Chicago downtown office space vacancy rate jumps to record high levels

By Glenn Minnis | The Center Square contributor
The Center Square

(The Center Square) – With Chicago’s downtown office vacancy rate now at a record-high 28%, Illinois Policy Institute researcher LyLena Estabine says city policymakers have become their own worse enemy when it comes to addressing the area’s changing demographics.

New data shows Loop vacancies ballooned over the recent third quarter as post-pandemic work trends continue to impact and impede demand. All told, companies reducing their footprint in the area over just the last two years have cost the business district 2.3 million square feet, or nearly twice the amount of space vacated during the Great Recession of 2009-2010.

“One of the problems that is being faced right now in Chicago is that for so long downtown has been centralized for businesses and now in a post-COVID world, where more and more companies realize that remote work is possible, you suddenly have people wondering what is there downtown to be offered,” Estabine told The Center Square. “There has been some return to the office, but a lot of companies are opting to remain remote. One way that the city could address this is by making it easier to have commercial to residential building conversion. This is something that New York’s Midtown Manhattan has been doing recently with a large degree of success.”

With rising interest rates also prominently figuring into the mix, Estabine adds lawmakers would be wise to act now.

“Downtown has become this place where people drive in in the mornings to go to work, then leave in the evenings,” she said. “There’s nobody in the area after they’ve left work for the day to stay and be paying customers. By looking at this as a way not to just decrease the vacancy rates but also to revitalize the downtown region can become a community and not just somewhere that people commute for work.”

As the city also struggles with an ongoing housing crunch, Estabine adds any campaign designed to convert more Loop offices into units residents can call home could go a long way toward solving both problems.

“Chicago is considering a central area plan and what steps the city will take,” she said. “One of the priorities of this plan is to revitalize the downtown area and then the nearby surrounding areas leading up to 2045. I think it’ll start taking effect within the next couple of years.”