As reported yesterday in GlobeSt.com, according to a new report by Savills Studley the office market in Chicago’s CBD has finally returned to a pre-recession vacancy rate. In the third quarter, the overall availability rate fell by 100 bps to 15.0%, the lowest since the end of 2008. The drop in vacancy was also notable in the class A sector. Availability dipped 90 bps to 14.3%, also the lowest it has been since 2008.
“The downtown market continues to be robust, with the West Loop and River North continuing to be at the apex of the most sought after submarkets,” Robert Sevim, executive managing director of Savills Studley, tells GlobeSt.com. Not only has activity among tenants increased, owners in the CBD continue to show interest both in selling their properties, raising the possibility of new investment, and in making the renovations necessary to attract new users. And with developers getting ready to introduce new class A space, the downtown office market should remain vibrant for an extended period.
Office-using employment in the Chicago region has expanded significantly in the last twelve months, for example, increasing by 1.7% from a year ago, and now sits just 1.0% below its pre-recession peak. “Unlike five years ago, business today are more confident in their ability to look forward.” Tech firms especially have begun taking down spaces large enough to accommodate future growth, and even tenants with leases that expire in 2020 are beginning to consider options.
The delivery of new West Loop office towers such as River Point and 150 N. Riverside Plaza in 2017 will set in motion much of this movement. Although these trophy buildings have secured anchors, “what you will soon start to see is the second wave of tenants” signing up for space, Sevim says. “There will be a cascading effect. I think this will breed a lot of activity.”Coworking space provider to open fifth outpost
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Chicago CBD Office Sector Report (Q3 2014)