Q2 2023 Chicago Office Market Report

Chicago’s downtown office hits the midway point of 2023 with vacancy increasing again from the prior quarter. Landlords will sigh with relief that it was only a marginal (0.1 percent) increase to 22.6 percent. Over the past several quarters, Class A product saw direct vacancy unchanged from 13.7 percent, as any negative movement was offset by new transactions.

Class B and C buildings continue to lose tenants as the flight-to-quality continues.Total vacancy ends the quarter at 26.4 percent and 24.2 percent, respectively. Looking ahead, office landlords will feel pressure to retain and attract new tenants as lenders tighten their belts in an elevated interest rate environment. Overall leasing activity remains low, so the few tenants that are in the market should benefit from intense landlord competition.

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