The New Floor: What Older Office Sales Say About Value, Assessments and Reuse

Where the market stands

Office vacancy in the United States rose from 9.4 percent at the end of 2019 to 14.1 percent at the end of 2025, on CoStar’s figures, and it rose in 24 of the 25 largest metropolitan areas (Exhibit 1). The rise has not been even. On CBRE’s own measures, vacancy in the prime buildings it tracks stood at 12.7 percent in early 2026, against about 19 percent for the market as a whole, so the rest of the stock carries more of it.

Chicago’s Loop shows it most clearly. It holds one of the country’s deepest collections of early skyscrapers: steel and masonry office towers raised between the 1890s and the Depression, many on narrow lots around light courts, with tall windows and modest floor plates. For two generations they were dependable Class B and C office space. That role is ending. Since 2020, tenants have given back millions of square feet of downtown office space, and the buildings hit hardest are the older ones that compete on price rather than amenity. Those towers also carry a long record of sales, which makes the Loop the case market here.

This article is a market reading for owners, lenders, investors and their counsel. It rests on Horwath HTL’s repeat-sale study of Loop office buildings built before 1932, CoStar’s market analytics and the Cook County public record. Three findings stand out. The whole market for these buildings fell: even the few resales with no distress sit far below their 2016 to 2019 prices. Distressed sales became a large share of the trades. And Illinois law requires the state’s Property Tax Appeal Board to consider such sales. Assessments have not followed prices down.

What the sales show

Horwath HTL read 177 recorded sales of Loop office buildings built before 1932, from 1995 to mid-2026, and kept the 103 that sold a whole building in the Central, East or West Loop, setting aside condominium units, partial interests, portfolio allocations and ground-lease transfers. Each sale is measured against the same building’s earlier sale, so the index tracks price change in the same buildings rather than a shifting mix.

In Exhibit 2, with 2016 to 2019 set at 100, the index stood at 73 in 2020 to 2023 and at 15 in 2024 and 2025, below where it stood in 1995 to 2002, in nominal terms. Sales recorded in the first half of 2026 read at 21. The decline is clear; the level is not.

The latest periods rest on few pairs (three in 2020 to 2023, four in 2024 and 2025, three in 2026), because few of these buildings have traded twice in recent years.

How the sales happened

The strip beneath Exhibit 2 counts them. None of the 16 sales from 2016 to 2019 was distressed. In 2024 and 2025, five of seven were recorded as distress, lender-owned, short or auction sales; in 2026 to date, two of four.

The sales without distress

The natural objection is that distressed sales understate what a building would bring. The few unforced sales also fell steeply, though by less: with distressed sales removed, the index reads 38 in 2024 and 2025 and 30 in 2026, each resting on a single pair. Even resales with no distress sit at well under half their late-2010s level.

Published market reports point the same way. Bradford Allen reported that downtown investment sales in the fourth quarter of 2024 traded at an average markdown of 73 percent from their prior sale prices, and LightBox found that almost two-thirds of the sales it sampled sold at 60 to 90 percent below their prior prices.

The leasing behind the prices

Leasing across the wider Loop points the same way. In Central and West Loop office buildings of 100,000 square feet and over, CoStar reports that year-end vacancy nearly doubled, from 11.9 percent in 2019 to 23.3 percent in 2025 (Exhibit 3). Net absorption was negative in every year from 2021 through 2025, a net 10.8 million square feet given back over five years. The Central Loop finished 2025 at 24.5 percent vacancy, against 17.2 percent for the Chicago office market as a whole.

Space that comes empty is slow to fill. Over the three years to October 2026, a block of Central Loop office space took roughly 14 to 17 months to lease, depending on its size, and a block of 100,000 square feet or more took nearly 20 months across the Chicago market (Exhibit 4). For an older building with several floors empty, each lease-up means more than a year of carrying cost, plus the tenant improvements and commissions needed to win a tenant with newer choices. That is what buyers are pricing.

