While the Chicago CBD office sector continues to see high vacancy rates, office product here is still attracting the attention of outside investors who see plenty of opportunity in this sector.
That’s one of the key takeaways from Transwestern‘s recently released Chicago-CBD Office Market report for the fourth quarter of 2025.
According to Transwestern’s report, the fourth quarter brought a period of relative stability to the Chicago CBD office market.
How so? The vacancy rate held steady at 22.6%, unchanged from the previous quarter and up 50 basis points year over year. And while net absorption totaled negative 64,055 square feet, that ranks as the smallest amount of negative absorption recorded in the Chicago CBD in 10 quarters.
For all of 2025, the Chicago CBD office market recorded 1.4 million square feet of negative net absorption. Transwestern said that the West Loop submarket recorded the most negative net absorption last year while the River North and Fulton Market/River West submarkets posted positive absorption in 2025.
Not all asset classes notched an equal performance in the fourth quarter. Transwestern said that the Class-B and Class-C office properties in the Chicago CBD recorded 85,498 square feet of positive absorption in the fourth quarter. That marks the first meaningful absorption in this segment since 2019.
Leasing activity remains below pre-pandemic levels, but in its report Transwestern said that this activity at least appears to be settling into a new normal. While many tenants continue to downsize, a growing number are also expanding. Current deal activity suggests that the outsized levels of negative absorption seen in recent years are unlikely to continue at the same pace going forward, Transwestern reported.
In another key number, Transwestern reported that average full-service asking rents across the Chicago CBD office properties reached $44.51 a square foot in the fourth quarter of 2025, reflecting a slight quarterly decline of 0.1% and a year-over-year increase of 3.4%.
The largest lease transaction in the fourth quarter in Chicago’s CBD was USG’s renewal of 165,410 square feet at 550 W. Adams St., which also represented a contraction of 55,477 square feet.
The largest new deal was AAR Corporation’s lease of 90,000 square feet at 222 W. Merchandise Mart Plaza. This represents a significant expansion of its CBD presence from its existing office at 321 N. Clark St.
The Class-A vacancy rate increased by 70 basis points in the fourth quarter to 21.7%, while the combined Class-B and -C vacancy rate decreased by 10 basis points to 29.4%.
The East Loop submarket posted the highest direct vacancy rate at 28.7%, up from 27.6% at the end of 2024. In contrast, the Fulton Market and River West submarket recorded the lowest direct vacancy in the CBD at 10.9%, decreasing by 70 basis points during the quarter and 190 basis points year over year.
Don’t expect an influx of new office space to impact vacancy rates in the Chicago CBD. Transwestern reported that this market’s construction pipeline includes only one building: 919 W. Fulton St. in the Fulton Market/River West submarket.
The 411,202-square-foot office building is scheduled for completion in the first quarter of 2026 and is 49.3% preleased. The 11-story project will be anchored by Harrison Street Asset Management, which will occupy 112,000 square feet. The ground floor will feature a 15,500-square-foot restaurant by Gibson Restaurant Group.
