A Retrospective Look At The 7 Stories Chicago CRE Had Its Eyes On In 2025
At the beginning of the year, Bisnow released an article with the seven biggest storylines Chicago CRE was tracking throughout 2025.
Among multiple key topics, industry insiders wanted to keep tabs on megaproject developments, money-making opportunities in multifamily and a Central Loop revival.
“Our heads are going to be on a swivel in 2025,” Maverick Hotels and Restaurants CEO Robert Habeeb said in January.
His prediction turned out to be right. CRE’s head certainly moved in multiple directions this year. The investment market started to show some signs of life this year across asset classes after a dormant period, and some of the city’s largest projects began to take shape.
Here’s what happened with the seven storylines Bisnow kept an eye on in Chicago in 2025:
Moves On Megaprojects
Related Midwest and CRG broke ground on the first phase of development on the Illinois Quantum and Microelectronics Park in September, also inking a deal with a firm nearing "quantum entanglement" as a future tenant. Most recently, IQMP announced a partnership with Silicon Catalyst to support quantum startups and bring them to Illinois.
Sterling Bay’s plans for Lincoln Yards officially came undone this year, with JDL Development scooping up the northern parcel of land in July and unveiling plans the following month for a $1B development named Foundry Park. The 1.3M SF development is set to include over 3,000 residential units.
Earlier this month, an affiliate of John Novak’s contracting firm, Novak Construction, entered into a contract to buy the southern parcel of the former megadevelopment. It’s still unknown what Novak plans to do with the property.
In February, the Chicago City Council officially approved The 1901 Project, a $7B redevelopment plan for the area surrounding the United Center. The project’s first phase will feature a 6,000-seat music hall, a 233-room hotel, retail space and two parking structures.
“A lot of the mega projects have momentum, which ultimately helps all the Loop and downtown as well,” said Michael Fassnacht, Clayco’s chief growth officer and president of the Chicagoland region.
Stadium Spending
Chicago is a tried-and-true sports town, and new stadium fervor once again captured the city’s attention this year.
Billionaire Chicago Fire owner Joe Mansueto made waves when he announced in June he would spend $650M of his personal fortune to build a new stadium for his Major League Soccer team at the site of The 78 megadevelopment. The move at long last secured an anchor tenant for the dormant site, and the new stadium is expected to open in 2028.
The Chicago Bears added a new entry into a protracted on-again, off-again stadium saga last week, with team president and CEO Kevin Warren floating the idea of a new home in Indiana. The team has vacillated between potential sites in Chicago and Arlington Heights for multiple years but has repeatedly run into legislative roadblocks for the public money it seeks.
While the White Sox were less aggressive in their bid for new digs this year, team owner Jerry Reinsdorf entered into a long-term agreement with billionaire private equity investor Justin Ishbia in June to eventually turn over control of the team. Ishbia reportedly invited Chicago native Pope Leo (who could forget when he won the papacy this year) to throw the opening pitch at a new planned White Sox stadium.
The Chicago Blackhawks also unveiled new renderings for their expansion of Fifth Third Arena, the team’s training facility, in June, and the Chicago Sky’s new $38M practice facility moved closer to completion.
A Central Loop Comeback
The LaSalle Street office-to-residential conversions dominated the conversation around the Central Loop in 2025 as work got underway on some projects and developers revealed renderings. The program is expected to add about 1,800 new residential units to Chicago’s total supply, with hundreds of thousands of square feet of older office space getting removed from the city’s inventory.
Some downtown office buildings — though not all in the Central Loop — began to trade hands at significant discounts, with one lender on a January office acquisition telling Bisnow at the time that “the value of the glass and the steel is more.”
The difference between the top of the Chicago office market and the rest also crystallized in 2025.
Transwestern’s Chicago Office Market Index, which tracks the last 20 Class-A office buildings greater than 300K SF built in the central business district, said the direct vacancy rate of its index was 8.0% at the end of Q3. That’s significantly lower than the 22.6% direct vacancy rate of the broader CBD.
