Office tenants seek out top-tier spaces, showing downtown market isn’t quite dead

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Downtown leasing activity remains well below pre-pandemic averages. But landlords are pushing up rents in the top-tier buildings as companies entice employees back to the office.

The largest lease signed during the second quarter in downtown Chicago was inked by Grubhub, which took 90,000 square feet at the renovated Merchandise Mart. Grubhub’s new Merchandise Mart space marks a 45% reduction from what it occupies in the Central Loop’s Burnham Center, pictured here.The downtown Chicago office market remained stuck in the doldrums during the first half of 2024, with a historically high vacancy rate and sinking office employment. But the news isn’t all bad.

Employers leased more than two million square feet downtown in the second quarter, well below pre-pandemic averages, and a record-breaking 29.3% of the office space is available, according to a second quarter Savills report. But landlords pushed up rents in Class A buildings, especially the new office towers along the Chicago River in the West Loop and in Fulton Market, by nearly three percent in the past year.Many companies slashed their office spaces.

 

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