Downtown Chicago office vacancy rate drops from historic high

Companies returned even as omicron surged

Even as omicron surged, Chicago’s downtown vacancies fell in Q4 (iStock)
Even as omicron surged, Chicago’s downtown vacancies fell in Q4 (iStock)

Chicago’s downtown office landlords can’t forget all their troubles just yet – but they finally got a bit of good news.

Vacancy rates dropped in the fourth quarter for the first time since the pandemic began, Crain’s reported, citing CBRE data. The rate stood at 19.7 percent in the last three months of 2021, compared with 20.1 percent at the end of September.

“The bold that have come out and taken advantage of the opportunities in the market feel that maybe the worst is behind us, and that’s what you’re seeing in these numbers,” CBRE leasing agent Jon Cordell told Crain’s.

Granted, the vacancy rate is still second-highest on record, lagging behind the third quarter. Net absorption fell by 2.1 million square feet in the year, according to Crain’s.

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And more new buildings are coming. Some 3.6 million square feet of office space was under construction at the end of December, of which just 57 percent has been pre-leased, the outlet said. That includes the BMO Tower in the West Loop, which opened this month with more than 750,000 square feet of available space.

Still, the fourth-quarter numbers are encouraging, especially because omicron has delayed back-to-office plans by many companies.

The period had more than 200,000 square feet of positive net absorption, the first time demand rose in 2021. Most new leases since the start of the pandemic have come in the Fulton Market District, according to Crain’s. In addition, downtown leasing volume rose to its highest in seven quarters.

[Crain’s] – Harrison Connery