Moderate decline in Downtown Chicago office demand continues as leasing volumes retreat

The Downtown Chicago office market exhibited weakened fundamentals in the fourth quarter, although some positive indicators were found within. Occupancy measurements of Chicago plateaued this period as the region continued to trail many other major U.S. markets, particularly those in Sunbelt locations, by average weekly attendance. The Downtown market witnessed its poorest quarterly leasing performance of 2022, with 1.7 million square feet (msf) transacted. For the full year, 2022 leasing activity of 7.8 msf rose 9% over 2021 volumes, but was down 40% from 2019, prior to the COVID-19 pandemic. Newer construction in Fulton Market, along with Downtown trophy towers, continued to fare considerably better, ostensibly insulated from conditions impacting the greater market. With office demand remaining weakened and unsure, overall availability is anticipated to remain elevated into 2023.

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