Downtown office rents rise in 2011 for top buildings
May 7, 2012
By: Ryan Ori

Rents at high-end downtown office buildings are rising again, but they still face a long way back to pre-bust levels.

Tenant and landlord rents both increased modestly last year, according to the Studley Effective Rent Index, an annual report that measures effective rents, or the amounts tenants actually pay and building owners actually receive by factoring building expenses and leasing costs. ...

... “When landlords start smelling markets turning in their favor, increases in net effective rents are much quicker than the downturn in (rents),” says Rick Schuham, an executive vice president in the Chicago office of New York-based Studley Inc., which prepared the report. ...

... Rents have risen as the slowly improving economy has boosted demand for office space and a lack of development has kept a lid on new supply. That could change, says Mr. Schuham, who predicts at least one new office tower will be launched in 2012 to meet increasing demand for new, upper-tier space. ...

... “Chicago has not proven to be an incredibly disciplined development market. There have been periods of great success and periods of great excess. The last development period was a demonstration of success. Before that, it was excess.” Studley, which represents only tenants, is “hoping for excess,” he says. ...

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