State of the Commercial Real Estate Market – 2026 Q1 – RFP 87 Transcript
Introduction
Gordon Lamphere (00:00): As we bring in the new year and roll into quarter one of 2026, we’re starting to see numbers and narratives come together. I expect to see the continuation of a few trends in 2026. However, we can also expect the market to have a few shakeups as well. After speaking with some of the industry’s top voices in 2025, a lot of our listeners reached out wanting to hear directly from our team and get a better feel for what’s going on in the market.
After conversations with corporate occupiers, developers, and lenders, and more than 100 transactions closed across the past year, here’s what I’m actually seeing in the marketplace. I’m going to go asset by asset and location by location in Greater Chicagoland to give you an idea of where opportunities exist in the market, as well as critical locations to avoid. So let’s dive into it.
Office: From Panic to Sorting
Gordon Lamphere (01:00): The commercial real estate market in Chicagoland is sending mixed but increasingly interpretable signals. The extreme dislocations of the early 2020s are giving way to a more stable pattern, one where different asset classes aren’t just diverging, but defining their long-term roles in the region’s economic ecosystem. Office is stabilizing in pockets. Industrial is recalibrating after years of drought-level vacancy. Multifamily is absorbing supply while holding pricing power. And redevelopment continues to be the bridge connecting all the asset classes across the board.
In quarter one of 2026, the office conversation in Chicagoland has meaningfully evolved from the early 2020s. The panic phase is over. What we’re in now is a sorting phase, one less defined by headlines and more fundamentally about lease term structures, tenant credit, building systems, power capacity, and the feasibility of alternative uses.
Let’s start with the headline numbers and then put them into context. Downtown Chicago office vacancy is hovering around 26 to 27%, depending on the methodology used. That’s still historically elevated, but the important shift is directional. Net absorption stabilized in the second half of 2025. While it wasn’t strongly positive, the pace of givebacks has slowed materially. The market is no longer hemorrhaging space each quarter, and that matters, particularly for underwriting, refinancing, and tenant decision-making.
Sublease availability downtown has also plateaued. At its peak, sublease space represented nearly 30% of all available downtown inventory. As of early 2026, that figure has begun to compress as sublease terms burn off and occupiers make long-term decisions about hybrid office space. Many firms that overcorrected in 2023 and 2024 are now leasing again. It’s a very different market than pre-2020.
Gordon Lamphere (03:22): One of the biggest stabilizers in 2026 is the clarity around hybrid work. Most professional services firms, tech-adjacent firms, and corporate headquarters have landed on a two-to-three-day-per-week pattern. That predictability has allowed tenants to right-size intelligently rather than defensively. So what does that mean for the market? Most importantly, it means fewer emergency terminations and less panic. As a result, we’re beginning to see data indicating more lease and footprint stabilization.
However, as I mentioned earlier, the space being leased is very different from 2020. We are seeing a bifurcation of the marketplace. Companies are seeking either flexibility with plug-and-play spaces, or seven-to-ten-year leases with premium build-outs. Therefore, as we discussed last quarter, Class A building options continue to outperform in the marketplace, both on occupancy and on the stability of long-term leases.
As a result, in 2026, office performance is no longer as cyclical as it is structural. Class A and A-plus office buildings downtown and in Fulton Market are operating in a different universe. These assets typically share five characteristics: one, modern HVAC and electrical systems; two, strong natural light and efficient floor plates; three, ample amenities; four, transit access; and five, ownership that’s willing and able to invest in capital improvements.
These buildings are still transacting and leasing in the mid-40s range downtown, and higher in Fulton Market, with concessions moderating compared to 2024. Tenant improvement allowances remain elevated, but landlords are protecting face rents and focusing on credit quality.
Class B buildings, by contrast, are increasingly bifurcated themselves.
Gordon Lamphere (05:36): Those with good bones, reasonable column spacing, and manageable cores are competing by offering value, flexibility, and speed. Others are slipping into long-term limbo with rising vacancy and limited capital investment. Class C office is now widely understood by the market, especially investors, as transitional inventory. Its value is no longer in leasing, but in optionality. Investors are looking at zoning flexibility, land value, and conversion feasibility.
