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Downtown Chicago office leasing freezes, market dynamics shaken by pandemic’s impact
As Chicagoland entered phase four of the state’s “Restore Illinois” plan in late June, allowing for further reopening of its economy, the downtown office market faced uncertainty and weakening fundamentals. With business and economic activity slowing to a crawl, the market witnessed leasing activity fall below one million square feet (msf). Second-quarter leasing plummeted by 75.4% from Q1, marking the lowest level of quarterly activity in at least 15 years. Many lease transactions completed in the second quarter were already in motion prior to the outset of the pandemic. Other transactions included short-to-medium term extensions, allowing occupiers to “kick the can down the road” while waiting to fully comprehend the extent of the crisis. Overall availability downtown increased by 80 basis points to 16.7%, its highest level in two years.