Downtown Chicago office market dynamics report, Q2 2026

Downtown Chicago's office market split in two in the second quarter of 2026: Trophy and Class A buildings added tenants and absorbed 117,613 square feet, while Class B and C properties continued to lose tenants, holding total vacancy at 25.6%. For occupiers working with JLL's Chicago team, the practical consequence is that the highest-quality space is getting harder to find even in a market with a vacancy rate above 25%.

• Trophy and Class A buildings absorbed 117,613 square feet while Class B and C properties gave back 127,126 square feet, producing net absorption of -9,513 square feet for the quarter as a whole.
• The newest generation of buildings did the heaviest lifting. Properties built in 2015 or later recorded 74,784 square feet of positive net absorption, and asking rents rose 0.4% quarter over quarter.
• Leasing volume reached 903,240 square feet, and the West Loop captured 44% of it. Trophy and Class A properties accounted for 53% of quarterly volume.
• Sublease availability fell to 4.2 million square feet, the lowest level since the second quarter of 2020. The discounted-space option that shaped occupier strategy over the past five years is thinning out.
• Nothing is under construction. With no office space under development and nearly 7 million square feet slated for removal through conversions, supply cannot respond to the 5.6 million square feet of tenants currently in the market.

Total office vacancy in downtown Chicago was 25.6% in Q2 2026, up slightly from the first quarter, and JLL Research forecasts it will decline from here as high-quality supply tightens. Direct-asking rent for Class A office space reached $54.16 per square foot, and the overall market rate across all building classes held at $46.73 per square foot, with rents up 0.4% quarter over quarter.

Year-to-date net absorption stands at -143,955 square feet, so the market has given back space over the first half of 2026 even as the quarterly figures improve. Concessions remained stable, which tells occupiers that landlords are not competing harder on free rent or improvement allowances than they were three months ago.

Net absorption in downtown Chicago was -9,513 square feet in Q2 2026, an improvement on prior quarters though the market remains in contraction. Trophy and Class A buildings absorbed 117,613, offset almost exactly by 127,126 square feet of negative absorption in Class B and C properties.The split matters more than the headline number; owners holding Trophy or Class A product in downtown Chicago are operating in a market with demand, while owners of older Class B and C buildings are not, and the net number obscures that difference.

Leasing volume in downtown Chicago reached 903,240 square feet in Q2 2026, with the West Loop accounting for 44%, and Trophy and Class A properties accounting for 53% of quarterly volume. 

The pattern in downtown Chicago reflects a flight to quality that now comes with a footprint reduction attached. Tenants are upgrading building quality while taking less space, partly because top-tier space is so limited that they cannot get the square footage they once could have. Owners of well-located Class A assets are capturing tenants from lower-tier buildings without needing to grow the overall size of the market.

Which tenants expanded or relocated in downtown Chicago in Q2 2026?

Stripe and Radix both expanded in River North, the best performing submarket in Q2 2026. Allianz and Baker Tilly both relocated during the quarter, moving into higher-quality space while reducing their office footprints.

In the Loop, law firm Gould Grieco & Hensley signed a 17,000-square-foot lease at One North Franklin, a building that recently completed a multimillion-dollar renovation including a new amenity floor. The pattern across all of these transactions is the same: quality and amenities are winning tenants, and building age or recent capital investment is the dividing line.

Sublease availability in downtown Chicago fell to 4.2 million square feet in Q2 2026, the lowest level since the second quarter of 2020. Sublease space has functioned as the discount tier of the downtown market since the pandemic, giving cost-sensitive occupiers access to built-out space below direct asking rents, but that option is now shrinking.

Occupiers that built their real estate strategy around sublease arbitrage need to reset their expectations. Fewer sublease options mean more competition for the remaining blocks and less leverage against direct asking rents, particularly for tenants seeking space in the best buildings.

Rents are rising because vacany and rent are meausred across different segments of the same market. Asking rents in downtown Chicago rose 0.4% quarter over quarter, and Class A direct asking rent reached $54.16 per square foot, even with total vacancy at 25.6%. The vacancy figure is dragged down by Class B and C buildings, which lost 127,126 square feet of tenancy during the quarter. The rent figure is set by the Trophy and Class A buildings, where tenants are competing for a shrinking pool of available space.

Nothing in the supply picture will relieve that pressure soon. No office space was under development in downtown Chicago as of Q2 2026, which means no new top-tier product will be delivered in the near-term. Investors and developers reading a 25.6% vacancy rate as a sign of a weak market should look at the segment-level figures instead, because pricing power in downtown Chicago now depends almost entirely on which tier an asset sits in.

This report is produced quarterly by JLL Research and covers office real estate market conditions in downtown Chicago during the second quarter of 2026 (April 1 to June 30, 2026). It tracks net absorption, leasing activity, vacancy, direct asking rents, sublease availability, concessions and development.

Download the full report for additional detail on submarket-level activity and a complete historical data series. For a broader picture of the market, visit our Chicago suburbs office market dynamics report, and explore JLL's U.S. office market dynamics report for the national context behind Chicago's numbers.

^{Report originally released July 10, 2026 and authored by Edgar Leon, director, research, JLL Research.}