One of the most important quarter one 2026 developments is that office-to-residential conversions have become more selective and, as a result, far more realistic. Early enthusiasm has given way to reality. Today, only a narrow band of buildings truly work for effective conversions. Buildings must have narrow floor plates, logical window spacing, central cores that allow for multifamily layouts, and an acquisition basis below replacement cost. Additional incentives are often needed, including zoning flexibility and access to transportation.
The LaSalle Street corridor remains a prime example of this, with 1,700 residential units either delivered, under construction, or approved through the LaSalle Street program, including meaningful affordable housing. But what’s changed in Chicago in particular, and among its capital partners, is that investors are no longer trying to convert everything. They’re converting what pencils. This has had a stabilizing effect on the broader office market.
O’Hare and Suburban Office
The O’Hare office market continues to outperform the broader metro area, with vacancy generally tracking in the 18 to 20% range. Again, not strong by historical standards, but resilient relative to other areas of Chicagoland. Why? Infrastructure and use alignment. O’Hare-adjacent office benefits from proximity to logistics, aviation, and global business. Class A rents near O’Hare remain in the 30s gross, and leasing activity has picked up modestly as corporate travel normalizes
Gordon Lamphere (08:04): and international connectivity improves. Importantly, these tenants often value location consistency over rent minimization, which supports longer lease terms. Class B and C buildings near O’Hare still face many of the same pressures they do elsewhere in the market, and they’re now being underwritten as flex, industrial, or mixed-use sites rather than pure office plays.
Suburban office vacancy in early 2026 sits near 27 to 28%, roughly in line with downtown, but the underlying drivers are different. Strong suburban nodes like Oak Brook and parts of Schaumburg, as well as desirable Lake County locations, continue to lease. These markets benefit from office campus-style environments, retail and dining adjacency, easier parking, and lower total occupancy costs than downtown office. Oak Brook, in particular, continues to post rents in the upper 20s gross, with Class A vacancy materially below the suburban average. Landlords who invested in amenities, outdoor space, and flexible layouts are being rewarded. Conversely, older suburban campuses with deep floor plates, low ceiling heights, and minimal reinvestment are increasingly being repositioned or quietly removed from the office inventory.
For occupiers, office is no longer a rushed decision. You have leverage, optionality, and time, but building quality matters more than ever before, and signing long-term with a building without a clear future strategy carries significant risk. For investors, office in 2026 is not about betting on a full rebound. It’s either about owning office assets at the top of the quality stack, or buying at a basis that reflects today’s reality and then creating value through reinvestment or conversion.
Office isn’t dead in Chicago, but many markets are readjusting to the new era’s financial and physical changes. Therefore, there’s a tremendous amount of opportunity for both occupiers
Gordon Lamphere (10:28): and investors.
Industrial: Normalization, Not a Rollover
As we move into quarter one of 2026, the industrial market in Chicagoland is no longer defined by the extreme tightness we saw coming out of the pandemic. But it’s also not rolling over. What we’re seeing instead is normalization, and importantly, that normalization is happening unevenly, depending on location, building type, and infrastructure. So let’s start with the numbers, and then talk about what those numbers actually mean.
Across the Chicago metro area, total industrial inventory now stands at roughly 1.4 billion square feet, the largest industrial base in the country. Vacancy in quarter one of 2026 is running between 5.8 and 6.2%, depending on how sublease space is categorized. That’s up from historic lows of roughly 3.4% in 2021, but still well below the long-term average, which typically sits around seven to eight percent. So despite the narrative that industrial is cooling, the data tells us something much more precise. This is not an oversupplied market. This is a market that has moved from scarcity-driven panic to fundamentals-driven decision-making.
Net absorption across Chicagoland slowed meaningfully through 2024 and early 2025, particularly in large-format logistics buildings delivered during the peak e-commerce boom of the 2020s. But what’s important is that in quarter one of 2026, absorption has stabilized and has not continued to deteriorate. So what are we seeing right now?
