Suburban Chicago market dynamics incrementally improve, but soft conditions generally prevail

Market conditions trended slightly better across the Suburban Chicago office market in the third quarter as leasing perked up while overall availability ticked lower. The 1.4 million square feet (msf) leased this period was the region's third best by volume since the pandemic's start in Q2 2020. The four largest deals completed in the third quarter were all tenants relocating to Class A properties, further evidence of a flight to quality by Suburban tenants. Overall availability edged lower, falling 50 basis points (bps) over the last year to 31.0%. Class A availability remained stubbornly elevated, but likewise declined by 50 bps to 34.5%. Occupier demand remains generally weak across the region, and landlords' financial distress has limited the number of stabilized buildings with sufficient capital required to transact space.

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