Chicago CBD Office Leasing Sees Improvement, “Flight-to-Quality”

Chicago’s CBD direct vacancy rate of the Chicago Office Market Index was 7.3% at the end of Q1, according to Transwestern’s latest report. Transwestern’s index is comprised of the last 20 Class A office buildings larger than 300,000 square feet in Chicago’s CBD.

This is 12.4 percentage points lower than the 19.7% rate for the overall CBD. This significant difference highlights the trend of tenants preferring newer buildings with better amenities, causing “flight-to-quality” activity in the market.

And while the newest building in the Index, the 1.5 million-square-foot BMO Tower at 320 S. Canal Street, technically has the highest vacancy rate at 39.0%, it’s due to lost pre-leasing momentum during the pandemic. But recently, Antares Capital leased 79,657 square feet, and Molson Coors leased 83,848 square feet of the building, showing prospects are improving.

The newly completed Sales Force Tower, a 1.2 million-square-foot property at 333 W. Wolf Point Plaza, will be added to the CBD and Index in Q2. The development is already 100% pre-leased by Salesforce and Kirkland & Ellis, although Salesforce has listed 119,950 square feet for sublease.

Meet industry experts at the upcoming Connect Midwest: Multifamily and Adaptive Reuse Trends, which takes place June 13, 2023 at the W Chicago City Center Hotel. Click here for more information and to register.