Gordon Lamphere (12:23): We’re seeing positive absorption in small- to mid-bay industrial, manufacturing, life science, and cold storage-adjacent spaces, particularly in infill submarkets. However, while absorption has been strong in some areas, buildings over half a million square feet, particularly speculative development, have struggled and are substantially below the market in both occupancy and rents. So in quarter one of 2026, it’s no longer a take-anything-you-can-get market. Users are being selective, and as a result, buildings that don’t line up with how companies are actually operating in today’s market are being left behind.
Another misconception worth clearing up is rent growth. Industrial rent growth has undeniably slowed, particularly in metro areas that were speculative. Rent growth now averages around 3% a year, compared to the double-digit increases we saw in 2021 and 2022. But importantly, rents are not broadly declining. What we’re seeing is face rents largely holding, concessions increasing modestly, particularly in softer submarkets, and concessions tightening again in infill locations. In other words, landlords are defending rate integrity while using structure, not discounts, to close deals. That’s a sign of a healthy late-cycle market, not distress.
One of the biggest changes entering 2026 is on the supply side. Industrial deliveries in Chicagoland peaked in 2023. Since then, new deliveries have fallen by more than 30%, and speculative starts have slowed dramatically. Most new construction today is either build-to-suit or meaningfully pre-leased. That matters, because it removes some of the fear of a runaway oversupplied market. The pipeline is shrinking at the same time that demand is stabilizing, which provides a natural floor for vacancy and rents.
Where Industrial Is Still Tight
Gordon Lamphere (14:44): Now let’s talk about where the market is still exceptionally tight. Elk Grove Village remains one of the country’s most constrained industrial submarkets. Vacancy in Elk Grove Village is still hovering around 1 to 2% in quarter one of 2026, and there is effectively no greenfield land. Turnover is driven almost entirely by functionally obsolete product rather than new supply. This is not cyclical tightness. This is structural scarcity. The O’Hare corridor tells a very similar story, with vacancy generally around 3 to 4%. Demand here continues to be driven by freight forwarders, aviation-adjacent users, cold storage, and power-intensive operations.
This brings us to one of the most important industrial themes of 2026. In quarter one of 2026, power availability is no longer a secondary consideration. It’s a gating factor. We’re increasingly seeing deals delayed or killed entirely because buildings cannot support automation-heavy operations, cold storage refrigeration loads, advanced manufacturing processes, or data-supported logistics systems. Utility upgrade timelines are often 18 to 24 months, which does not align with most lease timelines. As a result, buildings with scalable power capacity are leasing faster and commanding stronger terms, even within the same submarket. This is creating a real cap rate divergence based on infrastructure, not just location.
Yes, large-format logistics buildings in peripheral submarkets are softer in quarter one. Vacancy in some of these corridors is pushing 8 to 10% or higher, with sublease availability increasing and lease-up timelines lengthening. But here’s the key point: that softness is localized. It hasn’t spread into infill markets, mid-bay product, or power-capable facilities.
Gordon Lamphere (17:05): And because the construction pipeline has slowed, this softness is not compounding.
Lake County Industrial
Lake County continues to stand out in quarter one of 2026, not because it’s the tightest market, but because it’s one of the most executable. Since 2021, the county has attracted more than $1.7 billion in industrial and life science investment, creating and retaining thousands of jobs. Vacancy here is higher than in Elk Grove, but absorption remains steady and development is largely demand-driven. Tenants are choosing Lake County as an intentional place to locate, particularly around life science and the I-94 corridor, because of lower land costs and strong life science and manufacturing ecosystems. That’s a very different demand profile than spillover logistics, and it positions the county well for the next cycle.
So what does all this mean? Industrial in 2026 is no longer about chasing growth at any cost. It’s about alignment: aligning businesses with buildings that have labor access and power flexibility. Those buildings are generally outperforming the market. Buildings that don’t are falling behind, regardless of age or class.
