CHICAGO—Absorption in the CBD's office market may have slowed in the third quarter, but the year has already seen a host of new deals and renewals, and according to MBRE, this “should result in significant amounts of positive absorption over the next two years.”

The firm just released its analysis of the third quarter and also found that the vacancy rate for each class of properties in the CBD has continued to sink. The overall rate fell to 13.2%, a decline of about 30 bps since the second quarter, while class A properties ended the quarter at 11.9%, a decline of roughly 20 bps. A possible sign of concern was that the CBD experienced 397,334 square feet of positive absorption, which makes the year-to-date total just 559,791 square feet, or 44% less than it was in the third quarter of last year.

However, a “notable component of recent activity has been the third quarter signed relocations of ConAgra, Kraft-Heinz, Motorola Solutions, and Baxalta which have continued profound impact on the urban migration narrative,” the firm said. Furthermore, with other suburban companies, including McDonald's, making noises about their own possible moves into the CBD, downtown landlords should expect further migration.

In another good sign, at least for property owners, rental rates in all classes have continued to swing upward. In fact, “at $20.79 net per square foot across all classes, rental rates are higher than ever,” the firm noted. Still, “tenant improvement costs have been increasing significantly as contractors raise their prices due to increased demand for their work.”

But it's the level of investor interest in the city's office market that sets this year off from all the others. 2015 has already seen the largest amount of investment sales in Chicago's history with over $6.2 billion in total sales volume, MBRE said. The most significant transaction completed in the third quarter was the 2.7 million square foot Aon Center at 200 E. Randolph St., which sold for $712 million. The rush of sales should continue into 2016. Four new buildings came on to the market in the third quarter, the largest being the AMA Plaza at 330 N. Wabash Ave. with 1.1 million square feet.

In the next 18 months, of course, the office market will see big changes. Hines' River Point at 444 Lake, a roughly 1.1 million square foot property, will open, along with John O'Donnell's 1.2 million square foot tower at 150 N. Riverside, and although the properties are already 58.8% and 61.4% leased, respectively, “the overall impact on market value has yet to be seen. Optimistically, vacancy rates can expect to remain the in the low 13s.”