June 30, 2025 Ι Bloomberg CityLab
The 12-story building at 300 West Adams Street is typical of the terra-cotta-clad office towers that rose in downtown Chicago during the 1920s. Heavily ornamented with Gothic Revival details and brass decorative elements, it’s across the street from the city’s tallest skyscraper, the freshly renovated Willis (née Sears) Tower, and a few blocks from the elevated train tracks that define the city’s central business district, known as the Loop. It sold for $51 million in 2012. But when it went up for auction at the end of 2023, the historically landmarked building, half-vacant, sold for a mere $4 million, a 89% drop.
The plummeting value of 300 West Adams is just one example of the deep discounts in Chicago’s office real estate market, where a quarter of the business district sat vacant in the first quarter of 2025. The pandemic-fueled explosion of remote work blasted enduring holes in the hearts of cities across the US: Nationwide, downtown vacancy rates sat at 19% in April. A third of central Portland’s office space remains unoccupied; the Oregon city’s second-tallest skyscraper, the 42-story former US Bancorp Tower, is more than half empty and on sale for $70 million, a precipitous drop from the $373 million earned the last time it changed hands.
The era of American downtowns as monocultures of high-density white-collar work appears to be over, and what replaces it stands to be the most significant real estate reset of the post-Covid era. In many ways, business districts are learning to become more urban places, widening their economic bases and learning to become more welcoming to new kinds of people.
“The advantage of diversity brings flexibility, nimbleness, not putting all of your eggs in one basket, not being vulnerable to shocks that affect a particular demographic group,” says urban planner Brent Toderian, former chief planner for the city of Vancouver.
But to achieve that mix, cities like Chicago will have to unravel much of the last century’s urban fabric — a redevelopment campaign whose planning and scale are now beginning to take shape.
Revitalization Roadmaps
A persistent vacancy plight has helped make the Loop — which on most weekdays feels like a playground for tourists and a diminished corps of commuters — something of a laboratory for this great downtown reinvention. Last year, the University of Chicago’s Harris School of Public Policy launched an annual innovation challenge devoted to the issue, convening teams of grad students to pitch plans to revive the area. This year’s most revealing proposals reimagined the beleaguered business district as a residential destination that would attract other demographics.
The winning entry — “Activating the Cultural Mile,” from Samantha Anderson, Krista Brown, Ashton Mayo-Beavers and Uchenna Offorjebe — envisions the Loop as a creative district, with subsidized housing in converted office buildings that give artists and creatives a place to plant their flag. The team also looks to leverage the city’s 1950s-era pedestrian walkway system, the Pedway, transforming this 40-block network of tunnels and skyways into art spaces with year-round programming and new commercial enterprises. Meanwhile, a car-free stretch of Michigan Avenue alongside its most popular cultural attractions entices the city to slow down and experience it all.
Another team’s plan, “Revitalizing Downtown: An Innovative Young Professional Public-Private Housing Network,” looks to deploy the traditional shock troops of urban revitalization: young professionals. Paul Zee-Cheng, Melodie Slaughter, and Alison Collard de Beaufort propose redeveloping nearby office buildings as apartments, each with a signature amenity to be shared by residents across the entire network. Once you sign a rental lease, you could join your building’s rooftop basketball league, drop in on a Mediterranean cooking class in another building, and develop your aesthetic sensibilities at a street art studio space in another. (Given the urbane and frisky demographics, hosting meatspace meetups for dating apps seems like a slam-dunk.)
Instead of the usual high-end lifestyle amenities, ground floors would host public space like a farmer’s market or community center as well. “All of these organic, community-based options help dilute the structured and corporate feeling,” says Collard de Beaufort.
Living at the Office
Such proposals align with a demographic paradox of the post-Covid era: Even as it’s been drained of office workers, the Loop’s residential population has been growing, from 42,300 in 2020 to 46,000 in 2023, making it the fastest growing neighborhood in the city. That mirrors a trend seen across scores of US cities. And most of that population is younger people.
