Office Sublease Space Tops Record in Chicago's CBD

Available sublease space in Chicago’s central business district has set a new record, topping 6.4M SF, according to a report from MB Real Estate.

Almost half of the sublease space is in the West Loop, 136 separate office parcels encompassing more than 2.7M SF, with 26 spaces each over 50K SF. Months on the market for sublease space in Chicago’s CBD average 23.9%, MBRE’s report said.

Subleasing availability in Chicago’s CBD has nearly doubled since the pandemic began, increasing 96.5% since between Q1 2020 and Q3 2022.

Marketing software firm ActiveCampaign is the latest company to join the sublease crowd, listing its entire Loop office at One North Dearborn Street as the company embraces hybrid work.

The decision to sublease its space marks a complete about-face for ActiveCampaign. In July, the company announced it was doubling its office footprint at the building at One North Dearborn, which is owned by Beacon Capital Partners.

Before its sublease listing this month, ActiveCampaign was the second-largest tenant in the 940K SF building, which is anchored by the headquarters for Chicago Public Schools.

CME Group, the world’s largest derivatives exchange, in June listed 130K SF of office space for subleasing in a West Loop building at 550 West Washington Boulevard at $32.5 per square foot, according to the Colliers listing.

CME’s space will be available at the end of the year, with a direct lease extension available when the lease expires next year. In November, CME sold a 300K SF office building at 333 South LaSalle Street—formerly the Chicago Board of Trade’s largest trading floor for $39.5M to the utility, ComEd, which is turning the building into a power substation.

Leasing activity in Chicago’s CBD remains concentrated in Class A and amenity-rich buildings, which are yielding record rental rates while building foreclosures have been occurring down the street, according to Avison Young’s Q2 2022 office market report.

Net absorption was negative in Q2, at -351K SF, while direct asking rents averaged $44.50 per SF. Overall market vacancy was nearly 20%, but Class B space in the Central and East Loop has hit 25%, while the in-demand Fulton Market district held vacancies to 11%.

Chicago’s CBD recorded 1.7M SF of leasing activity in Q2, an increase of 400K SF over Q1. The largest new lease transaction was inked by Boston Consulting Group, which is occupying a tower at 360 North Green Street in Fulton Market being developed by Sterling Bay.