CX Insider Blog

Written By N. Oliver Maudlin, of KSA Lighting & Controls

Hailing from the Second City, firmly and proudly in America’s third coast, is truly a one-of-a-kind place to call home. From its world-class skyline and renowned dining scene to its lasting contributions in technology, economics, academia, and the arts, Chicago and its people have long shaped and inspired the nation. Chicago continues to earn its reputation as the home of tough, thoughtful, & resilient leaders who treat challenges as what they truly are: opportunities. Moving forward into 2026, opportunities are there. Yes, there are broader economic headwinds in certain commercial segments, however, recent data shows the flight to quality construction remains strong across certain key markets. In short, it’s OK to be cautiously bullish. Let’s explore.

The Central Business District, the epicenter of Chicago’s business community, is at the forefront of the flight-to-quality movement as companies continue to shift towards a return to the office. With demand for Class A/Trophy Asset remaining strong, and available square footage diminishing, organizations are forced to act quickly. Cushman Wakefield reports that 2025 saw a total recording of 6.3 million ft/sq of new leases, up 7 percent YoY. Of that, 3.7 million ft/sq, or 59 percent, were Class A/Trophy properties. On average, the leased square footage for Class A space is 4,000 ft/sq higher per transaction. Guided by fundamentals and patience, investors are starting to position themselves to capture a share of the next iteration of Chicago’s CBD. CY 2025 saw a 35 percent increase in large building acquisitions with 37 properties over 20,000 square feet changing hands. What does this mean? The flight-to-quality movement is only beginning. Companies value in-person collaboration and modern comforts in an amenity-rich environment. If you want to see what this looks like, I encourage you to enjoy a cup of coffee in the West Loop.

Staying downtown, Chicago is also seeing a significant increase in adaptive reuse projects as investors are harnessing the power of public-private partnerships to fund these transformative buildings. We’ve previously discussed LaSalle Street Reimagined, an ambitious program with the goal of converting vacant or depreciated office space into vibrant, mixed-use communities. CY 2024 saw Chicago lead the nation with 880 apartments delivered from adaptive reuse projects, edging out Manhattan. With several new building conversions funded and underway, including the recently announced 30 N. LaSalle conversion, Chicago continues to position itself to develop into the country’s next megacity with a vibrant and dynamic city center.

As Chicago’s Loop continues to attract and welcome more residents and office workers, public infrastructure, the Always-On Backbone, becomes paramount. The CTA recently kicked off a significant renovation of the State and Lake Street Station. This station, one of the busiest in Chicago, will be modernized with improvements to safety, accessibility, and comfort. While construction will take time, slated to finalize in 2029, this project delivers an unambiguous message: the Loop is coming back.

Let’s quickly step outside of the Loop. Chicago has long been an industrial nerve center, serving as a logistical and warehousing hub for many organizations. A low vacancy rate, closing the year at 4.6%, combined with a substantial increase in leasing activity, up 60% YoY, and positive net absorption is signaling a consistent demand for industrial space. For reference, 2025 saw over 40 million ft/sq of new lease activity in the Chicagoland area. Overall, 2026 is setting up to be a balanced year with a healthy mix of Build-to-Suit and speculative low-bay and high-bay projects that offer tenants what they want: modern, innovative, and scalable solutions.

Healthcare will continue to be a driving force in Chicagoland construction as we continue to see a flight-to-quality in convenience to care. Healthcare providers are keenly focused on an equitable distribution of access to healthcare services and are making strategic investments to serve previously underserved neighborhoods. Last year, we discussed Advocate Health System’s upcoming $1B ten-year development on the south side which will feature a hospital campus and additional satellite ambulatory care locations. In the coming months, in affiliation with Stone Community Development and Community Neighborhood Initiatives, Lurie Children’s will deliver a new facility, Austin HOPE Center, which is slated to open in August of 2026. When you have a moment, please consider reading about this transformational project. In addition to significant campus projects with both UC Med and Northwestern, look for continued opportunities to arise as the need for ambulatory care centers continues to rise.

Once again, we enter a new year fueled by a tailwind of megaprojects headlined by diverse mix of projects including Universal’s Horror Unleashed, Illinois Quantum Park, Google’s Offices at the Thompson Center, Foundry Park, The 78, The 1901 Project, and multiple data center expansions. The common thread binding these projects, and those listed previously, is collaboration. Value is generated and expectations are exceeded when all stakeholders row the boat together in the same direction. What separates Chicago is our passion to do good work, collaborate with each other better, and deliver our best for our clients, families, and communities.

Cheers to 2026!