09/01/2026
CHICAGO COMMERCIAL MARKET REPORT – SEPTEMBER 2026
As Chicago enters the fall market, commercial real estate conditions continue to vary significantly by property type. Industrial remains active, retail fundamentals remain stable, and the office market continues to work through elevated vacancy while showing improvement in select areas.
Chicago’s industrial market continues to demonstrate strong tenant demand. JLL reported 10.6 million square feet of leasing activity during the second quarter, marking the fourth consecutive quarter with leasing above 10 million square feet. Net absorption remained positive, while demand for large-format space was particularly active along the I-80 Corridor. At the same time, new construction is increasing, giving tenants additional options and making property quality and location increasingly important.
Retail continues to be one of the more stable segments of Chicago commercial real estate. Limited new construction and healthy occupancy are helping support market fundamentals. Grocery-anchored centers, restaurants, fitness operators, entertainment concepts and essential-service businesses continue to attract tenant interest, while retailers remain focused on strong trade areas and locations that generate consistent customer traffic.
The office market remains challenging, particularly downtown. Chicago’s downtown direct office vacancy rate reached 26.8% in the second quarter. Leasing activity for transactions larger than 10,000 square feet totaled approximately 1.5 million square feet, slightly higher than the first quarter, while net absorption remained negative. Demand continues to favor newer and higher-quality office space, creating a widening performance gap between top-tier properties and older buildings.
Chicago’s suburban office market provided a more encouraging signal during the second quarter. Net absorption turned positive at approximately 170,000 square feet, its strongest quarterly result since 2023, while direct vacancy declined slightly to 28.2%. Although vacancy remains historically high, the improvement suggests that tenant demand is beginning to stabilize in portions of the suburban market.
For investors and property owners, the market continues to reward quality. Location, building condition, tenant strength and dependable cash flow remain important factors as buyers evaluate opportunities. Nationally, commercial real estate investment confidence improved during the second quarter, although interest-rate volatility continues to influence investment decisions.
Heading into the final months of 2026, Chicago commercial real estate remains a market of both challenges and opportunities. Industrial demand remains healthy, retail fundamentals are stable, and office performance is increasingly dependent on property quality and location. Across the market, well-positioned properties remain best equipped to compete as tenants and investors become increasingly selective.
