CHICAGO—According to a new report on the fourth quarter from Cushman & Wakefield, the CBD showed strength in sales activity, but the vacancy rate remained elevated.
“At the end of 2013, overall vacancy was 14.8%,” the report notes. “Adjustments to the inventory sent vacant space up 0.7 percentage points since 2012. The West Loop showed the lowest overall vacancy at 14.0% but still up 1.1 percentage points from the previous year.”
The CBD did see 1.3-million-square-feet of positive absorption, the most occupied space gained since 2007. Major move-ins includes GoHealth taking 90,000-square-feet at the Merchandise Mart and Standard Parking occupying 40,000-square-feet AON Center. A total of 5.7-million-square-feet was leased, 5.7% below 2012.
“GoHealth's 93,755-square-foot sublet at the Merchandise Mart is a good example of the rapid expansion by tech firms in River North,” according to a separate report from Studley.
But a few move-outs caused the class A market to lag the CBD overall. The American Medical Association and United Airlines both moved out of large blocks of A space, causing total class A absorption in the CBD to come in at a little over 100,000-square-feet.
The persistently high vacancy rate has not stopped rents from setting another record. Direct asking rents averaged $32.99-per-square-foot at the close of 2013, an increase of 2.5% over 2012, C&W found. Class A rates softened this year, so B and C space drove the surge.
The market for downtown office space got more active in 2013 with 14.3-million-square-feet of trading hands. Buyers spent $3.6 billion on office buildings, averaging $231-per-square-foot. The $425 million sale of Citigroup Center, or $304-per-square-foot, was the most expensive sale of 2013. “The fourth quarter saw a massive amount of sales activity with 8.3-million-square-feet,” C&W notes.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
