Chicago office buildings left partially empty and debt-ridden after the pandemic are being scooped up by new development teams and undergoing refurbishment. The spiffed-up properties mean employees who commute downtown — even just a couple of days a week — could find new workspace amenities like tenant lounges and rooftop terraces.
The new building owners watched downtown property values collapse over the past six years, and they’re buying office complexes at a fraction of the prices they sold for in the past. That’s allowing them to offer lower rents and frills that previous owners couldn’t afford.
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“That’s the formula that seems to be working,” said California-based developer Andrew Brog, who bought his first Chicago office building in 2024. “Provide deals that are lower than the marketplace, improve the building and improve the tenant experience. Many of these distressed buildings have been zombies for a long time.”
Many feared downtown would be swamped by foreclosures after the pandemic as building owners struggled to fill spaces left behind by the shift to work-from-home. With fewer rent dollars coming in, some building owners were also finding it difficult to make payments on their commercial mortgages. But although some foreclosures are still likely, there’s no sign of a crisis, said Steven Ginsberg, a real estate attorney and partner with Ginsberg Jacobs LLC.
What’s happening, instead, is an organized turnover in building ownership. Because few lenders want to take over and run office buildings, many of the buildings are being sold to other developers. Seven downtown office buildings were sold in the last three months of 2025, including the former Robert Morris University building at 401 S. State St. and a 576,000-square-foot tower at 125 S. Wacker Drive.
The new year brought even more sales. Investors purchased another seven downtown office buildings totaling nearly 3.9 million square feet, according to Transwestern, a commercial real estate firm.
Some office buildings are being converted into residential use. Others are continuing on as offices but are being spruced up with amenities designed to appeal to employees who are slowly but steadily returning to downtown workplaces.
More than 31% of downtown office space was available for rent at the end of 2025, roughly double the rate in 2019, according to Transwestern.
But foot traffic by office workers in Chicago rose by more than 5% in 2025, according to Placer.ai, a data analytics firm. Foot traffic is still down 43% compared to 2019, but if activity continues trending upward, investors like Brog should continue to show up, even if the full five-day workweek doesn’t return, Ginsberg said.
“I think we will still have a downtown district which is vibrant, but not necessarily at the same scale,” Ginsberg said.
“Is (office activity) going to climb back to 100%? No, but most believe it will keep climbing, and that means a healing market,” he said. “It’s a tremendous opportunity for anyone looking to buy office space and who believes the worst has already hit us.”
Appealing to younger workers
Brog, who now owns two downtown office buildings, said Chicago is still a magnet for highly educated young people, a demographic much sought after by local employers. Even though the vacancy rate in Chicago is at a historic high, the market has great long-term prospects because of the city’s appeal to young professionals.
“All these kids from Iowa, Michigan, Ohio, Wisconsin and all over the Midwest, when they graduate from college, they’re planning to go to Chicago, and that’s never going to change,” he said.
The refurbishments Brog has done on two buildings he purchased in the city have added amenities popular with younger workers.
In 2024 Brog paid $2.5 million for 216 W. Jackson Blvd., a vintage 10-story building. The 185,000-square-foot building, completed in 1899, was sold in 2013 to a previous owner for $22 million, but hit with a notice of foreclosure in 2023. Buying it cheap meant Brog’s firm had the money to kick off a renovation and charge rents about 20% below market rate, he said.
“At 216 W. Jackson, we redid the facade, we redid the lobby, and we built a tenant lounge and a lot of spec suites,” Brog said. “We’ve been doing a lot of leasing.”
The property is now 23% leased, according to CoStar.
Brog’s firm also paid $18.5 million in late 2024 for 550 W. Washington Blvd. in the West Loop. The 16-story glass office tower was more than two-thirds vacant. MetLife Inc. bought the building for $111 million in 2013 when occupancy was more than 90%.
Brog began renovating the 372,000-square-foot property last year. He’s now putting the finishing touches on its new amenity package, including a tenant lounge, gym and conference center, and plans to start showing off the building to downtown real estate brokers.
“The reputation of this building among brokers was, no matter what, don’t bring your tenants here, since you won’t get a deal done because the owners are (financially troubled),” he said. “Well, we’re the exact opposite. Tell us what kind of office you want, and we’ll build it for you. We’re doing deals at below market (rate), and we’re open for business.”
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Different scenarios
Not every troubled building will quickly find a new owner, especially one committed to launching a top-to-bottom rehab. Construction costs and interest rates are still high, tariffs hit key building materials last year, and many developers are still leery of taking over older properties in the Central Loop.
