"From the perspective of the owner of class A properties downtown, I would say the sun is shining on our pack. It is probably the best market since the late 80's," said Tom D'Arcy, vice president of Hines during the event's Town Hall Meeting. While for class A properties "We have excellent organic growth. I am not sure that I have that same perspective for class B buildings in the West or Central Loop," D'Arcy said. "It really depends on what you own."

The same disparity holds true in the suburbs of Chicago, according to Kevin Clifton, partner with Colliers, Bennett & Kahnweiler. "In the suburbs, there is really a tale of two cities," Clifton said. For class A buildings and class B buildings "the dynamics are very different." Class A properties have "very low vacancies and some real rental rate increases over the last 12 to 24 months" as opposed to class B buildings where the rental rates have been "flat," Clifton said.

Steve Stratton, regional president for the Staubach Co., told attendees there is also a disparity Downtown depending on the height of the building. "It is a tale of three or four cities downtown: class A, class B, mid/low-[rise] and high-rise," Stratton said. "That is a very important distinction to make for the next 12 to 24 months as the market will continue to tighten."

The disparity will continue to increase as new class A buildings are constructed, said Aron Levine, regional executive for Bank of America. As "new premier" space comes on-line, "The [class] B buildings will be increasingly challenged," he says. The effect may be somewhat mitigated, however, by some of the class B and class C buildings being taken off-line through conversions.

RealShare Chicago, along with other RealShare Conference events nationwide, is produced by Real Estate Media, publishers of GlobeSt.com, Real Estate Forum, Real Estate New York and other print and online publications devoted to commercial real estate.

Instant Insights /

Panelists: Chicago Is 'Tale of Two Cities'

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