“Young professionals have always been the key demographic when it comes to who these developments are targeting because they put a value on the type of amenities that downtowns are better positioned to offer,” says Jorge González-Hermoso, senior research associate at the Urban Institute.
New research by the Pew Charitable Trust and the global architecture firm Gensler explores the potential for office-to-residential conversions into communal co-living apartments across seven cities, Chicago included. Here, former office buildings are filled with a ring of micro-scaled sleeping quarters along their perimeter, with central core of shared kitchens, bathrooms, and social lounges — an arrangement recognizable to anyone that’s every trudged through a college dorm hallway with shampoo in plastic shower caddy.
The trade-off in private space is affordability, with rents for each mini-unit ranging from $500 to $1,000 a month. In Chicago, 28% of renters are considered severely cost burdened, paying more than half of their income in rent.
“The models that got us into this are not going to get us out of it,” says Wes LeBlanc, an economist with Gensler. “We need a broader range of [housing] products and price points for different demographics to tackle this issue.”
Because access to light and air via windows is often required (and always desired) in residential buildings, skyscrapers built before the 1930s typically make the best candidates for housing conversions, as these buildings were designed before air conditioning, with smaller floorplates and openable windows.
These older buildings have often become less desirable as office space as well: In Chicago, the vacancy rate for pre-1930 properties in the Loop is 45%
Office conversions are typically expensive, but co-living arrangements can result in per-unit development costs that are approximately half of what it takes to build a traditional studio unit. That’s because of the sheer number of units and the way these developments would reuse inherited infrastructure. Each sleeping room is only 150 square feet, less than half a typical 440-square-foot studio, allowing landlords to pack more units in for less rent. And instead of running pipes to each unit, the central utilities core where bathrooms are typically located stays intact, making for lower plumbing costs.
“We want to add a rung to the housing layer that is above the extremely heavily subsidized product that helps bridge the dynamic where cost curves and income curves are not meeting in the middle,” LeBlanc says.
Family Planning
One demographic has been largely absent from the downtown recovery conversation: kids.
As in many US cities, Chicago’s current downtown residents are a transient lot. Often high earners in their 20s or early 30s, they tend to leave when children enter the picture: 54% of residents say they plan to move in the next five years. Many leave the city entirely, so a focus on the Loop for families can aid population retention for the entire city.
In “Urban Not Suburban: The Loop for Families,” a Harris School team made up of Hannah Flint, Liz Schutz and Marlin Exton call for a host of public and private sector investments. There’s a need for childcare and educational facilities — the closest public school is a 20-minute walk from the center of the Loop — as well as neighborhood parks and a teen-oriented community center.
But the biggest gap is appropriate housing: Currently, studio apartments are far more common than family-friendly three-bedrooms, since rent-per-square-foot rates decrease the larger a unit is. Only a paltry 2% of apartments downtown have three bedrooms. “The market, left alone, will continue to do studios and one-bedrooms because that’s what’s most appealing,” says Flint. “But we can make an argument for market failure and policy intervention.”
One benefit of bringing kids and their parents downtown is demographic stability. Once rooted in a school or among neighbors with similarly aged children, families will be more likely to stay put compared to the churn of young professionals cycling through different housing types and income brackets. This stabilizing effect could be multi-generational, as people accustomed to growing up downtown might raise their own kids that way.
And for downtown businesses, combining the young professional and family demographics means “you see a more diverse spending pool,” says Rosie Hepner, vice-president of the Urban Land Institute’s Terwilliger Center for Housing.
But this can come with a cost, as families demand more services and support. For municipalities, the value of these services (schools, childcare, parks, etc.) is weighed against tax revenue they generate, says Rachel Meltzer, a planning professor at the Harvard Graduate School of Design. “It’s definitely more cost-effective to bring in more high-earning single households that take up less space but still provide taxes and spending,” she says. “Families draw on a lot of services but may not always compensate for that. They’re not spending money at bars and museums every week.”
