Chicago’s suburban office market is showing modest signs of recovery. But the sector still faces a long list of challenges, according to the latest research from Transwestern.
In positive news? In its Third Quarter 2026 Chicago Suburban Office Market Report, Transwestern reported that vacancy in Chicago’s suburban office sector declined during the third quarter, tenants signed several sizable leases and businesses absorbed more than 200,000 square feet of office space.
But even with that bit of good news, the Chicago suburban office sector faces a big challenge: It is stuck with too much available space, particularly in older office buildings that no longer meet the needs of today’s tenants.
According to Transwestern’s report, the direct vacant available rate fell 20 basis points in the Chicago suburban office market during the third quarter, dropping to 19.7%. Net absorption reached 208,256 square feet, another encouraging sign.
But total availability moved in the opposite direction, increasing 10 basis points from the previous quarter to 26.4%. That figure also represented a 40-basis-point increase from the third quarter of 2025, according to Transwestern.
Not all subsectors performed equally. Transwestern reported that the Western East-West Corridor led the region in absorption, recording 131,434 square feet of positive net absorption in the third quarter. The O’Hare submarket followed with 66,089 square feet, while the Northwest Suburban market posted 64,078 square feet.
The Class-A office sector accounted for much of the positive activity. These properties recorded 180,865 square feet of net absorption during the third quarter. Class-B and -C buildings combined for another 27,391 square feet.
This isn’t surprising. The flight to quality is still a trend in the office market, both in the Chicago area and across the country. Tenants seeking new space continue to look for higher-quality office environments. This doesn’t mean that older office buildings can’t attract tenants. Transwestern reported that demand for suburban office space is not limited entirely to the newest buildings. Class-B and -C properties posted positive absorption, too.
The North Suburban and Eastern East-West Corridor markets struggled, recording negative net absorption of 30,145 square feet and 23,200 square feet, respectively, Transwestern said.
Despite the improving absorption figures, the market continues to face significant availability challenges. Direct vacant space totaled nearly 22.9 million square feet across the Chicago suburban market’s 116.2-million-square-foot inventory.
One potential solution? Removing obsolete office buildings from the market through conversions to other uses. Transwestern said that reducing outdated inventory remains one of the most realistic paths toward a sustained recovery in any office market. That could mean converting older office properties to other uses or redeveloping sites where traditional office demand is unlikely to return.
There were some encouraging investment and leasing developments during the third quarter, too. Mesirow completed the largest suburban office acquisition, paying $151 million for Amgen’s three-building, 660,000-square-foot campus at 1 Horizon Way in Deerfield. The transaction included a partial sale-leaseback arrangement. Amgen will remain the primary occupant of one building under a long-term lease, while Fortune Brands Innovations currently occupies the other two.
Leasing activity also increased slightly. Combined Insurance Company of America signed the largest reported lease transaction in the Chicago suburbs during the third quarter, renewing its 69,068-square-foot commitment at 8750 W. Bryn Mawr Ave. in the O’Hare submarket. Sentinel Technologies signed the largest new lease, taking 63,409 square feet at 410 Warrenville Road in Lisle.
Rental rates, though, continued to fall. Full-service asking rents averaged $26.96 per square foot across the suburban market, down 73 basis points from a year earlier. O’Hare commanded the highest average asking rent at $32.55 per square foot, followed by the North Suburban market at $29.15.
Perhaps the clearest indication of the market’s cautious outlook is its development pipeline. Transwestern reported no suburban office buildings larger than 40,000 square feet were under construction during the third quarter.
That lack of new development reflects a market still working through existing supply. Since 2016, relatively little suburban office space has been delivered, with most new construction designed for specific owner-occupiers.
