CHICAGO—The coming of Google, Motorola Mobility and many other high tech firms to downtown Chicago has understandably generated many headlines. But in its latest market report, MB Real Estate points out that even though the city rightly pats itself on the back over these successes, the tech sector still comprises a relatively small portion of the overall market.
“Of 146 tenants identified by MBRE as presently on the market for new space, just 17 of these are technology-specific,” the new report states. “The needs of these technology sector tenants are 12.5% of the 7,392,000-square-feet of total requirements of all active tenants.”
Therefore, although the tech sector will remain a key component of the city's real estate market, the more traditional sectors such as financial and business services will continue to account for the lion's share of demand. MBRE's tenant tracking shows that “the 56 actively searching tenants in professional and business services account for 36% of total space requirement.” In fact, “the most common tenants in the market right now are business services tenants based in the West Loop looking for 20,000 to- 50,000-square-feet." Such firms include Equity Office Properties at 2 N. Riverside and Dillon Kane Group out of 1 N. Wacker.
And although retail comes in second to professional and business services, this is due to the 1-million-square-foot requirement of Walgreen Co. from the Northern suburbs, MBRE finds. Financial services account for 26 active tenants even though employment in the sector “was down 1.7% in the Chicago MSA over the year ending May 2014, according to the US Bureau of Labor Statistics.”
“What Chicago's recent CRE activity is telling us is that while state initiatives and the rapid growth of tech incubators have made a splash on front page news,” MBRE notes, “it's not the tidal wave of activity that we might be lead to believe. The CBD continues to be a market driven by conventional business services industries.”
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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.
