Chicagoland Office Space Vacancies Increase

As of last December, demand for offices in the Chicagoland area stood at 45% of its pre-pandemic norms. This was down a full 10% from the previous year.

Many individuals are still working from home which means that companies aren’t in a hurry to sign leases. We’ve seen an uptick in foreclosures on downtown buildings as their owners can no longer afford their mortgages.

Other businesses that are supported by those workers like restaurants and stores are also affected. Sadly, this trend will probably continue.

Chicago’s demand for office space was in the middle of the pack when compared to other large urban centers. Demand in New York and Los Angeles has almost returned to their pre-pandemic levels as their downtowns are again filled with finance, banking, and venture capital firms.These markets showed a 20% increase over the prior year.

Meanwhile, on the West Coast in San Francisco and Seattle, demand is lagging behind Chicago given the fact that most tech businesses are still mostly remote. Those markets are sitting at 34% of their pre-pandemic levels.

This is a continuing sign that a true recovery of our downtown area may be many years away.

Let me leave you with this.

A new release from the New York Federal Reserve reported that credit card delinquencies increased more than 50% in 2023. This is defined as a credit facility that’s more than 90 days in arrears.

Past due accounts were sitting at 4% of the total in 2022. This number rose to 6.4% in the fourth quarter of last year.

Problems were also reported in mortgages, auto loans, and what the Fed Report simply terms as “other” credit accounts. Total consumer debt grew to $17.5T during the period.

Borrowers have been hit by higher interest rates. With the Fed increasing its Fed Funds Rate, the average rate charged on credit cards has grown from 14.5% to 21.5%. Auto loans and mortgages have also seen substantial rate increases.

What does all of this mean?

Credit delinquencies show financial stress in lower income families and younger borrowers. It reveals the continuing problem of the erosion of real wages in the past year which is the fact that wages haven’t kept up with inflation.

What many are now asking is whether or not this is a sign that a recession is approaching.

The answer is that it depends. If consumer spending remains robust and the job market continues to perform, then no. If either of those falter, then maybe yes.

We’ll see.

EIther way, it’s certainly time for all of us to tighten up on our receivables. If debt is trending in this direction, then your bad debts may do the same if you aren’t careful.

We’re all going to get through this. Let’s get through it together.

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Sincerely yours,

Chris Amundson


Accounting Solutions Ltd.



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