The downtown office market saw a modest increase in its vacancy rate during last year’s fourth quarter, according to a study just released by Savills Studley, but company officials say the overall market remains quite strong and in 2015 should continue growing and attracting big investors. The overall rate increased from 15% to 15.5% and the class A rate went from 14.3% to 14.9%.
“I think it’s a blip relative to the bigger picture,” Robert Sevim, the Chicago-based executive vice president, tells GlobeSt.com. “The market is still extremely active.” The bigger picture shows a CBD that in last two years has experienced a lot of absorption and development, including a plethora of office conversions for tech and creative firms in River North and the Far West Loop, and the launching of trophy towers at 444 W. Lake St. and 150 N. Riverside in the West Loop.
“Large leases needed to be signed to kick those off,” Sevim adds, and this has helped boost investor confidence in Chicago office buildings. “Many buyers continue to enter or reinvest in this market.” Heitman, for example, recently bought 353 N. Clark St. for $715 million, or $609 per-square-foot, the second-highest ever paid for a Chicago office building, after beating out a crowded field of domestic and global investors. The 46-story tower in River North was completed in 2009, making it among the last trophy properties built before the economy cratered...Outlook Optimistic for CBD’s Office Market
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National Office Sector Report (Q3 2014)