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<\/p>\nChicago\u2019s commercial real estate players are entering 2026 with optimism about the city\u2019s prospects, with hopes anchored in leasing trends and a lack of new supply across the office and multifamily sectors.<\/p>\n
The start of the year may be defined by tight vacancy rates in multifamily and certain office products, while the back half of 2026 could see opportunities for significant tenant movement in the office sector due to a wave of upcoming lease expiries, panelists said at Bisnow\u2019s Chicago 2026 Market Kickoff.<\/p>\n
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Buildings with stable ownership willing and able to invest in improvements stand to benefit, Cushman & Wakefield Managing Principal Vicki Noonan<\/a> said at the event held at the Burnham Otis building Thursday.\u00a0<\/p>\n \u201c\u201925 ended better than we thought it was going to end at the beginning of the year,\u201d Noonan said. \u201cThe second half of the year was like, \u2018Katy, bar the door,\u2019 on just about every asset class. I think that momentum has pushed into 2026. I think 2026 will be another really strong year.\u201d<\/p>\n Trophy office assets have posted positive absorption each year since 2020 but have experienced declining totals, averaging 48% since 2022, due to low availability,\u00a0according to an Avison Young office report<\/a>. Despite low availability in top office stock, Class-A negative absorption has not slowed at the same rate, averaging 1.7M SF every year since 2022.<\/p>\n Top-shelf properties had a total availability rate \u2014 covering both direct and sublease availability \u2014 of 15.3% by the end of Q4, roughly half of the overall market\u2019s rate. Under 500K SF of trophy space is currently in development.\u00a0<\/p>\n Limited top-shelf availability in the foreseeable future could influence leasing dynamics, said Paul Morgan, chief operating officer of work dynamics at JLL<\/a>.<\/p>\n \u201cThat puts real pressure on our stock here,\u201d he said. \u201cWe don’t have that much availability, and clearly, that’s going to tighten the market, I think this year.\u201d\u00a0<\/p>\n \n Bisnow\/Ryan Wangman\n <\/p>\n \n Wintrust Financial\u2019s Bart Johnson, JLL\u2019s Paul Morgan, Cook County\u2019s Fritz Kaegi, Cushman & Wakefield\u2019s Vicki Noonan and Husch Blackwell\u2019s Nida Ghaffer\n <\/p>\n The biggest limiting factor in the city’s ability to attract large corporations is the availability of premium space, Morgan said. While some of the demand may trickle down to older properties because of a lack of alternatives, the dearth of top space is something city CRE players need to keep in mind in the long term, he said.\u00a0<\/p>\n Combined with a lack of the most desirable space, lease terms coming up in 2026 could also spur market movement, Morgan said.<\/p>\n \u201cWe’ve got a lot of lease expiries coming up downtown this year,\u201d he said. \u201cThe back half of this year is going to really start to see some real tightening of the marketplace.\u201d<\/p>\n Some of the city\u2019s trophy owners are testing the market for top-shelf assets. Blackstone is reportedly\u00a0weighing a sale<\/a>\u00a0of the iconic Willis Tower<\/a> in the West Loop, and Donald Bren’s\u00a0Irvine Co.<\/a>\u00a0is\u00a0exploring a deal<\/a>\u00a0for the 50-story tower at 1 N. Wacker Drive.<\/p>\n Wintrust Financial President and CRE Head Bart Johnson projected that the city would see many more cranes in the sky over the next two years. At some point \u2014 possibly in 2027 \u2014 he said he thinks the city will see another trophy-quality office building being launched and built.\u00a0<\/p>\n Noonan said some of the renovations underway in older buildings across the city to update spaces and add amenities may provide quality space that\u2019s harder to find in the current market. Office owners with the capital to make investments in their buildings will create opportunities for more attractive leasing prospects, she said.\u00a0<\/p>\n \u201cThe\u00a0No. 1 for an occupier is, \u2018Do I have a landlord that is well capitalized in order to continue to maintain so that, if I move into this building, I’m actually going to get what I bargained for?\u2019\u201d Noonan said.\u00a0<\/p>\n \n Bisnow\/Ryan Wangman\n <\/p>\n \n Inland Mortgage Capital\u2019s Art Rendak, Belgravia Group\u2019s Jonathan McCulloch, W.E. O’Neil Construction\u2019s Damian Eallonardo and Hiffman National\u2019s Carrie Szarzynski\n <\/p>\n The city\u2019s multifamily sector, while posting strong vacancy rates and rent growth<\/a>, has only a trickle of new development on the way.\u00a0<\/p>\n Chicago\u2019s multifamily construction<\/a> pipeline is one of the slowest in the country, with this year\u2019s deliveries expected to fall below 4,000 units \u2014 the lowest since 2012, according to a\u00a0Marcus & Millichap 2026 forecast<\/a>. Vacancy projections for the end of 2026 are at 3.8%, about 200 basis points below the area\u2019s long-term average.\u00a0<\/p>\n<\/p>\n<\/p>\n