Gap Widens Between Downtown Chicago's Prime Office Spaces and Rest of the Market

The office market in downtown Chicago remains highly favorable for tenants, leading to a noticeable shift towards high-quality office spaces. This trend is not showing signs of slowing down, according to the latest Chicago Office Market Index by Transwestern.

Flight to Quality

As prime office buildings fill up, leasing activity has started to extend to other top market properties. An example is the Monroe Building at 104 S. Michigan Ave., where Cristo Rey Network recently secured office space.

Transwestern's Office Market Index

Transwestern's report evaluates the 20 newest office buildings in downtown Chicago, each over 300,000 square feet, by examining leasing, vacancy, and other factors compared to the overall market. The findings reveal that top-tier buildings continue to perform exceptionally well, with the gap between these and other properties widening.

Vacancy Rates and Market Discrepancies

The 20 buildings included in the Index have a direct vacancy rate of 6%, significantly lower than the 21% vacancy rate for the broader Chicago Central Business District. This difference, which was 14.5 percentage points in the previous quarter and five percentage points in the fourth quarter of 2019, highlights the increasing preference for high-quality office spaces.

Representation and Specifics

The buildings in the Index constitute 13% of Chicago's total office inventory. Only five of the newest trophy buildings have vacancy rates exceeding 10%. These buildings are 353 N. Clark St. at 12.1%, 22 W. Washington St. at 12.4%, 800 W. Fulton St. at 12.7%, 550 W. Adams St. at 19.8%, and 320 S. Canal St. at 25.1%.