For occupiers, this is a healthier market. You have more time, more leverage, and more choice, but only if you’re flexible on location, cost, or size. For investors, industrial remains the strongest asset class in commercial real estate, but the easy money is gone. Returns now come from precision, not market momentum. And increasingly, that precision is pushing capital toward infill redevelopment and assets that sit at the intersection of industrial infrastructure and land.
Gordon Lamphere (19:15): That’s the industrial story in quarter one of 2026, and it’s far more nuanced and far more durable than the headlines suggest.
Multifamily: Absorbing Supply, Holding Occupancy
As we move into quarter one of 2026, multifamily continues to be one of the steadiest asset classes in the Chicagoland market, but not without nuance. This is no longer the rent spike environment of 2021 or the anxiety-driven construction boom of 2023. What we’re seeing now is a market that is absorbing supply, rebalancing itself, and laying the groundwork for a firmer, fundamentals-driven market.
Let’s start, as always, with the data. Across the Chicago metro area, effective rents ended up around 4% on average last year, even after modest softening in the second half of the year. In the city of Chicago specifically, median rents are sitting in the low $1,800s, down slightly month over month, but still well above pre-pandemic levels. Importantly, occupancy across professionally managed properties remains healthy, generally in the 93 to 95% range, depending on submarket and asset class. That combination of moderate rent growth with strong occupancy is the hallmark of a market digesting new supply rather than losing demand.
One of the most important multifamily developments entering quarter one of 2026 is what’s happening on the supply side. Nationally, 2024 was a record year for multifamily deliveries. Chicago participated in that wave, even if in a more muted way than the Sun Belt, particularly in the downtown and near-downtown submarkets. But as we enter 2026, the pipeline is thinning. New starts are down materially, and projects slated for 2026 and 2027 delivery are roughly 20 to 25% below peak levels. That matters because multifamily is fundamentally a lagging asset class. The projects delivering today were underwritten two to three years ago
Gordon Lamphere (21:38): under very different capital market circumstances. As that supply burns off and fewer projects follow behind it, the market naturally tightens.
Downtown multifamily in quarter one of 2026 is best described as stable. Yes, there’s still competition among Class A buildings. Yes, concessions remain part of the conversation. But occupancy has held and in many cases improved, as office-to-residential conversions begin and we start to see that product come to market. The LaSalle Street corridor is a strong example, with more than 1,700 residential units delivered, under construction, or approved as part of the office conversion plan. These projects are not flooding the market. They are targeted, mixed-income, and largely replacing obsolete office stock rather than adding speculative density. From a market perspective, that’s constructive. It increases downtown population, supports retail and services, and creates a more balanced live-work ecosystem. Importantly, it removes stranded office inventory while adding housing the city still needs.
Outside the CBD, multifamily fundamentals are even more resilient. Neighborhood submarkets with transit access, retail adjacency, and strong school districts continue to see solid demand. Suburban multifamily, particularly in Lake County and the north and northwest suburbs, remains undersupplied relative to household formation and downsizing demand. We’re seeing a steady increase in leasing demand driven by empty nesters downsizing out of single-family homes, young professionals priced out of the for-sale market, and renters prioritizing flexibility over long-term mortgage commitments.
Gordon Lamphere (23:57): In quarter one of 2026, multifamily rent growth is no longer accelerating, but it’s also not reversing. Across most submarkets, effective rents are growing at around 2 to 3%, with some softness in luxury downtown product and stronger performance in well-located suburban and neighborhood assets. What’s notable is that concessions, while present in the market, are being used tactically rather than aggressively. Free rent is often limited to lease-up situations, and while renewals sometimes see free rent, it’s much rarer than in the market as a whole. That tells you that although we’re seeing some pricing softness overall, it’s still a relatively robust marketplace.
From an investment standpoint, multifamily capital in quarter one of 2026 is cautious but active. Lenders are underwriting conservatively, focusing on in-place cash flows, realistic expense assumptions, lower leverage, and strong sponsorship. So even though transaction volume is not back to peak levels, deals that pencil are trading, particularly when properties have stable occupancy, limited near-term capex, and exposure to long-term supply constraints.
