Chicago Office Vacancy Still High, But Signs Point to Rebound

Chicago’s downtown office vacancy rate went up to 22% in the second quarter of 2024 from 21% in the first quarter, according to a recent report from Bradford Allen. In its “Q2/24 Office Market Report: Downtown Chicago” research, the gross asking rents were $42.81 per square foot, down slightly from $43.44 last quarter.

Bradford Allen also released its Mid-Year 2024 Office Market Report: Suburban Chicago,” which showed the suburban Chicago office vacancy rate was 24% in the first half of the year, down from 28.3% at the end of 2023. Gross asking rents remained largely unchanged at about $27 per square foot.

“In this environment, successful owners tend to be those with the ability and willingness to reinvest in properties—often in the form of spec suites, amenity upgrades and tenant improvement allowances,” said Bradford Allen’s Neil Bouhan.

Examples of downtown reinvestment include the owner of Prudential Plaza office complex’s pledge to invest $50 million in upgrades and the city of Chicago’s $150 million in TIF funds to redevelop four office properties.

Office sales activity in Chicago’s CBD ticked up in the second quarter, with sales totaling $255 million in the first half of 2024, and the suburbs saw more than four times the sales volume of Chicago’s CBD last year despite having 40% less inventory.