Economic Overview
Despite a challenging economic environment, the Chicago region continued to exhibit signs of stability. The unemployment rate decreased by 60 basis points (bps) year-over-year (YOY) to 4.7% in Q3 2025. Q4 2025 employment data has been delayed due to the government shutdown. Chicago’s labor pool remained steady YOY, with nonfarm employment at 3.8 million individuals. As of September 2025, the office-using employment sectors that reported YOY job growth were information services and financial activities, which increased by 2.5% and 1.3% YOY, respectively.
Supply & Demand: Leasing Activity In West Loop Drives Cbd
Demand
Chicago’s Central Business District (CBD) recorded 6.3 million square feet (msf) of new leasing activity in 2025, an increase of 7.0% YOY and the highest annual total since 2019. Class A new leasing reached 3.7 msf in 2025, accounting for 59.1% of all new leasing. The average new deal size declined 8.2% YOY to 9,400 square feet (sf), while Class A leases averaged 14,300 sf for the year.
West Loop accounted for 52.8% of new leasing in 2025, totaling 3.3 msf, an increase of 35.9% YOY. Notable lease transactions signed during Q4 2025 include AAR Corp’s 92,000-sf lease at 222 W Merchandise Mart in River North; Wolverine Trading’s sublease of 83,000-sf to 433 W Van Buren St; and The Boeing Company’s sale-leaseback of 71,000-sf lease at 100 N Riverside, both in the West Loop. Notable Q4 2025 renewals include USG Corporation’s 165,000-sf lease renewal at 550 W Adams St, and Benesch, Friedlander, Coplan & Aronoff LLP renewing and expanding to 127,000 sf at 71 S Wacker Dr, both located in the West Loop. Overall net absorption remained negative for the ninth consecutive quarter, totaling negative 5.2 msf for the year. Continued negative absorption prompted the overall vacancy rate to increase by 320 bps YOY to 26.9%. Class A vacancy increased at the same rate of 320 bps YOY to 23.2%. Vacancy within trophy assets remained well below the market average, recorded at 15.7%, a decrease of 400 bps YOY. High-rise vacancy in trophy assets remains significantly lower than all other categories, reported at just 7.9% in Q4 2025. Despite ongoing negative absorption and elevated vacancy, leasing momentum in the West Loop and sustained demand for trophy assets continue to underscore a clear flight-to-quality trend within Chicago’s CBD.
Supply: Construction Pipeline Remains Muted
Three office properties have been delivered within the CBD since 2024, totaling 726,000 sf. For comparison, between 2016-2023, 41 buildings were completed, totaling 18.4 msf. The first building completed since 2024, located at 360 North Green Street in Fulton Market, totals 498,000 sf and was 68.1% preleased. The second, 311 West Huron in River North, totals 139,000 sf and was 35.0% preleased. The third, 910 West Lake in Fulton Market, totals 88,000 sf and was 40.1% preleased to Coca-Cola. As of Q4 2025, one project is under construction within the CBD, totaling 369,000 sf. That building is located at 919 West Fulton Street within the Fulton Market District and is 33.9% preleased to Harrison Street with an expected completion date in Q1 2026. In the West Loop, The Bell, located at 225 West Randolph completed a $150 million full-building renovation in Q2 2025. The property has recorded significant leasing activity, securing 619,000 sf of new leases with tenants including Golub Capital, Neal Gerber & Eisenberg LLP, Locke Lord LLP, Northwestern Mutual, and Stout, many of which have taken occupancy this quarter.
Supply Pressure: Sublease Availability Continues To Decline
Sublease availability continued to decline, decreasing 13.0% YOY to 5.0 msf. This represents 11.0% of the CBD’s overall available inventory. Over 2.4 msf of sublease space is currently vacant, with an additional 2.6 msf scheduled to become vacant in the future. Submarkets with the highest share of sublease availability include the West Loop and Central Loop, which account for 55.6% of active subleases. The two largest subleases added to the market this quarter were Walgreen’s 209,000-sf space in the West Loop and Goldberg Kohn’s 75,000-sf space in East Loop. As of Q4 2025, available sublease spaces of 25,000 sf and larger totaled 3.6 msf, accounting for 70.5% of total sublease inventory. Sublease space in trophy buildings remained limited; of the 24 sublease availabilities over 50,000 sf, only three are in trophy assets. While sublease availability increased significantly following the start of the pandemic, the pace of new sublease additions has slowed in recent years, with overall availability now showing signs of decline.
Pricing: Overall Asking Rents Record Slight Increase
Overall gross asking rental rates reported an increase across most asset classes in Q4, with the overall market average up 1.9% quarter-over-quarter (QOQ) to $43.50 per square foot (psf) from $42.70 psf. Class A asking rates recorded a QOQ increase of 5.3% from $48.80 to $51.37 psf. Class B asking rates increased 0.2% QOQ from $41.66 to $41.72 psf. Class C rates decreased by 0.8% from $30.76 to $30.52 psf. Trophy buildings continued to command premium asking rents with rental rates recording a YOY increase of 4.4% from $62.90 to $65.69 psf. Overall, rent growth was driven by higher pricing in Trophy and Class A assets, highlighting continued tenant preference for top-quality space even as market conditions remain uneven.