Assessments have not followed

Exhibit 5 sets eight recent sales of large, partly vacant Central and West Loop office buildings (150,000 square feet and over, no more than 60 percent leased at sale, sold 2023 to 2026), each shown by its year and leased share, against the Board of Review’s final assessed value for the year of sale, or the latest year issued. Cook County assesses commercial property at 25 percent of market value, so each assessment implies a market value of four times its amount.

In all eight, the assessment implied at least the price paid. The multiple ran from 1.0 to 5.0 times the price, with a median of about 2.4. Eight sales are a sample, not a ratio study, and each assessment speaks as of January 1 of its tax year (35 ILCS 200/9-95), so part of any gap is timing. The lag is not peculiar to Cook County: it appears wherever assessments rest on older sales.

For owners, the gap is costly: a tax bill set on a multiple of the price recently paid consumes much of an already thin net income, and during a lease-up the owner carries it alone. Because assessments follow sales with a lag, a buyer at today’s prices should plan for an appeal before the bill reflects what was paid.

One building, close up

The Subject, a Class B office building in the Central Loop, shows how these records meet in a single file. The Assessor’s published income model for tax year 2024 read it at 26.0 percent vacancy and rent of $37.00 a square foot, for a net operating income of $8.0 million and, at a 9.00 percent capitalization rate, a market value of $89.2 million (Exhibit 6). At January 1, 2026, the building’s rent roll showed 79.3 percent of its space vacant, at $33.15 a foot on the office leases in place.

Exhibit 6
The Assessor’s Income Model Beside the Subject

Subject: Class B office, Central Loop. The Assessor’s published income model for the building, line by line, beside what its rent roll and operating statement show at January 1, 2026.

Blue: as published or recorded Black: calculated from the blue

Source: Cook County Assessor, Commercial Valuation Data, tax year 2024 (county open data), read October 15, 2026; the Subject’s rent roll at January 1, 2026 and operating statement for the twelve months to January 2026; Horwath HTL calculation.

The model reads the building at 26.0% vacancy and $37.00 a foot; at January 1, 2026 its rent roll shows 79.3% vacant, at $33.15 a foot on the office leases in place. The building’s expenses are twelve months as reported, before property tax.

The assessment moved at each stage of the cycle (Exhibit 7). For 2023 the Assessor mailed an assessed value of $37.3 million, and the Board of Review set $21.5 million. For 2024 the mailed $22.3 million became $14.4 million after review. For 2025 the Assessor mailed $22.3 million again, certified $20.3 million, and the Board of Review set $10.3 million. The 2026 assessment has not been issued.

Exhibit 7
The Subject’s Assessment by Tax Year, at Each Stage

Subject: Class B office, Central Loop. Each tax year’s assessed value at each stage of the cycle, and the market value each implies at the 25% level of assessment.

Blue: as published or recorded Black: calculated from the blue

Assessed value

Market value implied at 25%

Source: Cook County Assessor, Assessed Values (county open data), read October 15, 2026; Horwath HTL calculation of the implied values.

After review, the assessed value moved from $21,483,888 for 2023 to $10,312,902 for 2025, each as set by the Cook County Board of Review. The 2026 assessment is not yet issued.

Exhibit 8 places the building among the 31 Loop office buildings an objective screen admits: 150,000 to 1,000,000 square feet, built before 1950 and assessed in the same commercial class. Twenty-four carry a higher assessed value per rentable foot than the Subject’s $17.65; their median is $22.62. Read together, the three exhibits are the kind of record an owner brings to the Board of Review: the Assessor’s assumptions beside the building’s own, each stage of the cycle, and the building’s place among its peers.

The Cook County example: the Board of Review and the Property Tax Appeal Board

Every state sets its own rules on distressed sales and on appeals; Illinois shows how one state handles them. Illinois defines fair cash value as the price a property would bring “in the due course of business and trade, not under duress, between a willing buyer and a willing seller” (35 ILCS 200/1-50). The law does not set distressed sales aside. Since 2010 it has defined a compulsory sale as a short sale or a lender’s first sale after foreclosure (35 ILCS 200/1-23), and it directs the Property Tax Appeal Board to “consider compulsory sales of comparable properties,” including those a taxpayer submits (35 ILCS 200/16-183). The Board of Review’s rules, last updated July 27, 2026, require an owner whose property sold within three years of the lien date to disclose the price, the parties and whether the sale was at arm’s length, with an affidavit when the price is far from the assessor’s value (Rule 18).

