Figures
Chicago Downtown Office Figures Q3 2024
October 9, 2024 10 Minute Read
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- The Central Business District (CBD) experienced just over 78,000 SF of net negative absorption in the third quarter of 2024, up significantly from last quarter’s net negative absorption of just over 470,000 SF. However, this is the CBD’s fifth-consecutive net negative absorption, leaving the market with a year-to-date (YTD) net negative absorption of nearly 1.5 million SF. This is the lowest annual net absorption since 2021, which saw an annual absorption of negative 2.1 million SF.
- The market bifurcation between Trophy and Class A assets and Class B or C assets continues to widen. Class B assets contribute the most to the annual net negative absorption, accounting for nearly negative 1.2 million SF, while Trophy assets account for positive 182,000 SF. Availability in these highly-sought-after buildings continues to remain slim, with Trophy assets accounting for just 13% of the total CBD inventory and Trophy direct available SF is just 6.3% of the total CBD market. Tenants opting to make changes to their office footprint are finding less and less options in the top asset class.
- The construction pipeline remains at its lowest point since 2016, with just one building under construction in the CBD expected to deliver next year. However, with the federal reserve lowering interest rates in September to 4.8% and signaling that more rate cuts may be down the pipeline, economic factors could soon return to a condition where lenders and borrowers alike are more comfortable with breaking ground on new projects.