Chicago Suburban Office Stabilizing Amid Shrinking Supply

For the Chicago suburban office market, it’s out with the old and in with nothing new. 

Since 2020, about 13.6M SF of suburban office has changed hands, and roughly half of that — about 6.3M SF — has been removed from the market as it is redeveloped for a different use, said Brent Jacob, a senior vice president in Colliers’ suburban office advisory group. There is no new suburban office space under construction as of the end of the first quarter, according to a Q1 report Colliers shared first with Bisnow. 

The shifting supply-and-demand dynamics are slowly helping the market move toward stabilization, Jacob said. 

“There is kind of a culling of some of the older, more obsolete assets that is really now having a significant impact on the overall inventory, which I think is certainly helping contribute to the slow improvement of the suburban office market health,” he said. 

Net absorption in Q1 dipped slightly to negative 151K SF, which Colliers stated in its report was due to leases from larger tenants that had given up space in late 2024 and early 2025 finally expiring. Overall, Chicago's suburban office vacancy rate stood at 26.8% at the end of the first quarter. 

Jacob said his team has seen more large corporate tenants in the market looking for space in the past 12 months than in the previous four years. Those tenants may be nearing the end of 10-year leases signed in the mid-2010s and are now facing decisions about future space needs. 

Higher-quality office buildings are still a major driver of tenant demand, he said. 

“It's more tenants coming to market, more tenants truly evaluating and willing to make that long-term decision to justify the costs that go into the move,” Jacob said.

Inland Real Estate signed the largest suburban lease in Q1, taking 140K SF at 3050 Highland Parkway in Downers Grove. Power Construction and Claire’s signed leases in the O’Hare submarket, taking up 55K SF and 43K SF, respectively. 

Sublease availability continued to decline in the first quarter, dropping 20 basis points from the end of the year to 1.6% — the lowest mark since 2019, according to Colliers. 

Corporate relocations can be a substantial out-of-pocket expense, as tenant improvement budgets haven’t kept up with rising construction costs, Jacob said. As a result, some tenants have sought to optimize existing conditions in spaces rather than pay for build-outs.  

The Oak Brook submarket was the best-performing of the five suburban submarkets Colliers tracks: Oak Brook, O’Hare, Lisle-Naperville, the Northern suburbs and the Northwest suburbs. Oak Brook finished the first quarter with a vacancy rate of 23.2%, while the Northwest submarket saw the highest vacancy at 32.5%. 

The Oak Brook market is centrally located in the west suburbs, has relatively low taxes due to a well-performing mall, and is close to several suburbs where many top executives live, Jacob said. The choice of submarket often comes down to where C-suites and the employee base live, and companies are increasingly analyzing drive times to office locations.

Jacob said he is hopeful about upcoming leasing activity as more large users review their lease commitments and make decisions. 

“We’re cautiously optimistic,” he said. “I think there is pent-up leasing demand.”