CHICAGO—After a couple of record-breaking years, the Chicago office sales market slowed down considerably in the first half of 2017. With just 17 major sales closing, overall dollar volume dropped to its lowest point in five years, according to a joint study between Commercial Café and Yardi Matrix. “Ongoing company relocations and downsizing efforts are likely to push the vacancy rate higher and companies will have a rough time selling underused assets.”
Sales volume dropped from $2.9 billion in the second half of 2016 to $1 billion, and the number of deals declined by more than half. Less than 5.5 million square feet of office space traded in the first half of 2017, compared to the 8.8 million square feet that sold in the first half of 2016.
Still, Chicago remains an attractive target for offshore investors, the researchers add, and “the market might get through this slump unfazed.” And average price per square foot is on par with the number recorded in the first half of 2015, at $254, the second highest number since 2014.
And sales could pick up in the second half of the year, Commercial Café says, something that has happened before. In fact, the final six months of the past five years have been the most active. Furthermore, leasing activity did stay strong throughout the period, and rental rates for Chicago office buildings exceeded historic highs in the second quarter, according to a recent Colliers report.
The largest deal to close in the past six months was China-based HNA's purchase of 181 W. Madison for $359 million.
CHICAGO—After a couple of record-breaking years, the Chicago office sales market slowed down considerably in the first half of 2017. With just 17 major sales closing, overall dollar volume dropped to its lowest point in five years, according to a joint study between Commercial Café and Yardi Matrix. “Ongoing company relocations and downsizing efforts are likely to push the vacancy rate higher and companies will have a rough time selling underused assets.”
Sales volume dropped from $2.9 billion in the second half of 2016 to $1 billion, and the number of deals declined by more than half. Less than 5.5 million square feet of office space traded in the first half of 2017, compared to the 8.8 million square feet that sold in the first half of 2016.
Still, Chicago remains an attractive target for offshore investors, the researchers add, and “the market might get through this slump unfazed.” And average price per square foot is on par with the number recorded in the first half of 2015, at $254, the second highest number since 2014.
And sales could pick up in the second half of the year, Commercial Café says, something that has happened before. In fact, the final six months of the past five years have been the most active. Furthermore, leasing activity did stay strong throughout the period, and rental rates for Chicago office buildings exceeded historic highs in the second quarter, according to a recent Colliers report.
The largest deal to close in the past six months was China-based HNA's purchase of 181 W. Madison for $359 million.
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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.
