The Chicago CBD office market faced ongoing challenges in 2024, with rising vacancy rates and negative absorption persisting for the ninth consecutive quarter. Despite these hurdles, leasing activity showed signs of recovery, particularly in the West Loop and professional services sector.
Key Highlights:
- Record-High Vacancy Rates – Direct vacancy hit an all-time high of 23.2%, while total vacancy, including sublease space, reached 24.67% by year-end.
- Continued Negative Absorption – The CBD recorded -3.2 million square feet of direct net absorption, with the East Loop suffering the largest loss (-1.1 million square feet) due to long-term tenant migration. Fulton Market was the only submarket with positive absorption.
- Sublease Vacancy Improvement – Sublease vacancy declined for four consecutive quarters, dropping from 2.31% in late 2023 to 1.47% by the end of 2024.
- Surge in Q4 Leasing Activity – Leasing volume reached 2.45 million square feet in Q4, marking the strongest quarter since 2021 and a 9.26% year-over-year increase. Notable deals included Sargent & Lundy’s 381,944-square-foot relocation and major renewals by PwC, Mayer Brown, and BP.
- West Loop Leads Demand – The West Loop remained the most active submarket, with professional services firms driving leasing activity. Tenants favored move-in-ready “spec suites” and high-quality existing spaces.
While vacancy remains a significant challenge, strong leasing activity in Q4 suggests continued tenant demand for well-located, high-quality office spaces.