CBD Office Market Still Looks Strong

This new speculative building at 625 W. Adams helped push up the CBD’s vacancy rate.

CHICAGO—New building deliveries may have just pushed up the CBD’s vacancy rate, but a look behind that number shows an office market with a lot of vigor. That rate increased 80 bps to 13.5% by the end of the second quarter, according to Newmark Knight Frank. The company attributes the increase partly to the delivery of 625 W. Adams, a 20-story spec tower in the West Loop, and CNA leaving 600,000 square feet vacant in the East Loop after its move into the new trophy property at 150 N. Franklin St.

“Although this created enough negative absorption in the market to drive up the vacancy rate, there were some positive events that indicated market strength and helped offset these moves,” according to NKF, including the migration of suburban firms into the CBD. McDonald’s, for example, occupied its new headquarters at 1045 W. Randolph after decades spent in Oak Brook. And Peapod moved from Skokie into 53,000 square feet of space at 300 S. Riverside Plaza.