Cities Use Variety of Tax Breaks to Entice Office Conversions

In Chicago, LaSalle Street cuts through a historic stretch of real estate lined with architectural high-rises and skyscrapers.

The corridor is the gateway to the city’s financial district, where offices make up more than 85% of the nearly 23 million square feet of leasable commercial space, according to a 2022 market analysis. But company exits and remote-work trends have hit the city and developers hard, sending office vacancy rates as high as 26%.

Chicago is banking on its Loop Revitalization Initiative to restore its downtown through conversions of privately held office buildings. The initiative uses tax increment financing to ...