Hiffman Releases First Quarter 2023 Office Market Report

Uncertainty Continues to Impact Suburban & CBD Office Markets

Chicago’s suburban office market faced significant headwinds to start off 2023, as rising interest rates and continued economic uncertainty largely paused major real estate decisions.

• While four of the five suburban Chicago office submarkets reported positive absorption, overall absorption for the suburbs was slightly negative at -10,749 square feet.
• Despite strong leasing velocity, vacancy continues to hover around 25%, where it has remained since 2021.
• As corporate leaders continue to evaluate their office footprint in the wake of the pandemic, growth among existing tenants in the market has stagnated, though the market has shown some signs of moderation heading further into 2023.

The downtown market softened further during the first quarter of 2023, with vacancy reaching new cyclical highs as landlords have struggled to backfill large blocks of space amid tenant relocations and contractions within the market.

• Chicago’s CBD downsized during the fourth quarter, with 1,309,335 square feet of negative net absorption, exacerbating the market’s woes.
• The downtown market registered 1.4 million square feet of new leasing activity during the fourth quarter, down from 1.9 million square feet year over year, and below the pandemic average of 1.8 million square feet since the start of 2020.

Detailed statistics and commentary are available in the First Quarter 2023 Office Market Report; enter your e-mail address below to access the download: