News

The office space market in the City of Chicago is entering a new chapter in 2025. One marked by caution, transformation, and strategic recommitments from major players. A defining move in this evolving landscape comes from JPMorgan Chase, which has expanded its footprint at 131 South Dearborn Street, also known as the Citadel Center. The global banking giant has signed on for an additional 126,000 square feet, bringing its total space in the building to a substantial 321,000 square feet.

This transaction isn’t just a vote of confidence in the property. It’s a signal that while Chicago’s office market faces real headwinds, opportunity still exists for companies ready to lean into the future of work.

A Market Under Pressure

Chicago’s office sector continues to grapple with record-high vacancies. As of Q4 2024, the downtown vacancy rate hit 26.3%, the highest level in the city’s history. The lingering effects of remote work, increased tenant downsizing, and economic uncertainty have left many buildings underutilized, particularly older, Class B assets without modern amenities.

Despite these challenges, transactions like the JPMorgan lease at 131 S. Dearborn are bright spots that offer insight into where demand still exists: large, well-located buildings that offer institutional quality, flexible floor plates, and a clear path to long-term occupancy.

Flight to Quality

One of the most prominent trends commercial real estate agents in Chicago are seeing is the so-called “flight to quality.” As tenants right-size their footprints to reflect hybrid work models, they are concentrating their space needs into Class A buildings that offer the highest levels of design, amenity access, sustainability, and location.

That’s exactly what’s playing out at the Citadel Center. Built in 2003 and renovated in recent years, the 1.5 million-square-foot tower offers top-tier infrastructure and amenities, a major draw for firms like JPMorgan and other large tenants who have made long-term commitments to stay downtown.

Chicago real estate agents report similar patterns at other high-profile properties like 110 North Wacker Drive, 300 North LaSalle, and 155 North Wacker, where demand remains steady even as surrounding buildings struggle.

Momentum Returns, But Selectively

The broader market is showing flickers of recovery. Leasing volume in Chicago hit 2.8 million square feet in Q1 2025, a 43% increase from the same period last year. But dig into the numbers, and the story is more nuanced: much of that activity is renewal-driven or consolidation-focused, and net absorption remains fragile.

Early renewals, downsized footprints, and hybrid occupancy models have become the new norm. Commercial real estate agents in Chicago are adapting to these new tenant preferences, acting as advisors not just in space selection, but in helping organizations navigate change—whether that’s through flexibility in lease terms, workplace strategy, or even converting office assets to other uses.

Office-to-Resi Conversions: A Safety Valve?

With so much underutilized office space, the City of Chicago is also betting big on adaptive reuse. Office-to-residential conversions are expected to surge by 28% in 2025, according to Chicago Agent Magazine, with over 70,000 new units potentially added to the downtown housing supply.

Conversion is increasingly becoming a viable alternative for older buildings unable to compete in the flight-to-quality race. For commercial property owners and developers, it’s an opportunity to salvage asset value and meet rising urban housing demand.

Why This Moment Matters

JPMorgan’s expansion at 131 South Dearborn represents more than just square footage—it’s a symbolic recommitment to Chicago’s urban core. And it reflects the fact that large occupiers are still willing to make long-term bets when the location, product, and timing align.

For anyone working with a commercial real estate agent in Chicago today, this moment is one of recalibration, not retreat. The market is moving, but it’s moving differently. Chicago real estate agents must help clients think beyond just size and rent—they must understand context, workforce needs, and long-term resilience.

Conclusion

The future of office space in Chicago is not a simple return to 2019 norms, it’s a complex evolution. Large-scale expansions like JPMorgan’s at 131 South Dearborn prove that the downtown market still matters. But success now depends on navigating new expectations: flexibility, location, and quality.

Whether you’re a landlord, tenant, or investor, now is the time to work with a commercial real estate agent in Chicago who understands the nuances of this reshaped market. The stakes are high—but so are the opportunities.