Chicago Office Real Estate Market Shows Signs of Recovery as $55M Acquisition and Leasing Activity Rebound

Major Office Real Estate Acquisitions Signal Market Confidence

Chicago's office real estate market concluded 2025 with notable transaction activity, as investors demonstrated renewed interest in commercial real estate acquisitions downtown. A joint venture of Namdar Realty Group and Mason Asset Management acquired 190 S. LaSalle St. for $55 million from Beacon Capital Partners in one of the quarter's largest deals. The building lost 76% of its value since it last traded in 2019 for $230 million.

In another significant transaction, a joint venture between Hines and Stahl Organization acquired the leasehold interest in the former Boeing headquarters office tower at 100 N. Riverside Plaza for $22 million in the fourth quarter. Boeing is leasing back 70,000 square feet in the building as part of the sale. Stahl also owns the land beneath the tower.

According to Colliers, 13 properties traded in the fourth quarter, with 37 buildings over 20,000 square feet sold throughout 2025, compared to 27 in 2024. Colliers Executive Vice President Dougal Jeppe said the investment market has loosened a bit as certain investors are once again eyeing office properties to diversify their real estate portfolios.

"Office is not dead, and good office and good markets can be a good play," Jeppe said.

Commercial Real Estate Financing and Investment Activity Accelerates

Distressed sales, refinancing activity and value-add investors' renewed interest in downtown office properties defined the market landscape in 2025, according to Savills' fourth quarter downtown Chicago office report. Jeppe said investors are recognizing that more companies are "office forward" than have been in years past.

"Beyond leasing fundamentals, 2025 was defined by accelerated price discovery and ownership turnover, particularly among older Loop assets," Savills wrote in its report.

The fourth quarter saw just 27,000 square feet of negative net absorption, a substantial improvement from the 654,000 square feet of negative net absorption in the third quarter, Colliers reported. However, total CBD vacancy did go up slightly by 10 basis points to 24.6%, a record high.

Office Leasing Activity Rebounds

Throughout 2025, total leasing volume reached 10.3 million square feet, the strongest total since 2019, according to Savills. The activity reflects tenants moving beyond short-term renewals to fortify their back-to-office strategies with long-term planning.

"There's been more activity," Jeppe said. "More tenants not just renewing and kicking the can, [but] really fortifying their back-to-office strategy so they know what they need for long-term planning."

Legal services firms accounted for the two largest expansions in the fourth quarter. Benesch Friedlander Coplan & Aronof signed a 130,000-square-foot extension and expansion deal at 71 S. Wacker Drive, while Ropes & Gray executed a 105,000-square-foot renewal and expansion deal at 191 N. Wacker Drive.

Other notable transactions included USG Corp. signing a 160,000-square-foot extension and contraction of its space at 550 W. Adams St., and Brookfield Properties—now named GGP—signing a 123,000-square-foot renewal at 360 N. Orleans St.