News

After years of uncertainty, the Chicago office market is showing renewed signs of life. Leasing activity is rising, but the nature of what tenants want—and how much space they’re willing to commit to has shifted dramatically.

According to preliminary data from CoStar, companies across the country leased 115 million square feet of office space in Q1 2025, the strongest quarter since 2019. But while national leasing is rebounding, Chicago remains below pre-pandemic norms, with new leasing volume still trailing its 2015–2019 average by double digits.

The key reason? Chicago tenants are downsizing and prioritizing quality over quantity.

Smaller Offices, More Activity

The average office lease in the U.S. now stands at around 3,500 square feet, nearly 15% smaller than before the pandemic. Chicago office space is no exception. While the number of transactions continues to increase, the average size per deal has shrunk, as companies recalibrate their hybrid work policies and space needs.

That shift is changing how space gets used. Large corporate tenants that once leased 50,000+ square feet are now seeking modular, collaborative hubs that support in-person engagement a few days a week. Smaller firms, meanwhile, are seeking plug-and-play space in buildings with strong amenities and transit access.

For landlords, this means adapting quickly or getting left behind.

The Flight to Quality Intensifies

Tenants in Chicago are no longer leasing just to have space; they’re leasing space that works hard for them. That means Class A buildings with:

• Natural light and high ceilings

• On-site dining and fitness amenities

• Wellness features and modern HVAC systems

• Flexible, pre-built suites for hybrid workforces

Older buildings that haven’t been modernized are seeing far less interest. Even in a high-vacancy market like Chicago, not all space is created equal. New or repositioned product is outperforming, while Class B and C towers face rising vacancies and tenant attrition.

Leasing Volumes Are Improving—But It’s a Different Market Now

Even though Chicago leasing volume hasn’t fully rebounded to pre-COVID levels, the broader national trend suggests tenants are returning to the office. Nationally, office leasing volume now represents 1.4% of total inventory, nearly back to the 2015–2019 norm.

Chicago may lag slightly behind that recovery, but recent anchor deals—such as Vynamic’s lease at 167 North Green or law firm renewals in the Loop—point to growing momentum. As the city’s tech, life sciences, and professional services sectors stabilize, demand for high-quality, right-sized space will lead the way.

What This Means for Tenants and Landlords in Chicago

For tenants: Now is the time to evaluate footprint strategy. There’s an opportunity to secure top-tier space in premier buildings—often with concessions or flexible terms. If your lease is coming up for renewal, this market offers leverage to upgrade and right-size at the same time.

For landlords: Repositioning is essential. Buildings that invest in amenities, wellness infrastructure, and flexible suite design will win. Those that do not risk falling further behind in a market where tenant expectations have permanently shifted.

Chicago’s Office Market: Leaner, Smarter, Better

The days of oversized floorplates and generic layouts are gone. Today’s Chicago tenants want spaces that reflect how people actually work in 2025: flexibly, collaboratively, and intentionally.

The result? A Chicago office market that may be smaller in square footage, but higher in performance. Landlords who embrace that shift will fill space. Those who don’t will continue to watch vacancy rise, especially in aging buildings without reinvestment.

In this new cycle, smaller doesn’t mean weaker; it means smarter. And for Chicago office space, that’s the future.

For more information on what’s happening in the office market, you can speak to one of our talented commercial real estate agents in Chicago.