Chicago’s Office Sector Still Struggles

Chicago’s office sector continued to struggle in the first eight months of this year, according to Yardi Matrix data. The metro lagged behind all gateway markets for average sale prices, despite ranking in the middle for investment volume. Its development pipeline was among the lowest nationally as well, although completions registered respectable figures.

However, the Windy City’s office vacancies remained nearly at the same level as last year’s. Furthermore, the market saw the biggest year-over-year office visit recovery this August, according to Placer.ai.

Development activity below national figures

Chicago’s office development pipeline at the end of August comprised 490,876 square feet, representing 0.2 percent of its total inventory. The index accounted for a third of the national threshold. The metro lagged behind all gateway markets, while Boston (5.6 million square feet) and Manhattan (3.4 million square feet) took the lead nationally.

When also taking into account planned projects, Chicago’s share out of total stock reached 0.6 percent, still well below the 1.9 percent U.S. figure. The market was surpassed by all its peers, with Austin and Boston (each at 6 percent) ranking first in the country.

This summer, Inspired by Somerset Development broke ground on the second phase of Bell Works Chicagoland, a 1.6 million-square-foot complex in Hoffman Estates, Ill. The redevelopment of AT&T’s former campus, that has been vacant since 2016, is one of the top projects reshaping Chicago.

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As for completions, the metro saw only three properties totaling 447,370 square feet coming online in the first eight months of 2025. Deliveries dropped almost 90 percent year-over-year; however, the Windy City occupied a median position among similar markets, surpassing Seattle (377,788 square feet), Los Angeles (171,760 square feet) and Manhattan (49,194 square feet).

One of Chicago’s completed projects was Hyde Park Labs, a 302,388-square-foot life science building developed by Trammell Crow Co. and Beacon Capital Partners. The duo delivered the facility in July.

Sale prices lag gateway peers

Chicago’s office investment activity reached $826 million year-to-date as of August, placing the metro in the lower half among gateway markets. Manhattan ($5 billion) lead nationally, while Miami ($341 million) and Seattle ($248 million) were at the opposite pole.

Chicago assets traded for $60 per square foot on average, less than a third of the $190 per square foot national value. The metro posted the lowest sale price among the top 25 markets. Once again, Manhattan ranked first, at $528 per square foot.

One of the largest properties to change hands in the second half of the year was a 1.3 million-square-foot office tower at 311 S. Wacker Drive in Chicago. Kohan Retail Investment Group acquired the asset from Zeller Realty Group for $45 million or roughly $35 per square foot, Yardi Matrix shows. The sale price marked an 85 percent discount from the property’s 2014 trade.

Chicago’s office vacancy rate still steady

Chicago’s office vacancy rate at the end of August clocked in at 19.1 percent, 40 basis points above the national average, but only 10 basis points higher year-over-year. Among gateway metros, Seattle (27.2 percent) and San Francisco (25.9 percent) had the most available space, while Manhattan (13.6 percent) and Miami (14.3 percent) occupied the ranking’s first two positions.

The metro’s average listing rate at the end of the same month reached $28, up by 1.5 percent over the year. Among gateway markets, Boston (11.2 percent) and Miami (8.8 percent) posted the highest year-over-year upticks, while Houston (-8 percent) and Los Angeles (-4.3 percent) were at the other end of the spectrum.

In one of the largest leasing agreements in the metro this year, Vantive signed up for almost 670,000 square feet at the Corporate 500 office campus in Deerfield, Ill. Opal Holdings owns the four-building complex, which has been subject to a foreclosure process since 2023, after remaining vacant a year before.

In July, Silver Cross Hospital renewed its 87,461-square-foot commitment at Pavilion A, PGIM’s 174,855-square-foot medical outpatient facility in New Lenox, Ill. The deal closed almost two years ahead of the original lease’s expiration date, underscoring medical office real estate trends.

Coworking share above U.S. average

Chicago’s coworking sector comprised 8.6 million square feet at the end of August, ranking second only to Manhattan (12 million square feet). This accounted for 2.6 percent of the market’s total office stock, 50 basis points above the 2.1 percent U.S. average.

Regus remained the largest coworking provider in Chicago, with more than 1.1 million square feet across 51 locations. The company was followed by Braveheart (775,266 square feet) and Expansive (686,900 square feet).

Workbox is a flex office operator with a rather small Chicago footprint, amounting to nearly 310,000 square feet. However, the company opened its largest U.S. coworking location in the city’s downtown area earlier this year. The 68,000-square-foot space spans two stories within the Civic Opera Building, a century-old landmark.