CBIZ Gibraltar Insights And Resources

What is the current state of the office market?

Offices are more than 50% filled with occupancy reaching a new post-pandemic high in November. The rise was led by Chicago, which increased three full points to 55%, according to Kastle data.

Hybrid work leads the arrangement between employees and most companies, shifting the focus from tenants to more high-quality assets that can attract employees to the office and drive culture, recruitment, collaboration, productivity, and training among teams.

While the increase in tenant tours and lease signings demonstrate a potential for market stabilization, indicators in Chicago’s central business district (CBD) point to the continuation of a very soft and tenant favorable environment — with growing opportunities for occupiers in their current and future leases.

Notable trends and data from Chicago’s CBD in Q3 include:

VACANCY: In Q3, 570,131 sq ft of negative net absorption increased vacancy to 23.2% (with 2.75 million sq ft of negative net absorption year-to-date). While leasing and move-in activity shows an uptick, the amount of space available also increased by nearly 2 million sq ft.

ASKING RENTS: Asking rents decreased slightly (from $45.65 to $45.50 per sq ft, quarter over quarter). Of course, the focus from landlords remains on keeping building valuations as high as possible as they negotiate mortgage debt with financial institutions. Consequently, rental rates are remaining consistent, with lease concessions and stronger incentive packages or tenant improvement allowances being offered with great flexibility.

LARGER BLOCKS: Currently, there are 59 blocks of contiguous large space (100,000 sq ft or larger) across 48 buildings in Chicago. 225 W Randolph, former AT&T building, contains the largest on floors 4-33 (which provides 900,000 sq ft on the market).

Overall, it continues to be a great time to be a tenant, and there are tremendous opportunities for healthy tenants who are making strategic decisions and taking advantage of the market.

At a time when 90% of companies will return to the office by the end of 2024 (according to a Resume Builder survey), many decision-makers are actively evaluating everything from the amount of space they need to where the offices are located and the amenities they offer. They are turning to tenant representation firms, like CBIZ Gibraltar, to better understand the costs and savings opportunities associated with their current and future lease.

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.