Suburban Chicago Office Supply Shrinks While Vacancies Climb

Chicago’s suburban office market volume is shrinking, though not fast enough to fix its vacancy problem.

The total amount of suburban office space has fallen to its lowest level since before the Great Recession, but the vacancy rate still hit a new all-time high in the first quarter, according to JLL. Available space climbed to 33.4 percent, up from 32.9 percent at the end of 2025 and marking the 21st consecutive quarter of record highs, according to Crain’s.

The data captures a market still out of sync more than four years after the pandemic upended office demand. Even as obsolete buildings are demolished or converted into residential or other uses, companies continue to shed more space than they lease, keeping downward pressure on occupancy, according to the outlet. Suburban landlords and municipalities alike are feeling the strain as empty offices erode property values and foot traffic.

Since 2020, suburban inventory has dropped from nearly 100 million square feet to 93.2 million square feet, a contraction driven by teardowns and repositionings. But that supply reduction has been outpaced by tenant downsizing, according to the report. Net absorption was negative 148,000 square feet in the first quarter alone, and the market lost 5.2 million square feet of occupied space since the start of the pandemic.

The pain is not spread evenly. High-quality buildings with strong ownership and modern amenities are outperforming, while older properties — particularly those saddled with debt — struggle to compete, according to the publication.

Negotiating leverage is not a position many tenants feel they are in, JLL’s Andrea Van Gelder told the publication, noting rents at premium suburban offices have risen $5 to $6 per square foot since mid-pandemic. Competition for the best buildings remains fierce even as headline vacancy balloons.

Recent transactions highlight the ongoing office space reduction. Inland Real Estate Group, for instance, agreed to sell its three-building Oak Brook campus to a buyer planning to demolish it and build a new Amazon distribution facility, trading office density for industrial demand. Inland will relocate its headquarters to Downers Grove.

Downtown Chicago tells a similar story, as vacancy in Chicago’s urban core hit a record 28.6 percent in the first quarter, according to CBRE, fueled in part by major move-outs from companies like Boeing and Citadel. The city lost more than 3 million square feet of tenants over the past 11 quarters — far exceeding losses during the last downturn.

Nearly half of vacant downtown space has sat empty for more than three years, according to the data.

— Eric Weilbacher