Chicago CBD office market report

Even with the addition of 3.9 million square feet of new space, the pandemic-driven demand for quality space has led to a relatively limited change in Trophy-class vacancy since the beginning of 2021. Fulton Market stands out as the only submarket where Class A vacancy dropped as finance, consulting, and law firms are now entering a tenant pool historically dominated by tech, media, and advertising companies. Class B/C vacancy rates in the Central Loop submarket are the highest among any segment of the downtown market.

As construction of office buildings has taken a dramatic pause in Chicago, supply for new space is becoming increasingly more competitive. In a continuation of the “flight to quality” trend persistent in today’s market, tenants in need of space have begun to look at the next-newest buildings of the 90s/00s era as new construction vacancies dwindle. The portion of total leasing activity conducted in this construction era has grown from 12% to 33% while post-2010 construction leasing has fallen from 25% to 9%.

Total office-using job postings across the Chicagoland area have grown in every month of 2024. Over this same time frame, the share of postings that were for fully remote roles fell from 11.4% to 9.1%, a 230-bps decline. In the next three years, 62% of U.S. CEOs expect corporate employees, who traditionally worked in-office, to return to the physical workplace*. This is up significantly from the 34% reported in 2022.