Chicago’s Suburban Office Market Shows Signs of a Comeback

Chicago’s suburban office market recorded its highest net absorption since the pandemic in the first quarter.

New leases totaled 517,000 square feet after factoring out vacated leases, according to Colliers.

The suburban market has lost more leased office space than it gained in 9 out of 12 quarters since the first quarter of 2022

A decline in sublease activity indicated a slowdown in companies shedding space. Sublease availability decreased by 70 basis points to 1.8 percent in the first quarter, the lowest level recorded since the onset of the pandemic.

Major deals included Fortune Brands’ 372,000-square-foot lease at 1-2 Takeda Way in Deerfiel;, a 150,000-square-foot lease by payroll services company ADP, at 1299 Zurich Way in Schaumburg; and biotech company Vantive’s 120,000-square-foot lease at an office complex known as Corporate 500 in Deerfield.

But even with the promising jump in activity, the suburban market’s vacancy rate remains high. It closed out the first quarter at 25.7 percent.

The vacancy rate is skewed by the widening gap between Class A, B and C properties, Colliers broker Jon Connor said. Among newer properties, the vacancy rate is substantially lower, he said.

The O’Hare submarket has outperformed others in the suburbs, maintaining a vacancy rate of about 20 percent since 2022.

“It’s at the epicenter of Metropolitan Chicago, and with the airport, you can bring in employees from pretty much anywhere,” Connor said.

The boost in activity signaled a promising start to the year for leasing, but finding solutions for underperforming properties is still easier said than done.

Some buyers were willing to give the market a try. Self Storage, for example, bought a 350,000-square-foot office at 9022 Heritage Parkway in Woodridge with plans to redevelop it.