'Office Is Not Dead': Leasing Rebounds As Chicago Market Recovers
Chicago’s office market finished the year on a high note, with both leasing activity and transaction volume showing signs of improvement.
Chicago central business district office property sales saw an uptick in volume in 2025, with 13 properties trading in Q4, according to Colliers. A total 37 buildings over 20K SF were sold last year, compared to 27 in 2024.
Colliers Executive Vice President Dougal Jeppe said the investment market has loosened a bit as certain investors are once again eyeing office properties to diversify their real estate portfolios. He also said those investors are recognizing that more companies are “office forward” than have been in years past.
“Office is not dead, and good office and good markets can be a good play,” Jeppe said.
One of the largest sales in the area this quarter was 190 S. LaSalle St., which a joint venture of Namdar Realty Group and Mason Asset Management scooped up for $55M from Beacon Capital Partners. The building lost 76% of its value since it last traded in 2019 for $230M.
A joint venture between Hines and Stahl Organization acquired the leasehold interest in the former Boeing headquarters office tower at 100 N. Riverside Plaza for $22M in Q4. Boeing is leasing back 70K SF in the building as part of the sale. Stahl also owns the land beneath the tower.
Distressed sales, refinancing activity and value-add investors’ renewed interest in downtown office properties defined the market landscape in 2025, Savills wrote in its Q4 downtown Chicago office report.
“Beyond leasing fundamentals, 2025 was defined by accelerated price discovery and ownership turnover, particularly among older Loop assets,” the brokerage wrote.
Throughout 2025, total leasing volume reached 10.3M SF, the strongest total since 2019, according to Savills.
The fourth quarter saw just 27K SF of negative net absorption, a sizable improvement from the 654K SF of negative net absorption in Q3, Colliers reported. Total CBD vacancy did go up slightly by 10 basis points to 24.6%, a record high.
“There's been more activity,” Jeppe said. “More tenants not just renewing and kicking the can, [but] really fortifying their back-to-office strategy so they know what they need for long-term planning.”
Legal services firms accounted for the two largest expansions in the fourth quarter, with Benesch Friedlander Coplan & Aronof inking a 130K SF extension and expansion deal at 71 S. Wacker Drive. Ropes & Gray signed a 105K SF renewal and expansion deal at 191 N. Wacker Drive.
Also of note, USG Corp. signed a 160K SF extension and contraction of its space at 550 W. Adams St., and Brookfield Retail Properties — now named GGP — signed a 123K SF renewal at 360 N. Orleans St.
The dichotomy between the performance of Class-A and Class-B office assets continues to bear out in vacancy rates: Class-A buildings posted a vacancy rate of 20.0%, compared to 30.5% for Class-B properties, according to Colliers. The brokerage expects the vacancy rates to decline in quality Class-A buildings over the next few quarters of 2026.
Jeppe also said some trophy buildings are starting to see their taxes and operating expenses stabilize — even going down in some cases.
"It's nice to see having conversations with leaders of organizations that are very confident in the fact that [they] believe the office is meaningful and it's a productive place for people to be,” Jeppe said.
