(The Center Square) – Wirepoints President Ted Dabrowski is sounding the alarm about Chicago’s still dwindling downtown office occupancy rates after 2025 kicked off with record-high vacancies as the market posted its second worst year on record.
“The risks are huge, especially when you see Chicago just getting downgraded by S&P,” Dabrowski told The Center Square. “You’re seeing the concerns about the city budget, about Brandon Johnson. Of course, concerns about crime and the big news on the Chicago Transit Authority and their big deficits. You’ve got that continued pressure of all those things as well as crime coming together to make the Doom Loop still a possibility.”
Overall, real estate firm CBRE reports the share of Loop area available office space rose over the final three months of 2024 to 26.3%, marking the 10th consecutive quarter that the vacancy rate hit an all-time high.
At the same time, the lingering effects of remote work continue to slow supply and demand, with downtown office users collectively vacating 1.6 million square feet more last year, prompting city officials to now stand behind a plan where taxpayers would be called upon to chip in roughly $250 million in tax-increment financing to convert empty Loop office space into apartments.
Dabrowski wonders if any of that will be enough, given he’s convinced the city’s overall trajectory continues downward.
“I think we’re still heading in the wrong direction,” he said. “Most of the decisions that Brandon Johnson is making are bad for business and bad for people. The kinds of things he’s doing is chasing people away, and I’d say the same thing for Gov. Pritzker. He continues to raise costs in the city and in the state. It keeps giving people a reason to leave.”
Dabrowski has his own ideas about what path he feels would be more sustainable.
“They could start by lowering property taxes,” he said. “Chicago has the highest commercial property taxes in the country for all the big cities. They’re trying to do a congestion tax that also hurts people coming in. Really, what they have to do is obsess about making the city more attractive and less expensive and everything they should do should be around reducing the cost to operate in Chicago.”
With space reductions coming from the likes of Trading Technologies. KPMG and CAN Financial, the fourth quarter ended with about 151,000 square feet of negative net absorption in the downtown central business district.
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