Office Continues to Decline
Chicago continues to see ever-higher vacancy and availability rates and large amounts of negative absorption. However, these overall data points obscure the fact that parts of the office market are improving much more than others. The office market in the West Loop and Fulton submarkets are relatively healthy, while the East Loop and Central Loop continue to struggle.
Rental rates rise for prime properties
Despite the overall distress observed in the office market, market rents for prime properties have continued to ascend. As tenants shift their focus from quantity to quality, and show a preference for newer, well-situated properties with abundant amenities, the rents for these prime properties have experienced robust growth. On the other hand, rents for older properties have generally remained stable, with some buildings experiencing rent decreases. It is anticipated that rents for these less desirable will not see an increase and may face further declines over the ensuing two years.
Office Investment Market Nears Rock Bottom
There were only six investment sales in the Chicago CBD office market in the first half of 2025. All of the sales reflected significant value losses. Three of the sales are targets for residential conversion.
