United States: Chicago office market - 2025
Leasing activity remains below pre-pandemic levels but appears to be settling into a new normal, whilst office investment nears rock bottom.
Office Continues to Decline
The fourth quarter brought a welcome period of relative stability to the Chicago CBD office market. The vacancy rate held steady at 22.6%, unchanged from the previous quarter and up 50 basis points year over year. Net absorption totaled negative 64,055 SF, the smallest amount of negative absorption recorded in ten quarters. Leasing activity remains below pre-pandemic levels but appears to be settling into a new normal. While many tenants continue to downsize, a growing number are now expanding. Current deal activity suggests that the outsized levels of negative absorption seen in recent years are unlikely to continue at the same pace going forward.
Rental Rates Rise for Prime Properties
Despite the overall distress observed in the office market, market rents for prime properties have continued to ascend, marking a 5.9% increase from the end of 2024 to $77.41 PSF at the end of 2025. Tenants continue to shift their focus from quantity to quality, and show a preference for newer, well-situated properties with abundant amenities. Most of the prime properties have very little remaining space available, leading to robust growth in asking rates.
Office Investment Market Nears Rock Bottom
There were 19 investment sales in the Chicago CBD office market in 2025, all of which reflected significant value losses. Lenders holding debt on distressed Chicago office assets are increasingly acknowledging that property values have fallen below outstanding loan balances. As a result, they are accepting lower offers and realizing losses. This shift has sparked renewed interest from outside investors who are acquiring multiple properties, a trend that suggests the market may be nearing, or has already reached, its cyclical bottom.