Downtown Chicago Vacancy Rates at All-Time High, Slashing Building Values

Record vacancy rates and the high cost of borrowing money are fueling a commercial real estate crisis in downtown Chicago.

1 minute read

March 5, 2024, 10:00 AM PST

By Mary Hammon @marykhammon

View of down La Salle Street lined with skyscrapers in downtown Chicago.

Media EDiaz / Adobe Stock

In an article about the city of Chicago reviving its delayed “LaSalle Street Reimagined initiative,” which was first announced in 2022 under former Mayor Lori Lightfoot, Bloomberg CityLab reporters shine a light on the downtown’s real estate crisis.

As part of the $1 billion initiative, which was delayed by high interest rates and is expected to move forward this summer, the city is working with developers to repurpose vacant downtown buildings in the city’s central business district. The revamp is an effort to combat post-pandemic vacancy rates, which hit an all-time high in the fourth quarter of 2023 at 21.2 percent. Combined with high interest rates, it has caused commercial building sale prices to plummet by more than 50 percent, report Shruti Singh and Miranda Davis. They write that fewer than five large office buildings sold last year, with deals struck at losses ranging from 50 to 90 percent.

It’s a trend many metros across the country have been dealing with and particularly challenging as cities and developers increasingly look to repurpose office space for other uses like housing and other amenities to draw people back to their downtowns.

Monday, March 4, 2024 in Bloomberg CityLab

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