CBD Tenants Waiting for Ideal Locations

CHICAGO—Landlords of the 30 newest buildings in downtown Chicago saw the direct vacancy rates for their properties decline for a second straight quarter, according to data just published by MBRE. The buildings, all built between 1989 and 2009, ended the last quarter with a direct vacancy rate of 10.0%, a decline of 70 basis points and the lowest in two years. The direct rate for the CBD overall, however, was stagnant at 15.1%.   

MBRE researchers consider these 30 buildings, termed the MBRE Index, which range from 372,000-square-feet to 1,845,460-square-feet, a landlord’s market. Demand for large blocks of space in the Class A downtown buildings outstrips supply, MBRE found, since only “four buildings in the MBRE Index can accommodate a tenant greater than 100,000-square-feet. Yet on the demand side there are currently 18 tenants in the marketplace seeking space greater than 100,000-square-feet.” Still, these tenants have been reluctant to move and seem largely content to “wait for their ideal location.”