US Office Market Demand Continues to Grow

Office space leasing activity established a new post-pandemic high in the second quarter of 2026. The number of leases are up 27% over the trailing 12 months relative to the previous 5-year average, according to JLL. A significant uptick in absorption in the second quarter has driven over 30 million square feet of occupancy gains during the past 12 months.

Total vacancy rates are declining aggressively, JLL reported. Availability also has declined rapidly for eight consecutive quarters.

Still, the construction pipeline has only marginally increased for two straight quarters, remaining  extremely depressed by historical standards. Newer buildings have become exceptionally rare in most markets, driving aggressive rent growth for high-end spaces and a growing share of ultra-high-rent leasing activity.

Leasing volume with rent over $100 per square foot has reached record volumes in the past 12 months, and effective rents for new construction are growing over 20% on a rolling 12-month basis.

Meanwhile, downtown office vacancy rates have slightly declined in the Chicago area for the first time since 2022, and the suburban vacancy rate has fallen for the first time since 2019, according to Crain’s. Suburban Chicago available office space dropped from 33.4% to 33.1%, the first quarterly dip since before the pandemic.

The improvement is aided by the redevelopment of office space, The Real Deal reported. Buildings that sat unused with little sign of being filled are actively pivoting into several other functions, bringing total square footage of all suburban office space down to 93.2 million square feet from 100.5 million square feet. 

Suburban Chicago office inventory and downtown office inventory share a common success: Premiere offices with great amenities and location are the most desired and have the lowest vacancy rates. The flight to quality is forcing Class A landlords to consider adding space to their properties and everyone below it to upgrade considerably if they want to be competitive in the market.