Suburban Chicago Office Demand Up, Vacancy Stubbornly High

Chicago’s suburban office market just logged its strongest quarter of tenant demand since before the pandemic — but landlords aren’t celebrating yet.

The suburban vacancy rate held at an all-time high of 32.4 percent at the end of September, according to JLL. That’s virtually unchanged from midyear and up from 31.4 percent a year ago and 22 percent when the pandemic hit, Crain’s reported. It’s also the 19th straight quarter of record-breaking suburban vacancies.

The long slide in occupancy, driven by remote work and corporate downsizing, has left landlords with 4.7 million fewer occupied square feet since 2020.

Still, the third quarter offered a flicker of optimism: net absorption — the amount of newly leased and occupied space minus what was vacated — rose by more than 216,000 square feet. That’s only the third positive quarter since 2022 and the strongest performance since late 2019.

Leading the charge, Fortune Brands Innovations relocated its headquarters to the three-building Amgen campus in Deerfield, dramatically expanding its footprint. ADP also upgraded, subleasing 149,000 square feet in Zurich North America’s Schaumburg headquarters — a move from an Elk Grove Village site that’s being demolished for a data center redevelopment.

Despite those wins, the vacancy rate stayed high as inventory swelled. The trend underscores the market’s new normal: firms are trading up to top-tier buildings while bypassing dated offices that now make up the bulk of the empty stock.

“They aren’t just looking to what’s available — they’re being creative,” JLL’s Andrea Van Gelder told the outlet, noting that companies are targeting high-amenity workplaces.

Some balance may be ahead. Major rightsizing is largely done, Van Gelder said, while a growing number of obsolete properties are being razed or converted. A former Walgreens campus along Lake Cook Road has already come down, and the Bannockburn Lakes complex is being repositioned.

“There is absorption,” Van Gelder said, “But the normal levels can’t eat up what the pandemic did.”

— Eric Weilbacher