Chicago has a city-run office-to-residential conversion program, focused on the LaSalle Street corridor. It uses TIFF funds to subsidize projects that include at least 30% affordable housing, but there are no buildings with three-bedroom units in any of the active projects, the first of which just broke ground. Flint’s Harris School team suggests using TIFF funds to pay for family-size units in a historically significant landmark building pitched as a high-profile test case for family living downtown.
A Canadian Model
Toderian, Vancouver’s former planning chief, has identified a three-part formula for child-friendly downtowns.
Housing is most critical: Without three-bedroom units, it’s “game-over” for families in downtowns, he says. The next most important factor is providing supportive services and commercial amenities like schools (there are already two downtown and two more under construction), daycare centers and grocery stores. Lastly, cities need to adapt the design of streetscapes and the public realm to kids, with added park space and pedestrianized streets.
“If you design spaces for kids, they work for everyone,” says Toderian. Because this change “requires the least regulation,” he says, it’s often used (ineffectively) to try to compensate for the lack of housing and services. “If you don’t successfully plan for, regulate for, [and] demand these elements, you will fail,” he says. “If you leave it to the market, the market will decide for you that there aren’t going to be any kids downtown.”
In 2016, Vancouver raised the percentage of two and three-bedroom apartments in downtown developments from 25% of 35%; 10% must be three-bedrooms. This simple mandate is a way to break out of the circular chicken-and-the-egg quandary of wooing a new demographic to an untested market, says Meltzer. “You need the units to get the families to come, but you need to be able to justify the units by having the demand from families.”
Similarly, for childcare and education, Vancouver used density bonusing, allowing developers to build more units if they pay for daycare facilities. The city also used this method to pay for the land and air rights to develop new schools.
It’s been an effective formula. The city center is now filled with so many kids — about 7,000 at last count — that locals schools are out of capacity.
“We’ve been designing downtowns to virtually repel children, and then saying, ‘See, families don’t want to live downtown,’” he says. “We’ve been creating the perfect self-fulfilling prophecy.”
Towers of Kids
For the architects tasked with designing family-centric office-to-residential conversions, the inherited ratios of floorplate size to unit size create some unique opportunities.
Lower Manhattan’s Pearl House is a 1970s skyscraper that once housed the insurance giant AIG. Now it has 588 apartments, making it the New York City’s largest office-to-residential conversion. Designed by Gensler and developed by Vanbarton Group, the building has no three-bedrooms (there are 30 two-bedroom units), and it’s targeted more toward young professionals without kids.
But with all this space across a wide floorplate, there’s room for more. About 30,000 square feet of the building is devoted to amenities, much more than standard ground-up construction. For families, there’s a maker space and arts-and-crafts studio, kids’ playroom, and a sports simulator.
“You’d never build that extra square footage in a ground-up project,” says Robert Fuller, principal at Gensler. “We have so much square footage to work with that we have the luxury of being able to provide a pretty wide array of amenities.”
As a market-rate building where a studio apartment can rent for $4,000, this level of family-friendly amenity saturation has yet to be seen below a luxury price point among office-to-residential conversions, but New York City’s primary policy tool to encourage conversions offers a 35-year tax break for projects where 25% of units are income-restricted.
An even larger Gensler conversion, the former Pfizer corporate headquarters on East 42nd Street, will become 1,600 apartments, served by 100,000 square feet of amenities. “How many billiard rooms can you put in?” says Fuller. “We had plenty of space to widen the program out to other amenity types that would appeal to a wider demographic. I think that’s a benefit we’re seeing on almost all of our conversions right now.”
Ideally, downtown neighborhoods will be able to place families with kids and young professionals side-by-side with complementary sets of amenities attractive to both, like walkable streets, parks and transit infrastructure.
“Kids,” says Toderian, “are an indicator species of a diverse neighborhood.”
With new patterns of work and life well-established, downtowns may lose some prestige as the commercial engines of their cities, but they’ll have much to gain by looking at themselves as one of many city neighborhoods.