Colliers Principal and Vice Chair David Burden likened the state of revitalization in the Loop to attending a sporting event, where the health of the market looks different across asset quality.
“If you're going to the game, the lower level, section 100, and the sky boxes are full,” Burden said. “The 200 level section seats are 90% full. And there's room in the upper deck.”
The Thompson Center
Development progress on the James R. Thompson Center’s conversion to Google’s new headquarters is moving along, with the glass wall on the building beginning to take shape in September. Michael Reschke, a co-principal for Prime | Capri Interests, said Google is looking to begin occupying the redeveloped Thompson Center in early 2027.
Chicago CRE pros hope Google’s move will spur activity in the surrounding area as tenants look to set up shop nearby. One potential move is Onni Group, which is in discussions to buy the 50-story office building at 161 N. Clark St., directly across from the Thompson Center.
Burden said there are other large prospective office tenants who would consider a move to the Thompson Center, depending on how much of the total space Google plans to take up.
Multifamily Opportunity
Chicago was one of the strongest markets in the country for multifamily rent growth in 2025 at 3.7% year-over-year, trailing only New York at 5.7% but ahead of other top performers in the Twin Cities, San Francisco and Kansas City.
This comes as a large portion of the country is seeing rent declines: The average U.S. advertised rent fell $8 to $1,740 in November, while year-over-year growth dropped 30 basis points to 0.2%, according to a YardiMatrix report from November.
Investors are taking notice. Just last week, a joint venture between LaTerra Capital Management and Respark Residential acquired a seven-property Chicago multifamily portfolio from Apartment Investment and Management Co. in a massive deal worth $455M.
Still, the city has one of the smallest multifamily construction pipelines in the country, with units making up less than 1% of Chicago’s total multifamily inventory. That rate is only met by Houston and San Francisco.
The lack of new multifamily construction in the city and the corresponding lack of private capital investment in ground-up apartment development are major issues, Fassnacht said.
“We are entering a significant housing crisis,” he said. “This crisis could diminish one of Chicago's biggest competitive advantages for talent, which is affordable housing.”
Construction Costs
When previewing the impact of potential tariffs on construction costs earlier this year, there was no indication of how topsy-turvy the tariff saga would become.
While CRE eventually learned to cope with the complexity of the changing daily landscape around tariffs, they have led to delays from decision-makers on leases and hindered the ability to build new developments.
ConstructConnect’s Project Stress Indicator, an index tracking project delays and abandonments, reached 125.7 at the end of November, up 19.9% from the prior month and 9.9% year-over-year. This is the highest the indicator has been since a July spike.
Increased construction costs are “100%” limiting people from pursuing new construction projects, said Paul Waterloo, managing partner at Interra Realty.
“We met with an investor yesterday that historically has built new construction, and he said, ‘Actually, right now, I'm trying to buy existing buildings and do renovations of the property,’” Waterloo said. “The main driver there is you can buy things below replacement costs right now, generally speaking.”
Increased Investor Interest
As mentioned in previous sections on office and multifamily investor momentum, Chicago saw an increase in investor interest in 2025 — albeit not with a massive uptick in total sales volume in any asset class.
Chicago CRE saw $2.6B in total volume across 84 transactions in Q3, according to Avison Young data. Through the end of the third quarter, the city was pacing for a 14.4% increase in transaction count compared to 2024, despite a projected 6.5% dip in dollar volume.
Total year-end multifamily volume in the Chicago area for 2025 likely will be close to the transaction mark in both 2023 and 2024, which was about $3.9B, Lument Managing Director Todd Stofflet told Bisnow in November. The city started off the year with strong multifamily sales, recording nearly $1B in multifamily transactions in the first quarter, one of its strongest quarterly performances on record.
The Federal Reserve has cut rates three times this year, including at its December meeting, and interest rate relief could pave the way for additional deals in 2026.
Fassnacht said the city is on the right track with its cut-the-tape initiative and needs to create a more predictable property tax system to bring in additional investment.
“We, the business leaders, as well as the elected officials, we have to court the capital market much more aggressively,” Fassnacht said. “We have to listen.”
