The story of Chicago’s suburban office market is often told in sweeping generalities: headlines point to rising vacancy, stubbornly high availability, and landlords struggling to attract tenants. In the second quarter of 2025, vacancy ticked up to 26.7%, with negative net absorption of 297,461 square feet — numbers that on the surface reinforce a narrative of weakness.
But that narrative misses the more important nuance. Year-to-date absorption remains positive at 313,292 square feet, and second-quarter leasing totaled 1.28 million square feet. More importantly, the composition of that activity tells us where tenants are actually making decisions — and it is not at the shiny trophy towers that have historically dominated the conversation. It is in the mid-cap, Class B and “value-oriented” properties that deliver on efficiency, flexibility and speed.
A Market Split by Quality
NAI Hiffman’s Q2 2025 Office Market Report illustrates this divide clearly. Class A suburban product continues to struggle, posting nearly half a million square feet of negative absorption year-to-date. By contrast, Class B has been a relative bright spot, with 535,975 square feet of positive absorption in the first half of the year.
The leasing split between Class A and B also tells a story. In Q2, Class A captured 52.9% of new leasing while Class B accounted for 44% — the narrowest gap in years. That closing delta reflects a tenant base that is willing to bypass prestige if a landlord can deliver the fundamentals: functional buildouts, flexible layouts, right-sized economics and the ability to get employees into space quickly.
In other words, tenants are pragmatic. They are less concerned with marble lobbies and more focused on how well a space supports their workforce and budget.
Jason Wurtz, executive vice president, NAI Hiffman
The Rise of Mid-Cap
Within that Class B performance, one category in particular continues to shine: mid-cap product in the 20,000- to 100,000-square-foot range. These spaces consistently outperform leasing velocity and maintain below-average vacancy.
Why? Because they hit the sweet spot for today’s demand profile. Most companies are no longer looking for sprawling footprints. Instead, they want offices that are efficient, adaptable and cost-effective. Mid-cap suites provide the scale needed to support hybrid work without the burden of excess square footage. They also lend themselves to quicker occupancy — often with move-in-ready layouts that allow tenants to execute faster than in larger, capital-intensive spaces.
At NAI Hiffman, I’ve seen this play out repeatedly in recent quarters. Leasing activity in Naperville, Oak Brook, and Schaumburg has shown that well-located, mid-size spaces are consistently attracting tenants who are rightsizing from larger footprints or relocating from dated buildings. These are not one-off anomalies; they are a pattern that aligns directly with the data.
Rightsizing as Strategy
The term “rightsizing” sometimes carries a negative connotation, as if taking less space means pulling back. In reality, it is often a proactive strategy. Tenants are reevaluating their true space needs in light of hybrid work, but they are not abandoning the office. They are trading excess for efficiency.
Recent transactions illustrate this point. Firms that once occupied 50,000 or 60,000 square feet are now committing to half that size — but in spaces with better layouts, stronger infrastructure, and amenities that help attract and retain employees. Smaller footprints do not equal smaller ambitions; they reflect a desire to make every square foot work harder.
This is why Class B and mid-cap product are winning. They deliver the functionality tenants need without the cost structure of premium trophy space.
Lessons for Landlords
For suburban landlords, the takeaway is not that every Class A property is doomed. Instead, it is that success depends on matching product to demand. A few clear lessons emerge from the first half of 2025:
- Function beats flash. Tenants will choose spaces that solve practical challenges — efficient floorplates, quick buildouts, functional amenities — over prestige alone.
- Mid-size is the sweet spot. Spaces between 20,000 and 100,000 square feet are moving faster than the market average, and landlords with this inventory are at an advantage.
- Flexibility matters. Landlords who can offer turnkey suites, modular layouts or phased occupancy are winning deals.
- Economics must align. Right-sized rents and operating costs are critical. Even Class A spaces can compete if ownership is realistic about pricing relative to functionality.
A Balanced Future
Chicago’s suburban office market will remain dynamic through the second half of 2025. Trophy assets with outsized operating costs will continue to face headwinds, and some obsolete properties will inevitably be repositioned or removed from the inventory through adaptive reuse. At the same time, mid-cap and Class B properties with the right fundamentals are absorbing space, signing leases and outperforming the averages.
The market may be in transition, but tenants are still making decisions — and those decisions consistently favor efficiency, speed and value. That is why mid-cap offices are outperforming, and why landlords who adapt to this reality will be best positioned in the quarters ahead.
For me, the lesson is clear: beyond the trophy towers and headline vacancy rates lies a more practical truth. Companies still need offices, and they are choosing those that align with how they work today. Suburban Chicago’s future will not be defined by marble lobbies or record-setting rents; it will be defined by landlords who deliver the space that companies actually need.
Jason Wurtz is executive vice president at Oakbrook Terrace, Illinois-based NAI Hiffman.
