Leasing rebounds, but construction lags

Leasing activity in Chicago’s CBD accelerated in late 2024, with total volume reaching 1.84 MSF in Q4, driven primarily by a surge in deals under 25,000 SF. That momentum continued into early 2025, as Q1 recorded 209 transactions totaling 1.67 MSF, reflecting renewed tenant engagement. Yet the construction pipeline has not followed suit, likely because these smaller deals require limited fit‑outs.

The average lease size provides further context: while the 2025 averages rose slightly to 26,631 SF, this remains well below pre-pandemic norms (41,411 SF in 2019) and underscores the continued absence of large-scale projects. This trend aligns with broader market dynamics, scarcity of premium space and tenant strategies favoring cost efficiency and strategic reuse over full-scale first-generation fit-outs.

Looking ahead, leasing optimism may not immediately translate into major construction activity. Instead, incremental renovations and targeted upgrades are likely as tenants prioritize speed to occupancy and capital preservation.