CHICAGO—The strong leasing activity at the CBD's newest office towers helped significantly decrease the direct vacancy rate among the city's top properties for the first time since the third quarter of 2016, according to MBRE. The company publishes a quarterly survey of the last 30 class A downtown office buildings constructed greater than 400,000 square feet, a group that serves as a leading indicator of office market conditions.
Direct vacancy in these towers decreased by 98 bps to 11.1% percent. Meanwhile, the CBD direct vacancy rate decreased to 11.9% at the end of the first quarter of 2018, a 40 bp decrease from the end of 2017.
According to the MBRE report, 444 W. Lake St. and 150 N. Riverside, the two newest projects, had a direct vacancy rate of 12.7% and 12.9%, respectively. The overall rate for these 30 buildings will probably increase later in the year, when two new buildings join the list and push off the two oldest structures. In the second quarter, MBRE will add both 151 N. Franklin, which is currently 54.4% percent leased, and 625 W. Adams, which has yet to sign any tenants.
“Citadel renewed 418,000 square feet at 131 S. Dearborn, making it the largest deal of the year so far,” MBRE says. “There are currently six blocks of directly available space larger than 100,000 square feet at index buildings, the largest of which is 340,362 square feet at 515 N. State.”
Investors continued to show interest in the CBD. 601W Cos. for example, sold Prudential Plaza, comprised of 180 N. Stetson and 130 E. Randolph, to Sterling Bay for $680 million, or about $309 per square foot, in April.
The index is also set for some future changes. Construction just began on a 1.5 million square foot office development at 110 N. Wacker. Bank of America agreed to be the anchor tenant with 497,275 square feet and Lincoln International just signed on for 55,751 square feet.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
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.
