Signs Of Life Emerge In The Loop As Conversions, Hotel Activity And Office Leasing Pick Up
The Loop is trending up, buoyed by major projects like the LaSalle Street office-to-residential conversions and the redevelopment of the James R. Thompson Center for Google.
The wave of adaptive reuse projects, surging hotel performance and early signs of renewed office demand are fueling cautious optimism that the Loop’s long-awaited rebound may finally be underway, panelists said at Bisnow’s Chicago State of the Market.
More projects being planned now would further drive that momentum, said Brian Barry, project executive at W.E. O’Neil Construction. While 2025 has still been slow for construction work, the city has approved additional projects downtown, like the 386-unit Field Building conversion, and other conversions like the 117-unit 79 W. Monroe St. have broken ground.
“It’s been really positive to see these projects get supported by the city,” Barry said onstage at Swissotel Chicago. “With the added residential population downtown, it's going to snowball effect and create a better and safer atmosphere.”
The hotels in the Chicago CBD have also performed well of late. From June through August, hotels in that area filled nearly 3.6 million room nights, a 4.3% gain over 2024 and passing the previous record set in the summer of 2019, according to Choose Chicago.
That performance bucks national trends. Nationwide hotel room demand was down 0.5% year-over-year during the summer months.
“The hospitality industry is doing great in Chicago,” said Michael Reschke, CEO and chairman of The Prime Group.
Reschke has three hotels in the pipeline in the Loop, two of which have residential components that are part of the LaSalle Street Reimagined program. The first, at 208 S. LaSalle St., is an expansion of an existing hotel coupled with a 168-unit apartment conversion.
The second is the redevelopment of the former BMO Harris headquarters at 111 W. Monroe St. into a mixed-use building with a 330-key luxury hotel and 345 apartments.
“I'll let the cat out of the bag: It might be a new W [Hotel] for Chicago,” Reschke said. “The other two W hotels lost their franchises, just couldn't keep up the brand standard. So we're thinking about reopening the W downtown, and adjacent to that will be the Monroe residences.”
Finally, Reschke said “maybe a year from now” his firm is planning another hotel in the Burnham Center, an acquisition The Prime Group made last year.
The hotel development pairs well with the major office renovations underway in the central business district.
Google is looking to begin occupying the redeveloped Thompson Center in early 2027, Reschke said. Reschke, a co-principal for Prime | Capri Interests working on the project alongside Quintin Primo III, is turning over floors to Google’s contractor this month for the tech giant to start on its tenant improvement work.
JPMorgan Chase’s major renovation of its Chicago office tower — paired with its mandate of five days of in-office work per week — is also expected to have an impact on downtown vibrancy.
Matt Pistorio, partner at R2 Cos. and founder of Madison Rose Leasing Co., said professional services and law firms have been leading leasing activity. He said he conducted about 90 tours in 2024 across about an 8M SF portfolio. This year, his team has had about 364 tours across a similarly sized portfolio.
People are gaining more confidence as buildings begin to trade again and tenants start to become afraid to miss out on the best deals, Pistorio said. Conference centers are one of the most asked-about amenities on Pistorio’s tours as tenants plan for future town hall meetings or instances when a whole company is in the office at once.
Tenants signed about 614 office leases of at least 1K SF in Chicago in the first three quarters of the year, according to Colliers. Financial services firms led the large leasing activity, with many tenants relocating to upgraded properties while consolidating space.
Among the largest deals were Bain & Co.'s 173K SF relocation and expansion to 131 S. Dearborn in the Central Loop, Wolverine’s 83K SF sublease at 433 W. Van Buren in the West Loop, and PPM America’s renewal of its 76K SF lease at 225 W. Wacker.
But there will still be obstacles to getting a larger portion of the population back in the office.
“People are creatures of habit, and outside of forcing people to come back, you want to have them want to come back,” Pistorio said. “Retraining people's minds where you've got to go work every day is going to be a challenge.”
A weakening labor market could shift the power dynamic in the return-to-office battle, Pistorio said. He said the unemployment rate would need to get to 5% or 6% to see that flip, but the economy is “starting to turn” in that direction.
If the labor market continues to worsen, Pistorio said he expects to see more five-day workweeks and fewer hybrid options.
The office market appears to have hit bottom, but a quick rebound isn’t likely. Instead of the sharp U-shaped recovery many hoped for, momentum is building slowly, a process that could take years.
“It’s still a little bit of a slow burn for us in the next year or two, but I do think that two years from now, we’re going to be in a completely different market than we are today,” Pistorio said.
