➤ The Signal
Chicago is the cleanest picture of where office actually is: not one market, but two. Within weeks, the same downtown produced its highest office price in four years and a default on a 1.2-million-square-foot tower. Both are true, and neither cancels the other.
The split runs on tenancy and quality. Trophy assets with occupancy and amenity are trading again, some at prices that look like a floor forming. Older, half-empty towers — One S. Wacker at 73% — are where the loans are breaking and basis is resetting toward the value of the shell.
That distress share jumping to 19.4% from 6.2% is the repricing engine. Every default and discounted sale marks the obsolete tier lower, which is exactly what has to happen before the surviving inventory can stabilize.
➤ Implications
Buyers should underwrite the two tiers separately — trophy recovery and obsolete distress are different trades in the same zip code. The defaults are a feature of the reset, not a market-wide verdict; the winners are recapitalized at a basis the prior owner could never justify.
Key Takeaways
- “Office isn’t uniformly distressed or recovering — Chicago just proved a single market can do both in the same month.”
- “Source: Bisnow / CoStar / The Real Deal — June 2026”
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