Chicago Office Market
Following a slow first half, leasing volume improved in the second half of 2024. This was the strongest fourth quarter of leasing for the CBD since 2019. While there were some positive signs, growth continues to be outpaced by the smaller, contraction-focused deals tenants are signing. Despite the pickup in leasing, reduced lease sizes will keep overall activity below pre-pandemic levels. Vacancy increased 10 basis points this quarter as the CBD saw approximately 170,000 SF of negative absorption. Year-to-date, total vacancy has risen by 1.5%, while absorption stands at approximately negative 1.5 million SF. Meanwhile, competition for Trophy Towers and premium view spaces on the top floors has tightened. Demand for top-tier space in the Central Business District is expected to absorb the limited supply, driving trophy rates higher.
Download Chicago CBD Office Market Report 4Q24Chicago Suburban Office Market
Leasing volume increased from last quarter and posted the strongest fourth quarter in the suburbs since 2018. Despite the surge in leasing activity, 2024 marked the sixth year in a row with leasing volume coming in below the historical average. Quarter-over-quarter vacancy increased by 0.2% to 25.8%, with a 120-basis-point increase year-over-year. Although there has been no new suburban office deliveries in years, move-outs have continued to outpace move-ins.
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Chicago Industrial Market
After increasing to 11.3 million SF in the second quarter of 2024, total industrial leasing volume slowed to 6.1 million SF in the third quarter and crawled back up to 7.0 MSF in the fourth quarter. Third quarter was still the lowest quarterly volume in 19 years. Total sublease availability continues to increase quarter over quarter, this time by over 5.0 million SF to 15.0 million SF. Although the increase in volume is significant, the sublease market share of total inventory remains constant at a not-so-significant 1.2% of the market’s inventory, a small portion of the 7.9% total availability in Chicago’s industrial market. This uptick in sublease space was largely driven by three major tenants, Home Depot, UNIS and Samsung.