Of the seven distressed sales in the index since 2024, four were recorded as lender-owned or short sales, the two kinds the statute names; three were auction or other distress sales. Each price in Exhibit 5 was checked against its sale record and, where available, the recorded deed. Horwath HTL’s appraisers prepare appraisals for property tax appeals and testify to their work.

Reuse: one group of buyers

Conversion buyers are one group among those bidding for older towers, alongside investors who will re-lease the space as office. A buyer planning a conversion prices a building from the cost and risk of the work ahead, and those costs are part of why prices sit where they do. A conversion budget measures what a project costs, not what a building is worth.

Chicago’s record is mostly residential. The city’s LaSalle Street program backs six conversions with 1,765 apartments and more than $900 million of investment; the first opened at 79 W. Monroe St. in September 2026.

Hotels are a smaller thread. The 1904 office building at 226 W. Jackson Blvd. reopened in 2021 as two hotels with 350 rooms after a $32.7 million purchase and a renovation of more than $100 million: about $379,000 a room all in, by Horwath HTL’s arithmetic. In September 2026 the City Council approved a $50 million tax increment financing loan toward a $166.5 million, 308-room hotel in 275,000 square feet of 111 W. Monroe St., about $541,000 a room by the same arithmetic. Nationally, hotels were 8 percent of active office conversion projects in mid-2025, against 76 percent for apartments.

Why hotels

Narrow floor plates around light courts, closely spaced windows and generous ceiling heights suit a hotel’s layout of rooms on both sides of a central corridor. Gensler puts a hotel’s efficient size at 80,000 to 200,000 square feet, against 300,000 or more for most residential conversions. A hotel needs a bathroom in every room but no kitchens, and its rooms are smaller: one Loop tower marketed in early 2026 was presented with concepts for up to 532 hotel rooms or about 296 apartments.

Conversion cost is the measure that matters. CBRE puts office conversion costs at $250 to $650 a square foot; at Gensler’s 775 square feet a room, that is about $194,000 to $504,000 a room before the purchase, by Horwath HTL’s arithmetic.

Public support is often part of the budget. Cook County’s Class L incentive for landmarks, and its Class 7 incentive for qualifying commercial property, assess at 10 percent of market value rather than 25 percent for ten years, then 15 and 20 percent. A hotel, as a commercial use, may qualify for Class 7 with municipal support and a finding of need; a residential conversion is not a Class 7 commercial use. On five Loop apartment conversions, city financing came to 22 to 44 percent of cost, and the 111 W. Monroe hotel loan to 30 percent (Horwath HTL arithmetic). The federal historic tax credit adds 20 percent of qualified rehabilitation spending.

Not every building converts

Gensler judged about a quarter of 1,300 office buildings it assessed suitable for residential conversion. Converted hotels have also failed. The hotel at 203 N. Wabash Ave., opened in 2015, resold in 2025 at about $309,600 a room against a renovation of about $468,000 a room. A $54 million office-to-hotel conversion in St. Louis closed in 2025 and resold for $14 million; a lender sold one in Los Angeles in 2026 at about $140,000 a room. Many projects depend on public money: at 135 S. LaSalle St., city financing and historic credit equity came to 54 percent of cost (Horwath HTL arithmetic), and its owner said, “But for the incentive, this will not work.” The residential half of 111 W. Monroe St. had no funding secured as of June 2026.

The owner’s tax bill

For an owner of older office in any market whose assessment reflects prices from before the fall, the evidence here is the kind a board can weigh: whole-building sales measured against the same buildings’ earlier sales, the share of trades made by lenders, and the months and cost of a lease-up. Horwath HTL appraises both office buildings and hotels and reads an older tower through every buyer bidding for it. The prices those buyers paid are the clearest record of what these buildings now trade for, and the record against which an assessment of them can be tested.

