In Q3/23, Chicago’s CBD occupancy levels and gross asking rates remained relatively unchanged from the prior quarter. The office market’s direct vacancy rate was 19.8%, while the average gross asking rate held at $44 p.s.f. Absorption levels turned negative this quarter at -432,000 square feet, resulting in year-to-date absorption levels at -933,000 square feet.
Leasing volume in Chicago’s CBD remains modest. Only 1.7 million square feet was leased in Q3/23. With approximately 5.3 million square feet leased year-to-date, total leasing volume in 2023 is at levels not seen since 2010. It’s also barely half the amount of the 10.5 million square feet leased through the first three quarters of 2019.
Sales activity remained at record-low levels with only one transaction in Q3/23—the sale of 230 W. Monroe. Oregon-based Menashe Properties purchased the building for $45 million, less than $65 p.s.f., which is a massive discount compared to the previous purchase price of $122 million ($173 p.s.f.) in 2014. This is the first major office sale in Chicago’s CBD in more than a year.