers rather than speculative construction.
Leasing activity included at least one sizable commitment from a major tenant. The largest lease transaction signed during the first quarter was Inland Real Estate Companies’ long-term agreement for 140,000 square feet in Downers Grove. The new headquarters lease stands out as a significant transaction in an otherwise measured suburban leasing environment.
Taken together, the stable vacancy metrics, modest positive absorption, and minimal new construction highlighted in Transwestern’s report depict a suburban Chicago office market that is adjusting gradually through inventory reduction and selective leasing rather than large-scale expansion or contraction.
