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Sublease Space Impacting Downtown Office Market

CHICAGO-Property owners are beginning to offer better concession packages that include more generous tenant improvement allowances and even some rental abatement in order to remain competitive in the market.

By Bonnie Grota | Updated on August 17, 2001

CHICAGO-In announcing Insignia/ESG midyear figures for the Downtown Chicago office market Michael Klein, EVP of the Midwest, “We continue to see the effects of the economic slowdown on the commercial real estate markets.”

Midyear figures show the third consecutive quarter of negative net absorption, -675,000 sf, and an overall availability rate of 14.6%, up from 13.9% at first quarter 2001 and 13.9% at midyear 2000. Insignia defines available space as that which is actively marketed and ready for occupancy within 12 months.

Given that the commercial real estate markets typically follow the economy, the last time quarterly statistics yielded positive absorption (1.7 million sf) was third quarter 2000, the same quarter that the availability rate and available sublease space each reached two year lows (13% and two million sf, respectively).

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