Monthly Archives: August 2025

Bradford Allen released its “Q2/25 Office Market Report: Downtown Chicago” and “Mid-Year 2025 Office Market Report: Suburban Chicago.”

CHICAGO — Bradford Allen, a national full-service real estate firm, today released its “Q2/25 Office Market Report: Downtown Chicago” and “Mid-Year 2025 Office Market Report: Suburban Chicago.” The firm’s in-house research team reported the CBD vacancy rate rose to 24.7%, up from 23.4% in the first quarter, and average gross asking rates declined to $41.54 from $42.56 in the same period. Meanwhile, the suburban vacancy rate reached 25.1%, up from 24.6% at the end of 2024, and gross asking rents declined to $24 per square foot.

Still, companies continued to sign large leases and investors acquired more distressed and obsolete properties, whether to recapitalize or convert to new uses. Move-in-ready office suites, which comprise built-out and speculative spaces, remained popular, accounting for almost one-third of downtown leases and more than a third of suburban leases. Those between 3,000 and 12,000 square feet are leasing the fastest, according to Bradford Allen.

“Behind the numbers is a market that’s continuing to find balance but healthier than some might realize based on recent headlines,” said Neil Bouhan, senior managing director, research and communications, at Bradford Allen. “As conversions take obsolete product off the market and distressed properties find new owners and tenants, vacancy will decline further and better reflect current market conditions.”

Downtown Chicago

Tenants signed approximately 1.9 million square feet of leases in downtown Chicago in the second quarter, with about half of that in the West Loop. Golub Capital’s 205,450-square-foot lease at 225 W. Randolph St. was the quarter’s largest. Throughout downtown, direct net absorption was negative 1.5 million square feet for the quarter, making second-quarter 2025 among the weakest periods for overall demand since first-quarter 2024.

Investment sales totaled $118.3 million in the second quarter, down from $156.7 million in the first quarter, a 24.5% decrease. Kohan Retail Investment Group’s purchase of 311 S. Wacker Drive for $45 million was the quarter’s largest investment deal. The purchase price equated to $34 per square foot, down significantly from the $230 per square foot paid in 2014 but a low enough basis for the new owners, who are considering converting some of the office space into a hotel, to pursue a strategic repositioning. 

Other conversion deals are expected to add a combined total of 734 residential units to the market, including:

• The Primera Group secured $67 million in TIF funding to convert 105 W. Adams St. into 400 residential units.

• WindWave Real Estate and Path Construction bought a portion of 111 W. Illinois St. for $17 million for conversion into 153 residential units.

• Concord Capital bought 223 W. Erie St. for $6.85 million and plans to convert it into 66 residential units.

Additional conversion projects announced were 1500 N. Halsted St. near Goose Island (31 units) and 309 W. Washington St. (84 units).

Suburban Chicago

The vacancy rate in the suburbs was 25.1% for the first half of 2025, up from 24.6% at year-end 2024. Gross asking rents declined to $24 per square foot.

Suburban office leasing activity was 2.9 million square feet at mid-year, ahead of the pace for 2024, which saw a total of 5.7 million square feet. Net absorption was negative 5,639 square feet, an improvement over the net negative 770,000 square feet of absorption in the first half of last year.

Investment sales totaled $121 million through June, well below the pace for last year, when $368 million in sales were recorded at year-end.

Market conditions continue to present opportunities for patient capital looking to acquire quality assets in prime suburban locations, according to Bradford Allen. For example, GTZ Properties acquired the 327,000-square-foot Oak Brook Office Center for just under $9 million, a significant discount from the 2013 purchase price of $33 million. GTZ plans to maintain 100,000 square feet of upgraded office space while exploring retail and entertainment conversions for the remainder of the property, located about 3 miles from the Oakbrook Center mall.

Fortune Brands Innovations leased two of three buildings at 1 Horizon Way in Deerfield, the former Horizon Therapeutics campus. The deal was backed by Illinois EDGE tax credits in exchange for creating 400 new jobs by late 2027. Vantive, the kidney care spinout from Baxter International, took 390,000 square feet at 510 Lake Cook Road in Deerfield, bringing 200 employees and 50 new jobs to the former Caterpillar site.

Full copies of each report can be downloaded using the following links:

Q2/25 Office Market Report Downtown Chicago

Mid-Year Office Market Report Suburban Chicago

About Bradford Allen:

Bradford Allen (BA) is a commercial real estate firm based in the heart of downtown Chicago. Founded in 2003 by Jeff Bernstein and Larry Elbaum as an office brokerage, the firm has grown into a vertically integrated commercial real estate company, offering a full array of services and expertise across multiple U.S. markets to entrepreneurial, corporate and not-for-profit clients, including strategy, marketing and transaction execution for occupiers, investors and owners. For more information, visit bradfordallen.com.

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Editors:

For more information or to schedule an interview, contact Patty Cronin, pcronin@taylorjohnson.com, (312) 267-4513.