CHICAGO—Due to its large numbers of obsolete buildings and office parks, the suburban office market has historically experienced much higher vacancy rates than downtown. That disparity will remain for a very long time, but over the past year, the gap has closed a bit, according to a recent report from Cushman & Wakefield. Yesterday, GlobeSt.com reported that overall vacancy in the CBD increased to 14.8% by the end of 2013, a 0.7% boost. But in the suburbs, C&W notes, “overall vacancy ended 2013 at 21.3%, a decline of 1.2 percentage points over the past 12 months.”
The class A market led the way in 2013 with overall vacancy declining 1.3% in the past year to 20.2%. Furthermore, in 2013 class A net absorption totaled 1.2-million-square-feet, about 84% of the overall total. Rents for class A also ended 2013 with a relatively strong gain, growing 2.0% since 2012 to $24.36-per-square-foot. Other classes fared worse, and rents in the entire suburban market increased only 0.4% to $21.60-per-square-foot.
C&W cite Zebra Technologies' recent 230,000-square-foot sublease at Three Overlook Point as the largest suburban leasing deal of the year. And the suburban region saw a total of 5.5-million-square-feet of leasing activity in 2013, 3.5% more than in 2012.
Suburban buyers were also quite active. More than 7.8-million-square-feet were sold during 2013. The Canada-based REIT Adventus was the biggest buyer in 2013, acquiring almost 1-million-square-feet. “Surprisingly, only 62.7% of all space sold was class A, bucking the trend of the past few years,” 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.