Importantly, multifamily is still benefiting from its relatively strong position. Compared to office, it carries less structural risk, and compared to industrial, it offers more predictable cash flow. So where does that leave us? Multifamily in quarter one of 2026 is not a story of explosive upside, but it is a story of durability. Supply is cresting, demand remains intact, rent growth is moderating but positive, and development discipline is returning to the market.
For occupiers, that means more choice in the near term, but likely firmer pricing over the next few years as construction slows. For investors, this is a positioning phase. You’re not buying at peak rents, but you’re also not buying into distress.
Gordon Lamphere (26:20): The opportunity lies in well-located assets that can ride the next tightening cycle as supply constraints reassert themselves. When you zoom out, multifamily continues to be a strong play, particularly in Chicagoland, as the broader real estate ecosystem absorbs population stabilization, and it acts as a natural reuse path for obsolete office.
Industrial Outdoor Storage: Scarcity You Can’t Build
Next up, we’ll talk about one of the least glamorous but most misunderstood corners of the market: industrial outdoor storage, and why the data shows it has quietly become one of the most valuable land uses in the region.
Industrial outdoor storage, or IOS, is one of the least talked about and most misunderstood asset classes in commercial real estate. This is not a glamorous sector of the market. There are no polished lobbies, no Class A amenities, no architectural awards. But if you want to understand where real estate scarcity exists in Chicagoland in quarter one of 2026, IOS is one of the clearest examples. And once again, the data tells a very consistent story.
At a national level, IOS is now estimated to represent roughly $200 billion in asset value, a figure that has grown rapidly since 2020 as institutional capital finally began underwriting the asset class. Vacancy in IOS typically runs at half or less of traditional warehouse vacancy in many major metro areas, particularly Chicagoland. Functional vacancy in Chicago is around 2%, and in certain corridors it’s effectively zero. Rents have also outperformed bulk warehouse space over the past five years. While warehouse rent growth has generally moderated and stabilized in the low single digits,
Gordon Lamphere (28:29): IOS rents in infill locations have continued to post mid- to high-single-digit growth.
Overall, the market is being driven by one thing: scarcity. The reason IOS performs the way it does is structural scarcity, not cyclical. You can always build another warehouse on the edge of a metro area. You cannot easily create new legal truck yards. IOS faces three permanent constraints. First, zoning resistance: municipalities strongly disfavor new IOS. Second, community opposition: truck traffic, noise, and visual impact limit approvals. And third, municipalities push for competing land uses with higher perceived tax value.
As a result, once a site is paved, fenced, and legally entitled for outdoor storage, it becomes functionally irreplaceable, especially in infill locations. That’s why IOS behaves more like infrastructure than traditional real estate.
In Chicagoland, IOS performance closely mirrors industrial infill dynamics, but with even tighter constraints. Around O’Hare and Elk Grove Village, industrial vacancy is already under 2%, and IOS availability in those same corridors is even tighter. Most legal yards are fully occupied, often by long-term tenants with specialized operational needs. Demand here comes from freight forwarders, trucking, construction, equipment rental companies, utility companies, and municipal contractors. These tenants tend not to be optional users. They’re highly location dependent.
One of the defining characteristics of IOS tenants is stickiness. Relocation
Gordon Lamphere (30:33): for an IOS operation is operationally complex and expensive. It involves new zoning approvals, re-permitting, security redesign, fleet logistics changes, and labor displacement. Because of that, IOS renewal probabilities are materially higher than traditional industrial. In practice, many IOS tenants stay put 10 to 20 years or even longer, renewing multiple times at escalating rental rates. That’s why IOS cap rates have compressed relative to warehouse over the last several years, despite the asset class appearing simpler on the surface.
