Economic Overview
The Chicago metro area remained relatively stable through Q3 2026 despite a challenging economic environment, with unemployment up 90 basis points (bps) year-over-year (YOY) to 5.1%. Nonfarm employment held steady at 3.8 million jobs, up 7,600 YOY. As of August 2026, employment trends across office-using sectors were mixed, with government (+3.7%), education and health services (+1.0%), and professional and business services (+0.6%) posting YOY gains, while information (-3.6%) and financial activities (-5.0%) declined.
Supply & Demand: Class A Space Drives Cbd Demand
Demand across Chicago’s Central Business District (CBD) remained steady, with year-to-date (YTD) new leasing through Q3 2026 totaling 4.7 million square feet (msf), down 1.6% YOY. Class A space accounted for 62.0% (2.9 msf) of leasing activity, underscoring tenants' continued preference for high-quality office space. The average new lease size increased 5.2% YOY to 9,900 square feet (sf) through Q3 2026, with Class A leases averaging 14,700 sf for the period. New leasing has been concentrated in the West Loop and Central Loop submarkets, which totaled 2.4 msf and 849,000 sf, respectively, through Q3 2026. Notable new lease transactions signed in Q3 2026 include Morningstar's 275,000-sf lease at the Thompson Center, which is currently under renovation, in the Central Loop; Ripple's 50,000-sf lease at 300 N LaSalle in River North; and Horizon3's 40,000-sf lease at 333 N Green in Fulton Market.
Overall net absorption remained negative for the 12th consecutive quarter, totaling negative 397,000 sf in Q3 2026 and bringing YTD 2026 absorption to negative 1.4 msf. Despite overall net absorption remaining negative, Fulton Market and River North outperformed other CBD submarkets, recording positive absorption of 367,450 sf and 64,559 sf, respectively, through Q3 2026. Trophy buildings have been the only asset class to record consistent positive absorption over the last several quarters, totaling 610,000 sf YTD.
Chicago's CBD office vacancy rate remained elevated at 27.2% as of Q3 2026, up 20 bps quarter-over-quarter (QOQ) and 160 bps YOY. Class A vacancy increased 150 bps YOY and 50 bps QOQ, ending the quarter at 23.3%, though it remains well below the overall CBD rate and that of other property classes. Top-tier space continues to tighten, further reinforcing the flight to quality, as trophy office vacancy fell 420 bps YOY to 12.1%.
Supply: Redevelopment Fuels Cbd Pipeline
Following the execution of Sidley Austin's lease in Q2 2026, construction at 725 W. Randolph is expected to begin in Q1 2027, signaling renewed confidence in demand for premier office space. At 550 W. Randolph in the West Loop, bicycle parts manufacturer SRAM acquired the 197,000-sf building in late 2025 and is currently renovating the property with plans to relocate its headquarters from 1000 W. Fulton. SRAM plans to occupy approximately half of the building and lease out the remaining space. The Thompson Center is undergoing a $280 million redevelopment for Google, which will occupy approximately 554,000 sf of the 945,000-sf building. Morningstar recently signed a 275,000-sf lease, and the project is set for completion in early 2028.
Supply Pressure: Sublease Availability Continued To Decrease
Sublease availability continued to decline, down 18.3% YOY from 4.8 msf to 4.0 msf. This figure represents 8.6% of the CBD’s overall available inventory with just over 2.0 msf of sublease space vacant and an additional 1.9 msf scheduled to become vacant in the future. The West Loop and East Loop accounted for the largest share of sublease availability, representing 58.0% of active subleases. The two largest subleases added to the market this quarter were the American Bar Association’s 27,000-sf space in River North and Valtech’s 27,000-sf space in the West Loop. As of Q3 2026, available sublease spaces of 25,000 sf and greater totaled 2.4 msf, accounting for 61.6% of the total sublease inventory. Trophy sublease supply remained limited, with only 18 availabilities totaling 417,000 sf. Sublease availability surged after the start of the pandemic, but the pace of new sublease listings has slowed in recent years, and overall availability is now beginning to decline.
Pricing: Trophy And Class A Asking Rates Lead Growth
Overall gross asking rental rates remained stable across most asset classes in Q3 2026, with the overall market average increasing 5.1% QOQ to $46.15 per square foot (psf). Class A asking rates recorded a QOQ increase of 5.5% to $57.11 psf. Class B and C product reported more moderate QOQ growth rates of 0.5% to $41.56 psf and 0.8% to $30.52 psf, respectively. Trophy buildings continued to command premium asking rents, which rose 24.3% YOY and 9.9% QOQ to $73.05 psf in Q3 2026.
