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Suburban Office Market Finishes 2015 on High Note

CHICAGO—The suburban office market ended the year with more than one million square feet of absorption, after a fourth quarter with 967,329 square feet of absorption, according to MBRE.

By Brian J. Rogal | brianjrogal | | Updated on February 08, 2016
Horizon Pharma subleased 126K at Solo Cup's former headquarters in Lake Forest, IL, taking one of the largest blocks of sublease space off the market. Horizon Pharma subleased 126K at Solo Cup’s former headquarters in Lake Forest, IL, taking one of the largest blocks of sublease space off the market.
CHICAGO — The suburban office market has had a tough few years, but 2015 nay have been the year that things turned around for its owners and operators. The fourth quarter was especially robust, with 967,329 square feet of absorption, bringing the total for the year to more than 1 million square feet, according to a fourth quarter analysis by MBRE. The overall direct vacancy rate dropped from 20.9% to 19.9% over the fourth quarter alone. And vacancy rates fell by more than 100 bps in every suburban submarket except the Northwest Suburbs, which still struggles with the highest rate in the region. The year-end vacancy rate for class A properties around O’Hare fell below 15% for the first time since 2000.    Even the highly publicized moves by suburban companies into the CBD have had a more modest impact than some feared. Medline Industries, for example, has decided to take over the space occupied by Kraft Heinz in Northfield, which will move to the Chicago’s Aon Center this year. In fact, according to MBRE, after three quarters that saw a steady stream of suburban-to-city migrations, there were no such announcements during the last three months of the year.    The climate has improved enough that several developers are starting to propose new suburban, campus-style office projects. Hamilton Partners, for example, has proposed building a 330,000 square foot low to midrise class A development at Eola Rd. and I-88, and at least four other significant projects are on the drawing board. But since no developers are ready to break ground in the near future, MBRE expects that vacancy rates will continue to fall in 2016.

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