If you've been watching the commercial real estate market across Chicagoland lately, you probably already know: things feel a little different right now. And honestly, they are. But "Chicagoland" isn't one market. The city and the suburbs are telling two different stories, and knowing which one applies to you matters more than most people realize.
I talk to business owners, tenants, and investors every week, and the same two topics keep coming up: there isn't much good space available, and the cost of money is still making everyone think twice. So let's break both of those down and look at how they're playing out differently depending on where you're looking.
The Inventory Problem Looks Different Depending on Where You Are
In the Chicago CBD, there's actually no shortage of available office space on paper. Downtown vacancy sits around 24% heading into 2026, one of the highest rates in recent memory, and that number has been climbing since the pandemic. Sounds like a tenant's market, right? Not exactly. The space sitting vacant is largely older Class B and C product that companies have been shedding as they right-size for hybrid work. The Trophy and Class A space that tenants actually want downtown? That's tight, well-leased, and commanding around $41 per square foot.
The suburbs are dealing with a similar flight-to-quality dynamic, just with a smaller runway. Suburban asking rents closed Q4 2025 at $22.55 per square foot, significantly more affordable than downtown, but well-located, move-in-ready Class A space in markets like Lake County, DuPage, and the northern suburbs is genuinely hard to find. What's available tends to be that same older product nobody is rushing to take.
This is especially acute for medical tenants. Dental practices, med spas, and specialty clinics searching the northern and western suburbs right now aren't just dealing with limited options. They're dealing with limited viable options. A vacant suite in an aging strip mall or a former insurance office doesn't become a medical practice without significant plumbing, electrical, and buildout work. What looks like available space on paper often requires $150,000 to $300,000 or more in improvements before it's functional, and finding a landlord willing to fund that conversion is its own challenge. The result is a market where demand from medical users is clearly outpacing the supply of spaces that can realistically serve them, and that gap isn't closing quickly.
You might expect that tenants downsizing their renewals would free up more space, and technically it does, but what gets released back to the market is largely the Class B product that was already oversupplied. New construction hasn't filled the gap in either market. Labor costs, materials, and the interest rate environment have kept developers on the sidelines, which means the quality inventory squeeze isn't going away anytime soon, whether you're searching in Schaumburg or the West Loop.
Interest Rates Are Still the Elephant in the Room
Rates have softened from their 2023 peaks, but they haven't disappeared, and they're reshaping how deals get done across the entire metro. Downtown, roughly 23 buildings in the CBD are sitting on distressed loans, with significant debt coming due in the near term. That creates both pressure on landlords and, for the right tenant, real negotiating leverage if you know where to look.
In the suburbs, the dynamic is a little different. Buyers who were on the fence are still cautious, and some tenants are choosing to renew rather than relocate because committing to a new space means committing to today's economics. For healthcare and medical tenants specifically (dental practices, med spas, specialty clinics), this creates a real tension: the need to establish or expand a location doesn't pause because rates are elevated. The practices getting deals done right now are the ones who've come to terms with today's reality: landlord contributions toward build-out are leaner than they used to be, and waiting for a better package often just means losing the space to someone else who moved faster.
Where This Is Headed
Both markets are showing signs of stabilization for 2026. Downtown Chicago leasing hit 8.4 million square feet in 2025, its strongest showing since before the pandemic. Suburban leasing was up nearly 20% year-over-year. Chicago retail vacancy is near its lowest point in years, with tight availability expected to push rents higher in key city neighborhoods like Fulton Market, the Gold Coast, and Armitage.
The city and suburbs aren't competing with each other so much as they're serving different needs. Downtown rewards tenants who want density, transit access, and a walkable amenity base. The suburbs reward those who need parking, lower occupancy costs, and proximity to a patient or customer base that doesn't work downtown.
The tenants I see getting the best outcomes right now, in both markets, aren't the ones who timed things perfectly. They're the ones who knew exactly what they needed, moved deliberately, and didn't let uncertainty become an excuse to stall. That's the mindset worth carrying into 2026.
