CHICAGO—A few signs of life have been seen in the suburban office market, including significant positive absorption in the first quarter, and increased investor interest in some submarkets, but the stubbornly high vacancy rate outside Chicago may persist for a very long time, according to the latest market report issued by MBRE.

The hopeful signs include 198,871-square-feet of positive absorption in the first quarter, the company's report notes. However, since the start of the recession, the suburban office market has experienced over six million square-feet of negative absorption, and with major corporate tenants continuing to migrate downtown, even more “potential headline losses could derail this progress in the coming quarters.”

That migration has been a flood of well-known names including headline-grabbing tech companies like Gogo Inc., which recently decided to leave its 160,000-square-foot suburban Itasca headquarters for 232,000-square-feet at 111 N. Canal St.

“We've been running out of space,” Debbie Fangman, facility manager for Gogo, told GlobeSt.com, and wanted the opportunity to design an office from scratch. “We looked extensively throughout the Chicago area for a new office,” but opted for the downtown. “I think part of it had to do with transportation and recruitment.” Gogo found that employees would prefer working in an area like River West, which had easy access to many train lines, rather than the comparatively difficult-to-reach Itasca.  

“Seeing the same necessity to have a front-facing metropolitan office from which to conduct business and draw talent, other firms have been making the move,” MBRE notes. “Motorola Mobility, United Continental Holdings, Capital One, Hillshire Brands, Scor Reinsurance, and Legal & General Investment Management have all joined in on this urban transition over the last two years.”  And if the drug store chain Walgreens decides, as has been reported, to move from their Deerfield campus to the Old Main Post Office building, it could leave a giant hole in that submarket.

One particular sign that this trend may strengthen even further is the large number of companies opening satellite offices in the CBD, perhaps as a way of testing the waters. “Discover Financial Services, while continuing to occupy 601,578-square-feet in Riverwoods, recently leased 26,000-square-feet for a satellite office at the Apparel Mart, and they're just one of many who are opening up branches downtown for better access to young labor and clients,” the company notes.

Guggenheim Partners, formally based in suburban Lisle, they point out, last year closed its suburban office and moved into their new headquarters at 227 W. Monroe, expanding its initial lease in the building. “Like Guggenheim Partners, these initial ancillary leases may be a precursor to a few more wholesale transitions in the next few years. If so, the effect on the suburban market could be dramatic.”