About the data

The repeat-sale index pairs each building’s sales recorded from 1995 to mid-2026, from Horwath HTL research. Distressed means recorded as a distress, lender-owned, short or auction sale. Exhibits 5 and 8 show sales and peer buildings without their addresses, and the building in Exhibits 2 and 6 to 8 is identified only as the Subject, a Class B office building in the Central Loop. Figures labeled Horwath HTL arithmetic are computed from the cited figures. Nothing in this article states or implies the value of any property.

Sources

• CoStar office vacancy, via Horwath HTL’s market database: the United States and, for each of the 25 largest metropolitan areas, the CoStar market for its core city; fourth quarter of 2019 and fourth quarter of 2025, database as of the second quarter of 2026 (Exhibit 1 and the national figures in the text).
• U.S. Census Bureau, Population Division, annual estimates of the resident population of metropolitan statistical areas, Vintage 2025 (July 1, 2025), released March 2026 (Exhibit 1, the 25 largest areas).
• CBRE, “Continued Prime Space Recovery Augurs Well for the Rest of the Office Market,” June 25, 2026 (prime and overall vacancy, first quarter of 2026).
• Horwath HTL research, repeat sales of Loop office buildings built before 1932 (Central, East and West Loop), 1995 to mid-2026; the Subject’s sales, Cook County Assessor’s parcel sales and Horwath HTL research (Exhibit 2).
• CoStar, quarterly office analytics, Central and West Loop office buildings of 100,000 square feet and over, October 15, 2026 (Exhibit 3).
• CoStar, office market analytics, Central Loop and Chicago: vacancy and months to lease by block size over the three years to October 15, 2026 (Exhibit 4).
• Cook County Assessor, Assessed Values (county open data), assessed values at each stage and Board of Review final values, tax years 2023 to 2025, read October 15, 2026 (Exhibits 5, 7 and 8); Horwath HTL research, sale prices, areas and leased shares (Exhibit 5).
• Cook County Assessor, Commercial Valuation Data (county open data), tax year 2024, read October 15, 2026; the Subject’s rent roll at January 1, 2026 and operating statement for the twelve months to January 2026 (Exhibits 6 and 8).
• CoStar, office inventory, Chicago CBD (submarket, rentable area, year built), October 15, 2026 (Exhibit 8).
• Bradford Allen, year-end 2024 downtown Chicago office report, February 14, 2025.
• LightBox, Manus Clancy, “Chicago: Whose Kind of Town for Office?”, January 31, 2025.
• Illinois Property Tax Code, 35 ILCS 200/1-50, 1-23 and 16-183 (P.A. 96-1083, effective July 16, 2010) and 9-95, Illinois General Assembly, read October 15, 2026.
• Cook County Board of Review, Official Rules, Rule 18, last updated July 27, 2026, read October 15, 2026.
• City of Chicago, Department of Planning and Development: “TIF Funding Approved for $130 Million Loop Residential Conversion,” January 21, 2026 (program totals); “TIF Loan Will Support Loop Office-to-Hotel Conversion Project,” September 23, 2026 (111 W. Monroe St. hotel); releases of October 9, 2024, April 16, 2025, March 12, 2025 and January 21, 2026 (financing shares).
• Block Club Chicago, “First City-Backed Apartments On LaSalle Street Now Renting,” September 9, 2026.
• Urbanize Chicago, “Historic Loop office building prepares to reopen as dual hotels,” July 29, 2021 (226 W. Jackson Blvd.).
• Urbanize Chicago, “City Council approves $98 million in TIF for 135 S. LaSalle,” October 31, 2025.
• Chicago YIMBY, “Funding Advances For Conversion Of 111 West Monroe Street In Loop,” June 1, 2026.
• Bisnow, “LaSalle Street Reinvention Gains Steam As Field Building Heads For Conversion,” October 19, 2025.
• Chicago Star Media, on the 2025 resale of 203 N. Wabash Ave., July 27, 2025.
• St. Louis Post-Dispatch via Hotel-Online, “Downtown St. Louis Hotel Abruptly Closes,” March 7, 2025; InsideFlyer, “St. Louis hotel set to return as Hyatt Centric,” October 11, 2026.
• The Real Deal, on the 2026 lender sale of a converted downtown Los Angeles hotel, September 14, 2026.
• CBRE, press release on office conversions and demolitions, June 9, 2025 (hotel share of conversion projects).
• CBRE, “More Office Conversions Underway to Revitalize Downtowns,” April 11, 2024 (conversion cost per square foot).
• Gensler, “Office-to-Hotel Conversions: Resilient Opportunities for Downtown Districts,” June 18, 2025.
• Gensler, study of 1,300 office buildings assessed for office-to-residential conversion, published October 23, 2023.
• Cook County Assessor, Class L Eligibility Bulletin (undated; file of December 4, 2018); Class 7a Eligibility Bulletin, updated January 9, 2026; Incentives and Special Properties (Class 7a and 7b), retrieved September 21, 2026.
• National Park Service, Federal Tax Incentives for Rehabilitating Historic Buildings, Annual Report for Fiscal Year 2025, March 2026.
• A Loop office tower’s 2025 to 2026 sale marketing by its listing broker, as publicly circulated (the marketed hotel and apartment capacity).

