Chicago’s office market hits ugly vacancy number

Pandemic struck as developers invested in 6.5 million square feet of new space

TRD CHICAGO /
Jul.July 14, 2020 03:30 PM
(iStock)

(iStock)

Downtown Chicago’s office market has hit a wall as office vacancy reached its highest point in more than eight years.

Largely due to the coronavirus pandemic following substantial investments in the market, office vacancy in the central business district jumped to 15.1 percent as of June 30. That percentage is up from 13.8 percent at the end of the first quarter, according to CBRE.

The devastation comes just six months following the best year that the market has seen in a decade, and it may only get more painful, according to Crain’s.

There are currently 6.5 million square feet of new office space under construction right now, less than half of which has been pre-leased. Such new inventory drove most of the vacancy increase seen in the CBRE report.

However, with most of the new office supply becoming available in 2022 and 2023, some say that they don’t believe that the pandemic will have long term consequences on the market.

“You can’t create company culture over Zoom,” CBRE’s Jon Cordell told Crain’s. “We’re being forced to [work remotely] right now. But given the option, companies and employees will want to work together face to face.”

While Cordell said that he’s seen interest slowly return, leasing activity has largely been decimated as a result of the pandemic. Activity during the second quarter plummeted 75 percent from the first three months of the year, according to data from Savills.

Other reports have posited that less dense footprints would win out in the end.

Cities across the country are similarly struggling to imagine what the long-term impacts of working from home may be, including New York, where residents have increasingly bought homes in the tristate area due to remote work expectations.

[Crain’s] – Sasha Jones


Related Articles

arrow_forward_ios
Gov. J.B. Pritzker (Credit: Paul Natkin/Getty Images, Jim Vondruska/NurPhoto via Getty Images, and Xinhua via Getty Images)

Small businesses hurt by Covid and looting get $46M in grant money

Small businesses hurt by Covid and looting get $46M in grant money
Suburban new home purchases surged in the second quarter, propelled by record-low mortgage rates and the need for more space amid the pandemic. (iStock)

Chicago suburbs see surge in new home sales

Chicago suburbs see surge in new home sales
Vista Property principal Hymie Mishan, whose company is betting on the West Loop office market. (Images via Vista Property)

Vista Property plans 15-story office building in West Loop

Vista Property plans 15-story office building in West Loop
Chicago will direct $33 million to help renters and homeowners avoid eviction and foreclosure (iStock)

Chicago ups ante to help residents avoid eviction, foreclosure

Chicago ups ante to help residents avoid eviction, foreclosure
The former Target in Calumet City will be converted into a working farm (Google Maps)

For latest retail redevelopment, old Target will become new farm

For latest retail redevelopment, old Target will become new farm
The Chicago area is one of the most at-risk nationwide to rising home foreclosure rates, according to a recent report (iStock)

Treading water: Chicago housing market among most at-risk to foreclosure, report shows

Treading water: Chicago housing market among most at-risk to foreclosure, report shows
One Bennett Park’s Lawn Bowl, Optima Signature, and JeffJack Apartments

Privacy is the newest amenity

Privacy is the newest amenity
CCC Information Services’ CEO Githesh Ramamurthy and 167 North Green Street in Fulton Market. (Ramamurthy courtesy McKinsey & Company; 167GreenSt)

Corona cut: Software products firm trims lease space at Shapack’s 167 N. Green

Corona cut: Software products firm trims lease space at Shapack’s 167 N. Green
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...