Although vacancies increased for class A space, the average asking rate for class A space increased about 1.1% per sf from year-end 2000. The same is true for class B and class C space, which increased about 4.4% and 3.8%, respectively. Mid-year leasing activity totaled 3.6 million sf.
In contrast to Chicago's CBD, which completed no new construction in the first half of 2001, new office completions were concentrated in the suburbs with about 1.5 million sf. A total of 4.4 million sf is currently under construction, with 22% secured with pre-lease commitments, according to the report.
"Many companies feeling the affects of the economic slowdown are thinking carefully and deliberating longer about their future real estate decisions, developing strategies on how, when and where they should expand and contract," according to Gail Sturm, senior director in Cushman & Wakefield's Office Services Group.
During first six months of 2001, two major tenants announced sizable space has become available: Moore North America has 264,000 sf in the north suburban Northbrook/Tri-State market, and Commonwealth Edison is marketing about 122,000 sf in the west suburban Oak Brook area.
The overall vacancy rate for the Northbrook/Tri-State submarket increased to 14% from 10.9% at the close of last year. Although this rate is one of the lowest in the Chicago suburban office market, it is the highest vacancy rate for Northbrook/Tri-State in five years. "Since 1996, approximately 38 new buildings have been constructed, contributing to this market's overall vacancy rate," says Sturm. Rents for the Northbrook/Tri-State submarket are the lowest class A asking rental rates in the Chicago suburban office market, behind the far west suburban Lisle/Naperville submarket. The overall asking rental rate is now down to $21.64 per sf from first quarter's $22.34 per sf. Class A rents are at $25.21 per sf.
In the west suburban Oak Brook market, the overall vacancy rate increased to 16.4% from 13% at the end of first quarter 2001. The class A vacancy rate increased the most over the quarter, registering at 17.4%. Overall rents increased to $24.23 per sf from $22.47 per sf at year-end. Class A rates increased to $25.34 per sf from the $24.35 per sf recorded at first quarter 2001. Development activity continues with about 822,000 sf now under construction, the majority of which is to be finished before year-end.
Mid-year overall vacancy rates for some of the other suburban Chicago office markets include: north suburban Evanston/Skokie with 12.1%; O'Hare with 14.9%; and northwest suburban Schaumburg with 16.2%. Class A direct average rental rates are: $27.53 per sf for Evanston/Skokie; $28.28 per sf for O'Hare; and $25.89 per sf for Schaumburg.
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