Office Market Update — 2025 Mid-Year Chicago CBD
The Chicago Central Business District (CBD) office market continued to evolve through the second quarter of 2025, reflecting ongoing tenant-favorable conditions, widening disparities between asset classes, and a wave of repositioning activity in the investment market.
Our team at CBIZ Gibraltar is always monitoring conditions across office markets – and there are several key insights that can benefit tenants leveraging the current landscape for economic advantage.
Notable examples include Golub Capital, the largest transaction in Q2. Golub was represented by CBIZ Gibraltar, which advised the market leading, award-winning direct lender and experienced private credit manager in securing favorable lease economics for 205,000 SF.
During the second quarter, financial service and consulting firms were among the top office space users that signed larger leases.
Trophy properties continued to outperform, attracting demand and maintaining higher face rental rates — highlighting a clear divide between well-capitalized, high-quality assets versus those that are not well-positioned financially.
The overall vacancy rate in Chicago’s CBD rose nearly 100 basis points in Q2, escalating to 25.5%. Both direct and sublease space increased across all classes, with Class B assets contributing the most vacant space.
Increased vacancy had a slight impact on rental rates this quarter, causing an average $0.15 drop per square foot in the overall gross rental rate.
While the broader market experienced softening, top-tier assets continued to hold their value, underscoring the strength of the “flight to quality” trend.
Most new office deals in Q2 came from existing office space users relocating to higher quality, more-amenitized assets while consolidating their current office footprint. Class B assets saw a majority of renewals this quarter, with tenants opting to remain in their existing space.
We expect the Chicago CBD office market to remain tenant-favorable in the second half of 2025. While vacancy is expected to remain elevated, leasing momentum is likely to be driven by consolidations into high-quality assets with strong amenity offerings.
As the leading provider of integrated real estate services with a 100% commitment to advocating the interests and needs of tenants, CBIZ Gibraltar understands that no two companies are alike and works to deliver the best possible solutions for our clients. Together, we uncover the potential of your work environment, maximize human capital and map the path to critical business success.