For decades, IOS was dominated by small operators and local owners. That changed in 2020. Institutional capital entered IOS for three data-driven reasons: first, low capex requirements; second, high renewal probability; and third, minimal obsolescence. Once paved and entitled, IOS does not face the same functional depreciation as more building-centric assets. There are limited clear height issues, minimal HVAC system issues, and very limited office build-out issues. As a result, from a risk-adjusted standpoint, IOS is extremely attractive in a higher rate environment.
Moving north into Lake County, the IOS story changes slightly, but not fundamentally. There are more land plays here, and certain municipalities are marginally more willing to entitle IOS. But even there, infill sites near the tollway with proper truck geometry are hard to find. The data shows that even in markets with more land, IOS availability still collapses rapidly once zoning and access constraints are applied. In other words, scarcity still wins.
For investors, IOS is one of the cleanest expressions of supply-constrained real estate in the market.
Gordon Lamphere (32:58): Returns are driven by land scarcity, zoning barriers, tenant immobility, and long-term demand tied particularly to logistics and construction trends. It’s not a growth story in the traditional sense. It’s a durability story, and the data supports that durability across cycles.
For occupiers, IOS is one of the toughest markets to navigate. If you need a yard, you cannot wait until lease expiration. You cannot assume relocation is feasible. You cannot rely on speculative supply. You have to plan ahead, lock down space decisively, and often overpay for it. The data shows that once you lose a well-located IOS site, replacing it is often impossible, especially within the same trade area. That’s why renewals are high and pricing power sits firmly with landlords.
IOS also helps explain what’s happening elsewhere in the market. As obsolete office and retail assets come under pressure, many assume they will just convert to industrial or IOS. The reality is that most will not. IOS is not easy to entitle, it’s not politically popular, and it only works in very specific locations. That’s why existing IOS assets continue to command premiums, and why the market keeps repricing them upward.
Land and Redevelopment: Where It All Comes Together
Now let’s talk about land and redevelopment, because this is where everything we’ve been talking about comes together. When we talk about land and redevelopment, it’s important to understand that it’s generally the most effective mechanism through which capital is reallocated when commercial real estate falls out of alignment with the market. In quarter one of 2026, that mechanism is working, and it’s working quite effectively. Not aggressively, not recklessly, but deliberately. And that distinction matters.
Over the past three years, redevelopment activity slowed for one simple reason: uncertainty. Construction costs were volatile.
Gordon Lamphere (35:24): Interest rates reset faster than underwriting models could adjust, and municipal approval timelines became riskier, even as political pressure mounted around housing, traffic, and land use. As a result, many owners and developers waited.
So what’s changed entering 2026? It’s not necessarily optimism. It’s clarity. We now have generally stabilized interest rate expectations, more predictable construction pricing, clear municipal priorities in Chicagoland around housing and employment, and increasingly a clear view of which assets are obsolete. That clarity allows the redevelopment math to work again.
Let’s anchor this in the data. Across Chicagoland, tens of millions of square feet of office and retail inventory are now functionally obsolete. That inventory isn’t obsolete because it’s vacant. It’s obsolete because the spaces no longer meet what users want in the market. In office alone, downtown vacancy remains around 26 to 28% in some portions of the market, and much of it sits in older, predominantly inefficient buildings. These assets are not going to lease their way back to health. The data on absorption, rent growth, and tenant preferences makes that clear.
So what does this mean? For many of these properties, value is no longer driven by income. It’s driven by what the land can become. One of the biggest misconceptions about redevelopment is that the goal is always to push the land into the most intensive use possible. Although that’s perceived as the high-value move, such as putting dense logistics or high-density residential into a location, that’s rarely how successful projects actually get built. In quarter one of 2026, the data shows that most successful redevelopment projects share three traits: one, community use compatibility; two, entitlement realism; and three, infrastructure alignment.
Gordon Lamphere (37:46): That’s why most office-to-industrial conversions fail, and most office-to-multifamily or office-to-flex conversions succeed. The LaSalle Street corridor has already demonstrated what works: narrow floor plates, logical building cores, mixed-income housing, and public-private alignment. As a result, more than 1,700 units on LaSalle Street are either delivered, under construction, or approved through the program. That’s not because conversion is easy. It’s because these buildings met specific feasibility thresholds.
