Chicago 2026 U.S. Real Estate Market Outlook Midyear Review

Executive Summary 

Office

Tenants caution amid economic uncertainty has weighed on leasing activity in Chicago's central business district (CBD). However, in-market occupiers are actively seeking a combined 3 million sq. ft. of space, which is expected to boost leasing velocity in H2 2026 and H1 2027. While much of that demand is for Prime space, limited availability will cause this demand to spill over to well-positioned, non-Prime Class A buildings.

Industrial

More than 20 million sq. ft. of new leases were signed in H1, surpassing H1 2025 activity. Consistent with national trends, third-party logistics (3PL) providers accounted for more than 40% of total leasing activity at midyear. Jumbo deal activity also outperformed, with eight signed leases totaling over 750,000 sq. ft. The demand pipeline remains robust, as 16 tenants have active requirements exceeding 250,000 sq. ft. each, including more than 5 million sq. ft. of combined 3PL requirements.

Retail

Leasing activity, tenant tours and brand re-engagement are accelerating along North Michigan Avenue, following several years of elevated vacancy. A growing deal pipeline is expected to drive leasing volume through year-end, supported by recent commitments from global tenants including Uniqlo, The North Face, Charles Tyrwhitt and Leica Camera, as well as American Eagle's recent new lease at 600 North Michigan Avenue. Renewed occupier confidence in the corridor is broad-based and continuing to build.

Data Center

Chicago's wholesale data center inventory increased by 38% year-over-year in Q1 to 910.6 megawatts (MW). Hyperscale, AI, enterprise and financial services occupiers drove absorption, with strong preleasing attracting further investment. Average asking rents increased year-over-year, reflecting strong demand across a wide range of tenant types.

Multifamily

Multifamily demand continues to outstrip new supply. The overall vacancy was 3.8% in H1, well below the long-term average of 5.1%. The ever-widening gap between ownership and rent costs will sustain demand and continue to drive would-be buyers into the rental market. Strong fundamentals are expected to continue attracting investors and supporting sales prices in the near term.