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Two Markets in One: How Chicago’s office sector is splitting along quality lines By Brandi Smith
Image by freepik
W
alk into the right building in Chicago’s West Loop and the lobby hums: coffee bar, concierge, a fitness center that would not look out of place in a boutique hotel. Walk into the wrong one and the vacancy signs do the talking. Same city, same quarter, same market … entirely different reality. “Trophy towers are seeing vacancies below 10% while Class B and C properties are experiencing vacancy rates of 30% or more,” said Jeff Skender, managing director at Cushman & Wakefield’s Chicago office. “Flight to quality continues to be the trend through Q1 2026.”
That gap of more than 20 percentage points between the top of the market and the middle is the defining characteristic of Chicago office in 2026 and the forces driving it show no signs of reversing. CBD direct vacancy reached 27% in Q1 2026, a 40-basis-point increase quarter-over-quarter, according to CBRE Research. Suburban direct vacancy climbed to 28.7% over the same period. Those topline figures, however, flatten a more fragmented reality: within both markets, a small tier of well-located, well-amenitized buildings is outperforming the broader numbers by a substantial margin.
Geographically, the West Loop remains the undisputed center of gravity for CBD leasing. Skender said the submarket captured more than 60% of new Class A leasing activity in Q1, a dominance driven by proximity to Ogilvie and Union Stations and a concentration of trophy and newer Class A product. CBRE research data shows West Loop direct vacancy at 22.8% — elevated by historical standards, but well below the CBD average, while the submarket recorded 1.4 million square feet of leasing activity during the quarter. OFFICE (continued on page 22)