Status quo endures in Suburban Chicago as occupiers continue to retrench and rightsize

The market dynamics of the Suburban Chicago office market were largely unchanged in 2023 as the region remained stalled by entrenched elevated availability and generally weak occupier demand. Financial distress plaguing many landlords has limited the number of stabilized buildings with adequate capital required to execute deals. The 5.4 million square feet (msf) leased in 2023 was 6.0% below levels observed in 2022. Much of the leasing activity occurring in the fourth quarter remained driven by lease expirations, while discretionary leasing activity remained uncommon. Seven of the ten largest deals completed in the fourth quarter transpired in Class A properties, further evidence of occupiers seeking out the highest quality properties that appeal to employers and their workforce. Overall availability across Suburban Chicago edged slightly lower this year, falling 20 basis points (bps) over the last year to 31.0%.

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