Frequently asked questions

How far have prices for older Loop office buildings fallen?

Horwath HTL’s repeat-sale index of Loop office buildings built before 1932 sets 2016 to 2019 at 100. It stood at 73 in 2020 to 2023 and at 15 in 2024 and 2025, and sales recorded in the first half of 2026 read at 21. The decline is clear; the level is not, because the latest periods rest on three or four pairs each.

Do distressed sales explain the drop in prices?

Not on their own. None of the 16 sales from 2016 to 2019 was distressed, but five of seven in 2024 and 2025 were, and two of four in 2026 to date. The few unforced sales also fell steeply, though by less: with distressed sales removed, the index reads 38 in 2024 and 2025 and 30 in 2026, each resting on a single pair.

How long does it take to lease empty space in an older Loop building?

Over the three years to October 2026, a block of Central Loop office space took roughly 14 to 17 months to lease, depending on its size, and a block of 100,000 square feet or more took nearly 20 months across the Chicago market. Each lease-up means more than a year of carrying cost, plus the tenant improvements and commissions needed to win a tenant with newer choices.

How do Cook County assessments compare with recent sale prices?

In eight recent sales of large, partly vacant Central and West Loop office buildings, the Board of Review’s final assessed value implied at least the price paid. Cook County assesses commercial property at 25 percent of market value, so each assessment implies four times its amount. The multiple ran from 1.0 to 5.0 times the price, with a median of about 2.4. Eight sales are a sample, not a ratio study, and part of any gap is timing.

How does Illinois treat distressed sales in a property tax appeal?

Illinois does not set distressed sales aside. Since 2010 the law has defined a compulsory sale as a short sale or a lender’s first sale after foreclosure (35 ILCS 200/1-23), and it directs the Property Tax Appeal Board to consider compulsory sales of comparable properties, including those a taxpayer submits (35 ILCS 200/16-183). Every state sets its own rules on distressed sales and on appeals.

Can older Loop office buildings become hotels?

Some have, but hotels are a smaller thread: 8 percent of active office conversion projects nationally in mid-2025, against 76 percent for apartments. Narrow floor plates around light courts and closely spaced windows suit a hotel’s layout of rooms on both sides of a central corridor. Not every building converts, and converted hotels have also failed.

Horwath HTL: Hospitality Valuation & Advisory Services

Horwath HTL provides specialized hotel valuation, litigation support, and real estate advisory across the Americas. Our US valuation practice delivers independent, audit-ready appraisals, financial reporting valuations, property tax appeal assessments, and transaction due diligence for hotel owners, lenders, institutional investors, and law firms.

Bryan Younge, MAI, ASA, FRICS is Managing Partner, USA with Horwath HTL, specializing in complex hotel valuations, expert witness testimony, and real estate advisory. He leads the firm’s US practice, advising global hotel brands, ownership groups, lenders, and counsel on portfolio valuations, tax appeals, litigation support, and high-stakes hospitality transactions. To discuss your U.S. hospitality valuation or advisory requirements, contact Bryan at byounge@horwathhtl.com or reach out to your local Horwath HTL office.