CHICAGO—The downtown office seems to have gotten off to a solid start in 2017. MB Real Estate just published its first market overview of the year, and its researchers found that the overall vacancy rate sank 83 bps to 11.1%. Net absorption for the year now stands at about 174,000 square feet. That is lower than at the same time last year, when tenants had already absorbed 325,000 square feet.
Leasing activity at the city's first new office towers to be developed since 2009, 444 W. Lake and 150 N. Riverside, has been brisk. MBRE believes the resulting shadow inventory will cause vacancy rates to rise slightly by the end of the year.
Sublease availability in the first quarter was at 3.9 million square feet, a bit of a boost over last year's first quarter, when 3.6 million square feet was available.
Still, there are a number of signs that leasing activity throughout much of 2017 will remain strong. MBRE says that 54 large tenants, meaning those needing 50,000 square feet or more, are looking for spaces in the city's downtown. Last year at this time, there were 45.
Furthermore, the downtown submarkets continue to benefit from large new deals signed by rapidly expanding businesses and suburban migrators. Outcome Health, for example, signed a new lease in the first quarter for 394,000 square feet at 515 N. Michigan Ave., an expansion over its current space at 330 N. Wabash. And Nielsen Co., the TV ratings firm, just decided to leave its Schaumburg offices for 215,000 square feet at 200 W. Jackson in the West Loop.
These moves “indicate that Chicago's CBD is well positioned to absorb the additional 2.2 million square feet of office space that is currently under construction,” MBRE says.
CHICAGO—The downtown office seems to have gotten off to a solid start in 2017. MB Real Estate just published its first market overview of the year, and its researchers found that the overall vacancy rate sank 83 bps to 11.1%. Net absorption for the year now stands at about 174,000 square feet. That is lower than at the same time last year, when tenants had already absorbed 325,000 square feet.
Leasing activity at the city's first new office towers to be developed since 2009, 444 W. Lake and 150 N. Riverside, has been brisk. MBRE believes the resulting shadow inventory will cause vacancy rates to rise slightly by the end of the year.
Sublease availability in the first quarter was at 3.9 million square feet, a bit of a boost over last year's first quarter, when 3.6 million square feet was available.
Still, there are a number of signs that leasing activity throughout much of 2017 will remain strong. MBRE says that 54 large tenants, meaning those needing 50,000 square feet or more, are looking for spaces in the city's downtown. Last year at this time, there were 45.
Furthermore, the downtown submarkets continue to benefit from large new deals signed by rapidly expanding businesses and suburban migrators. Outcome Health, for example, signed a new lease in the first quarter for 394,000 square feet at 515 N. Michigan Ave., an expansion over its current space at 330 N. Wabash. And Nielsen Co., the TV ratings firm, just decided to leave its Schaumburg offices for 215,000 square feet at 200 W. Jackson in the West Loop.
These moves “indicate that Chicago's CBD is well positioned to absorb the additional 2.2 million square feet of office space that is currently under construction,” MBRE says.
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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.
