Chicago Office Market Report
Space Demand Yet to Turn Corner in Chicago;
Return to Office Timeline Remains Murky
Office fundamentals continue to weaken. Uncertainty regarding both the economic climate and workers’ return to offices made tenants reluctant to renew current agreements or expand operations in the metro. This accelerated the pace of move-outs and consolidations while move-ins tapered, which has driven a sharp increase in available space on the market. Over the past six quarters, the metro observed nearly 13 million square feet of negative net absorption, the most significant decline in office demand in at least 15 years. As a result, vacancy rose 380 basis points to 19.2 percent, the highest level in over a decade. Vacancy will continue to elevate in the second half; however, demand should begin to stabilize over the next few quarters. A rebound in leasing activity is likely on the horizon as pent-up demand resulting from a year of indecision plays out.