It’s not easy to find bright spots in the Chicago downtown office market. But JLL in its fourth-quarter 2024 report did say that the final two quarters of last year brought some positive signs for the sector.
The raw numbers, though, aren’t great. JLL reported that the Chicago downtown office market closed 2024 at negative 2.4 million square feet of absorption. The CBD ended the year, too, with a total vacancy rate of 23.4%.
Leasing activity was sluggish, too, with JLL reporting that the city’s CBD office sector closed 2024 with 5.3 million square feet of leasing activity, down 15% from 2023.
In slightly better news, JLL said that 13 office buildings in the Chicago CBD sold last year for a total of nearly $500 million. That represents the most office properties traded in the Chicago CBD since 2022.
JLL also reported that the majority of the CBD’s negative absorption numbers came in the first half of 2024. JLL said that 96% of the negative 2.4 million square feet of office absorption happened in the first half of the year. Absorption numbers improved in the second half of the year, with just 50,000 square feet of negative absorption recorded in the last two quarters of 2024.
This slowdown in negative absorption was driven by tenants moving into the highest-quality office assets in the Chicago CBD, with Class-A and trophy office product closing the fourth quarter with 334,000 square feet of positive absorption.
JLL reported that Chicago’s highest-quality Class-A and trophy offices, clustered in the River North, Fulton Market and West Loop submarkets, accumulated a combined 389,000 square feet of positive absorption in 2024.
JLL said that despite the sluggish office sector performance overall, the Chicago CBD did see some positive signs in 2024. Most importantly, the vacancy rate for Chicago’s highest-quality office space has dropped consistently, with trophy office availability falling to 7.4%, the lowest it’s been in the last decade.
Also, progress on Google’s nearly 1-million-square-foot office project at the Thompson Center coupled with JP Morgan’s investment in its Central Loop office are both what JLL calls future-altering projects that will help jumpstart demand for the most underperforming sections of Chicago’s CBD office sector.