What’s changed in 2026 is discipline. The city is no longer entertaining marginal conversion proposals. Capital partners are underwriting conservatively, and as a result, developers are targeting buildings where conversion improves, not dilutes, the city’s urban fabric. That selectivity reduces risk, and it improves execution timelines.
Outside the CBD, redevelopment looks different. In the suburbs, we’re seeing office campuses repositioned into multifamily, senior housing, or mixed-use retail. We’re also seeing mall conversions, as well as office-to-industrial conversions. Generally, the most important thing about these conversions, like all of the conversion projects we’ve been discussing, is finding uses that are consistent with the community as a whole. Unless there’s community buy-in, a project never makes sense.
The Big Picture for 2026
As we wrap up the quarter one 2026 market update, I want to zoom out for a moment, because when you look at each asset class in isolation, it’s easy to miss the bigger signals. What the data shows us very clearly right now is that Chicagoland’s real estate market is not in collapse. It’s not in chaos. It’s a reallocation.
Office stopped falling and started sorting. The market is shedding obsolete inventory while stabilizing around buildings that still serve how people actually work.
Gordon Lamphere (40:08): That’s not a failure of office. It’s a recalibration to a smaller, more functional office footprint.
Industrial is no longer riding a once-in-a-generation shortage. It’s operating in a more rational environment where infrastructure, power, and location all matter more than sheer square footage. Scarcity still exists, but ultimately, it’s not structural scarcity.
Multifamily is doing what it almost always does in moments like this. It’s absorbing supply, holding occupancy, and quietly reestablishing pricing power as new development slows. It’s not exciting, but it’s dependable.
Industrial outdoor storage is a totally different world. It’s reminding everyone what real scarcity actually looks like. Zoning, entitlement, and land constraints are driving value far more than sophisticated buildings ever could, and the capital flowing into IOS is responding to that data and driving up costs.
And redevelopment, whether it’s office to residential, suburban campuses to mixed use, or obsolete assets to clean industrial, is the connective tissue tying all of this together. It’s how capital migrates from yesterday’s demand into tomorrow’s reality.
What’s different about quarter one of 2026 compared to the last few years is clarity. We have a much clearer picture of tenant behavior, clearer capital expectations, clearer municipal priorities, and clear signals about which assets have a future and which don’t. That clarity doesn’t eliminate risk, but it does make risk priceable again. And when risk is priceable, deals get done.
For investors, this is not the moment to wait for a broad rebound. This is the moment to be selective, to focus on assets with infrastructure, alignment, and optionality, and to underwrite reality, not nostalgia.
Gordon Lamphere (42:29): The market in quarter one of 2026 isn’t asking whether commercial real estate will survive. That question has already been answered. What it’s asking now is who is willing to adapt. And as always, the data tells us exactly where to look.
If you want more insights like this, grounded in real transactions, real negotiations, and real market data, subscribe to The Real Finds Podcast. You can find us on YouTube, Spotify, or wherever you get your podcasts. I’m Gordon Lamphere with The Real Finds Podcast. Thank you for listening.
Van Vlissingen and Co. has been the Midwest’s oldest commercial real estate brokerage, development, and management firm since 1879, and today is independently ranked the #1 commercial real estate agency in Chicagoland, home to the #1 independently ranked agent, Gordon Lamphere, and the region’s #1 ranked commercial property management team. If you own, manage, or invest in energy-adjacent, mixed-use, or transit-oriented property across Lake County, the North Shore, the Northwest and O’Hare corridors, DuPage and the I-88 corridor, Will County, or southern Wisconsin’s Pleasant Prairie, Kenosha, and Racine markets, contact Van Vlissingen and Co. at 📞 847-634-2300 or 🌐 vvco.com. For a market-wide view of where these dynamics sit today, see our State of the Chicagoland Commercial Real Estate Market for Q3 2026.