CBD Begins Accelerating After Slow 1Q

CHICAGO—After a first quarter that saw the direct vacancy rate in the CBD remain largely flat, the downtown submarkets perked up in the second quarter with their strongest quarter since the end of 2007, according to data just released by MBRE. The entire downtown recorded 526,332-square-feet of positive absorption and direct vacancy dropped 40 bps to 14.7%, the largest drop in five years. MBRE researchers say the improvement shows a modest but accelerating recovery, at least in the near term.

However, job growth was a bit anemic and adversely affected the office market. Although the overall economy has been recovering for some time, with companies bringing in over 2,000 new jobs to the CBD in 2013 alone, total employment has “only rebounded 4.2% since its December 2009 nadir,” and “overall job growth must improve markedly for a strong and sustainable recovery to occur.” Still, MBRE “expects the rate of positive absorption to slowly increase over the next two years, resulting in a steadily declining vacancy rate.”