Chicago’s Sublease Surge
From Peak Inventory to Stabilized Commitments in a Hybrid World
After surging since 2019, driven by hybrid work policies and evolving footprint needs exacerbated by the pandemic, Chicago’s CBD sublease availability has started to recede from its peak. For tenants focused on value and quick occupancy, sublease space is proving to be an ideal solution, offering move-in-ready suites at significant rent savings.
RECENT INVENTORY DYNAMICS AND STABILIZATION
Although sublease inventory grew substantially post-2019, sublease space was already a viable tenant option even before recent shifts to hybrid work. From 2017 to 2019, tenants leased an average of nearly 1 million square feet annually (about 35 transactions), showing that subleasing has long been an integral part of the market’s fabric.
From 2019 to 2025, completed sublease transactions slightly outpaced new supply: an average of 515,500 square feet leased and removed each year versus roughly 400,000 square feet added (Exhibit 2). Despite these positive trends, nearly 1 million square feet removed from available sublease inventory post-2023 is unaccounted for in leasing activity. This points to natural lease expirations and sublessors quietly withdrawing stale listings. The final result is clear: sublease availability has stabilized and is now tightening.
DRAWING INSIGHT FROM COMPLETED TRANSACTIONS
While many tenants adopted hybrid models after 2019, traditional office users such as financial services and law firms seized discounted prebuilt suites. Tech tenants, however, led the charge, capturing nearly one-third of activity. They chose ready-to-occupy spaces that eliminated buildout delays during rapid expansion. Other active users include historically cost-conscious groups: healthcare, insurance, civic and social organizations, and educational tenants (Exhibit 4).
Over the past seven years, approximately 70% of sublease deals closed below floor 20 (Exhibit 5). Tenants seeking the best economics willingly traded city views and higher-floor prestige for meaningful savings on quality existing conditions. Only 28 transactions occurred above floor 30 across the seven-year period, while 225 closed lower in the stack — confirming that tenants who once paid premiums for elevation largely stayed put.
Class A buildings clearly dominated, capturing 67% of subleased square footage from 2019 to 2025, while Class B accounted for 31% (Exhibit 6). Class C deals totaled just 2% of total square footage, owing in part to lower-quality credit tenants tending to walk away from leases rather than seek subletters. Larger users (over 10,000 square feet) overwhelmingly selected Class A, while smaller tenants spread across all classes.
THE ART OF THE SUBLEASE DEAL: EXTENDING TERMS AND CAPTURING SAVINGS
Relative to new, direct deals, sublease tenants save an average of $15 per square foot while gaining access to existing buildouts and prime locations they might not otherwise afford (Exhibit 8). Despite these lower costs for sublease tenants, building owners gain increased physical occupancy while keeping the original tenant legally attached to the space. Many deals also include additional tenant improvement allowances, enabling new occupants to customize the space and make it their own.
For many sublease tenants, extending the term with a direct lease in addition to the sublease, and blending the rates over the term, is a common, cost-effective structure. For building owners, this blend-and-extend approach is a strategic and operational win. Furthermore, growing interest in spec suite leasing presents an opportunity with minimal additional buildout costs to the owner should high-quality sublease suites become vacant.
What many tenants once viewed as a temporary solution, subleasing has become a strategic value choice. Today, alongside the rise of spec suite leasing (nearly 40% of CBD activity in 2025), sublease space stands as a reliable, long-term alternative to bespoke buildouts.