CBD Office Reaches Pre-Recession Level

CHICAGO—The road to economic recovery has been a long one, and more than five years after the recession was officially declared over the office vacancy rate in downtown Chicago has finally sunk to a pre-crisis level. In the third quarter, the overall availability rate fell by 100 bps to 15.0%, the lowest since the end of 2008, according to a new report by Savills Studley. The drop in vacancy was also notable in the class A sector. Availability dipped 90 bps to 14.3%, also the lowest it has been since 2008.

Rental rates in class A spaces rose by 0.7% to $38.36 with the West Loop leading the way. Rates there increased to $39.55, a 2.8% jump. Landlords in River North, however, once considered the CBD’s hottest neighborhood, saw their rates sink to $30.29. But rates in the CBD’s trophy buildings, which have been healthy for some time, increased again to $46.43. “Leasing activity has attained its five-year average, (2.1-million-square-feet) for three consecutive quarters,” Savills Studley found. “Class A deal volume fell by 15.8% to 824,998-square-feet, but strong class B and C activity (1.4-million-square-feet) made up for some of the shortfall.”