C
hicago's downtown office market continues to struggle with high vacancy rates, marking its third year of distress despite a recent slowdown in downsizing. The city's central business district saw a steady 25.8 percent vacancy rate in the third quarter, up from 23.7 percent a year ago and significantly higher than the 13.8 percent at the start of the pandemic.

    Landlords are facing declining property values, foreclosures, and distressed assets as companies continue to reduce their office space by 15-25 percent. CBRE Senior Vice President Tony Coglianese forecasts more downside risk for many downtown landlords, citing the ongoing trend of high vacancy rates. While new leases have helped soften the blow, significant losses, such as Interpublic Group's departure from 875 North Michigan Avenue, have offset these gains.

    The Class A office market has fared better, with a 20.5 percent vacancy rate, compared to the struggling Class B buildings, which are experiencing a 31.1 percent vacancy rate. However, some Class B buildings are gaining attention due to reduced rents and reinvestment efforts, particularly as Google prepares to move into the redeveloped James R. Thompson Center.