The Chicago suburban office market remains sluggish, with a high direct vacancy rate of 19.1%, according to the latest research from Transwestern.
In its third-quarter office market report, Transwestern reported that office leasing activity in the Chicago suburbs fell sharply to 802,147 square feet in the third quarter. That’s the lowest this figure has been since the first quarter of 2021, a drop of 37.9% from the second quarter of 2025 and a 42.8% decrease on a year-over-year basis.
Transwestern reported that net absorption in the Chicago suburban office market stood at negative 164,735 square feet in the third quarter, with Class-A offices experiencing a loss of 12,479 square feet, while Class-B and -C offices combined for negative absorption of 152,256 square feet.
Even with these numbers, the Chicago suburban office market did see some significant deals. The largest transaction was Anthony Donato’s $17 million acquisition of Bannockburn Lakes, a largely vacant office park in Bannockburn, Illinois. The buyer plans a $25 million conversion project for the site, one that will transform the office park into a youth sports facility.
This isn’t unusual. As Transwestern says, owners are scheduling several office conversions to alternative uses.
Average full-service rents decreased to $26.95 per square foot in the third quarter, with the O’Hare submarket commanding the highest rates at $32.69 per square foot.
The construction pipeline remains sluggish, with no significant new office developments underway in the Chicago suburbs in the third quarter, reflecting a broader trend of limited new construction since 2016.
Transwestern said that recovery in the Chicago suburban office market won’t come until owners address their obsolete office inventory — perhaps converting these spaces to other uses or demolishing them — and until building owners begin attracting larger corporate tenants to their office spaces.
