The net amount of space leased July through September was 249,263 sf. Net absorption year-to-date is 322,401 sf, a decline from 2.6 million sf during the first nine months of 2000 and running below the previous five-year average for the period of 1.8 million sf.
According to CBRE senior VP Bob Gillespie, "Many companies are looking for ways to cut or at least hold the line on capital expenditures, and that typically includes keeping real estate requirements to a minimum."
The report describes one new office project coming on line during third quarter, the 407,000-sf 550 W. Jackson Blvd. building, which opened 40%, leased.
Scheduled to open during fourth quarter is the 1.3-million-sf One N. Wacker Dr. office building, developed by the John Buck Co. and now known by its anchor tenant, UBS Tower, which is about 88% pre-leased.
The CB Richard Ellis report puts net absorption levels year-to-date in the Central Loop at 283,502 sf; River North, 218,878 sf; and the East Loop, 29,605 sf. Posting declines in occupancy and negative absorption levels during the first nine months were: West Loop, 193,138 sf and North Michigan Avenue, 10,446 sf. Vacancy rates at the close of Q3 were: Central Loop, 7.4%, North Michigan Avenue, 7.4%, West Loop, 8.8%, East Loop, 11% and River North, 32.2%, where a 1.5-million-sf former industrial building, redeveloped for office use, was added to the property base during third quarter.
Although rental rates have held fairly steady, tenant-concession packages have grown, according to Gillespie. Net rental rates for trophy buildings fall in the range of $26 to $31 per sf. In class A buildings, the typical range is $21 to $26 and in Class B buildings from $15 to $20. In class C buildings, gross rents including taxes and operating expenses are running on average from $22 to $26 per sf.
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