CHICAGO-The office market in the Chicago area isn’t exactly roaring back, but with almost non-existent new construction and companies getting stronger, deals such as the Chicago Board of Trade sale Monday are closing and vacancy is dropping. A first quarter market report by US Equities Realty shows that both the downtown and the suburbs saw direct vacancy drop by 0.9% since a year ago.
According to the report, direct vacancy dropped to 14.1% in the 140-million-square-foot downtown market, from 15% in the first quarter 2011. Absorption was also at 288,939 square feet for Q1 2012, up almost 750,000 square feet from Q1 2011. The West and Central Loop areas saw absorption drop heavily for Class A properties, but the East Loop had a strong boost by more than 650,000 square feet in the first quarter.
Though the GlenStar/USAA purchase of the CBOT building Monday was a big deal for the city, there have continued to be strong CBD investment transactions. The first quarter saw a $228 million deal by Shorenstein Properties to buy 350 N. Orleans St. in River North, and a $150 million deal by CommonWealth REIT to buy One Illinois Center (111 E. Wacker) in the East Loop.
The suburbs are still struggling with higher vacancy, but coincidentally saw direct office vacancy drop by 0.9%, from 21.4% in Q1 2011 to 20.5% in Q1 2012. The suburbs also positive absorption at 158,359 square feet, one of the strongest quarters since 2006.
There were no real strong office purchases in the suburbs. However, the submarkets fared significantly different, with the East/West Corridor and the North submarkets both seeing negative absorption, while the Northwest and O’Hare markets had strong growth. The Northwest submarket had the three top leases of the first quarter, including the 189,000-square-foot Acco Brands Corp. new lease at Four Corporate Dr. in Long Grove, IL.
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