Andy DeMoss, executive managing director of Bradford Allen, said he expects to see at least some new foreclosures, along with other lenders who kick the can down the road by agreeing to modify or extend loans that back office properties.
“We’re seeing all these situations play out in real time,” he said.
Some of the city’s most iconic office properties are still troubled, carrying large debts and at risk of missing loan payments. 601W Cos. the owner of the Aon Center, the 1,136-foot tower at 200 E. Randolph St., missed a payment earlier this year, according to CoStar, and the loan faces a high risk of default. 601W Cos. had secured in 2023 a three-year extension on its loan. It bought the 2.7 million square foot building for $712 million in 2015.
Dougal Jeppe, executive vice president of Colliers, which represents downtown office tenants, said some buildings have been purchased by buyers who aren’t office developers. They likely saw opportunities to pick up properties cheaply and collect the rents, and may not commit to expensive, long-term rehab projects.
Other investors are ready to pour a lot of money into Chicago office properties. Alongside its plan to develop thousands of new apartments across Chicagoland, Canadian multifamily developer Onni Group also decided to jump into downtown office renovation. It bought the former AT&T headquarters at 225 W. Randolph St. in 2021 for $155 million, nearly half its 2007 sale price, according to CoStar.
It launched a $140 million gut rehab on all 32 floors in 2023 after AT&T vacated the property, adding several floors of amenities. The West Loop building, first completed in 1966 and now called The Bell, includes reconstructed offices, a health club with a cold plunge, several tenant lounges and bars, pickleball courts, a rooftop deck and Solette, a ground-floor casual restaurant.
“It was virtually vacant when AT&T left,” said Paul Purewal, Onni’s vice president of development, but the company transformed it into a building similar to an upscale residential property or hotel. “We know how to bring in a multifamily experience, so we brought that to the office. The type of tenants we attract demand that.”
It’s been a popular move. Onni leased hundreds of thousands of square feet last year at The Bell, now more than 70% leased, according to CoStar.
The building’s design team preserved its historic marble interior, but the new amenity package was essential for companies that want employees to leave their comfy home offices and commute downtown, said Lindsay Butters, partner and managing director of Ste Marie, The Bell’s design studio.
“In the ’60s, the building had a ‘Mad Men’-style corporate culture, and there was some glamour attached to it,” she said. “But expectations are now higher, and people want something different, a more open, less traditional environment. If folks are going to come into the city, there has to be a draw.”
Purewal said Onni is ready to buy and renovate other Chicago office towers. It just completed the purchase of 161 N. Clark St., a 50-story, 1.1 million-square-foot building.
CoStar reported the price was $125 million, less than half its 2013 price of $331 million.
“We are definitely getting it at a discount and we will be able to add new amenities to the building,” Purewal said.
Residential conversions
One of the best ways to heal the office market is to transform obsolete offices into new residences, said Mavrek Development Chief Investment Officer Anthony Hrusovsky. Many older, smaller office buildings are perfect candidates for conversions, as their small floorplates allow most interior spaces access to windows and natural light, a must for downtown apartments and condos.
“The opportunities that are happening right now with conversions are pretty much a direct result of the decrease in values for office properties,” Hrusovsky said.
The best-known conversion effort is the city’s $900 million LaSalle Corridor Revitalization. A team of developers, with city assistance, is transforming six aging office buildings near LaSalle Street into a new, 2-million-square-foot neighborhood with 1,765 residential units. Thirty percent of the units will be affordable. Another 14 office-to-residential conversion projects in the area are being planned without city assistance, according to city officials.
Mavrek Development, in partnership with ACRES Capital, last year began remaking Wacker Place, a 1920s-era art deco office tower at 65 E. Wacker Place, into 252 apartments. The 25-story, 248,000-square-foot building, home to Morton’s The Steakhouse, will include 51 affordable units, a third-floor coworking and fireside lounge, a fitness center and a rooftop deck.
The developer secured more than $90 million in financing, including about $17 million in federal and Illinois historic tax credits.
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“The historic tax credits went a long way toward making this viable,” Hrusovsky said. “But this location is also right up against Michigan Avenue and the Riverwalk, and that also makes it possible. Other (residential) developers are also looking at office properties, and there is no shortage of opportunities. Right now, the capital interest is there.”
Buildings along the Chicago River or in the West Loop are still the most attractive to investors, but the 2027 opening of Google’s new headquarters in the iconic Thompson Center will give the Central Loop a much-needed jolt, possibly bringing new investment to the area’s older properties, said DeMoss of Bradford Allen.
“There are still plenty of zombie buildings, but Google’s arrival will start to be felt next year and offset some of the high vacancy we’re seeing,” he said.