Answer extracted from The Crexi Commercial Real Estate Podcast — listen to the full episode below.
What is the current condition of different office market segments in Chicago?
Class A office in Chicago remains stable with regular leasing activity, though growth is slower than pre-COVID levels. The real challenge lies in Class B and C office stock built between 1960 and 1999, which is now functionally obsolete—creating urgency for owners to pursue conversion, repositioning, or alternative strategies.
The Class A–to–Class B Divide
Chicago's premier office properties continue to attract tenants and capital, but the momentum lacks the velocity of earlier recovery. Landlords in the Class A segment are leasing space consistently, signaling underlying market confidence. However, this stability masks a deeper structural challenge: much of Chicago's aging office inventory lacks the modern infrastructure, flexibility, and amenities that today's tenants demand.
Buildings constructed during the 1960–1999 window represent a substantial portion of the city's office stock, yet many are now uncompetitive. As discussed in The Crexi Commercial Real Estate Podcast, this obsolescence isn't always about physical condition—it reflects misalignment between building DNA and tenant expectations around technology, layout, natural light, and operational efficiency.
Conversion and Repositioning as Exit Routes
Rather than waiting for market conditions to shift, forward-thinking owners and developers are pursuing alternative pathways: industrial conversion, multifamily adaptation, or retail repositioning. The viability of any conversion depends on understanding local zoning codes and municipal regulations in Illinois, as well as assessing site logistics, proximity to transit, and neighborhood demand patterns.
Van Vlissingen & Co. has moved beyond advisory into execution—Gordon Lamphere's firm has completed or is actively working on two or three office-to-multifamily conversions in the last 12 months, including projects near their own headquarters. These deals illustrate that the conversion pathway is no longer theoretical; it is becoming standard practice for managing obsolete or underperforming office assets in Chicago's market.
Each conversion project requires navigating complex variables: structural feasibility, market demand for the target use, capital costs, financing appetite, and regulatory approval. Yet the rising volume of these transactions signals that many owners view conversion as preferable to holding or distressing Class B and C stock.
Gordon Lamphere — Vice President at Van Vlissingen & Co., the Midwest's oldest private commercial real estate firm. A fourth-generation real estate professional and licensed Illinois and Wisconsin broker, Lamphere oversees more than 100 transactions annually throughout greater Chicagoland, spanning office, industrial, and land assets. He earned a Juris Doctor from Tulane University Law School and brings legal expertise to complex leasing, repositioning strategies, and development-oriented advisory work.
The structural shift in Chicago's office market is no longer a cyclical correction—it reflects permanent changes in tenant behavior, building performance expectations, and capital allocation. Class A stability is real but modest; Class B and C distress is acute and widespread. The most successful players in the market are those who recognize this bifurcation early and move decisively toward solutions, whether that means modernization, repositioning, or conversion. Learn more about the full scope of these market dynamics and specific conversion strategies in the full episode.
See also
How does a broker's client selection process change as their track record and reputation grow?
As success and reputation grow, brokers shift from accepting nearly every potential client to receiving multiple inquiries per day and becoming highly selective about which clients to take on.
What limitations exist when relying solely on artificial intelligence for property valuation in commercial real estate?
AI is programmed to keep users invested rather than seek objective truth; in real deals, AI valuations can diverge significantly from actual market reality and professional judgment.
How is the role of legal expertise evolving in real estate transaction negotiations?
Brokers and owners now demand higher expertise from legal staff because AI tools like ChatGPT can proof documents, but human judgment and strategic negotiation remain irreplaceable.