Chicago Office Vacancy Drops a Sliver in Suburbs

Office landlords across Chicagoland are stacking wins. For the first time since 2022, downtown office vacancy rates dropped, and now suburban office vacancy rates are decreasing for the first time since 2019.

While the numbers only decreased a sliver, it’s a welcome sign of positive momentum. Suburban Chicago available office space dropped from 33.4 percent to 33.1, according to Crain’s, the first quarterly dip since before the pandemic. Landlords around the suburbs are hoping that the mass work-from-home office exodus has run its course and that the course correction provides momentum for future leasing efforts.

The improvement is aided by the redevelopment of office space. Buildings that sat unused with little sign of being filled are actively pivoting into a number of other functions, bringing total square footage of all suburban office space down to 93.2 million square feet from 100.5 million square feet, according to the outlet.

Suburban office inventory and downtown office inventory share a key throughline: trophy offices with great amenities and location are the most desired by far and have the lowest vacancy rates. The flight to quality is forcing Class A landlords to consider adding space to their properties and everyone below it to upgrade considerably if they want to be competitive in the market.

Net absorption is up as well during the quarter with a 32,000-square-foot uptick, according to the outlet. The leasing momentum showed in an ownership shuffle around the Chicago suburbs.

Deer Park Investors and Marc Realty put the 224,049-square-foot 1350 Touhy Plaza in Des Plaines up for sale in late June, and are hoping for a sale in the low $20 million range. Claire’s moved its headquarters to Columbia Centre III, which is just a stone’s throw away from Touhy Plaza. The AI company boom is set to benefit office property owners around the city as well, as they seek workspaces outside of Silicon Valley.

— Hunter Cooke