CHICAGO—Many firms looking for non-traditional office space have begun to spill out of the River North area and into alternatives like the West Loop, the Fulton River area and even the East Loop. But the office market in the city's original home for tech firms and others that want loft-style spaces has not slowed down at all.

“I have not seen any reduction in demand,” Aaron Zaretsky of Urban Innovations tells GlobeSt.com. The Chicago-based company was a River North pioneer and still owns nine buildings in the neighborhood it helped transform into a trendy office market. The company, which also owns two other office buildings in the West Loop's Greektown, recently completed a new round of leases for a group of River North tenants that totals about 65,000 square feet.

One thing that has not changed in the submarket is the desire among many tenants for very short-term leases. Back in 2008, when the bottom fell out of the market, Urban Innovations did a lot of short-term leases, some even shorter than 12 months, “just to get tenants in the door,” Zaretsky says. But since many of the local tenants are start-ups, a lot still want short-term leases of between 18 months and two years.

Still, Urban Innovations has generally been successful when it comes to securing renewals. In fact, “tenants are reaching out to us a little earlier than usual to lock in their space.” Therefore, although most landlords would hesitate to sign a group of tenants to such short terms, “for us it has proven over and over to be the right choice. In a way, we are getting our five-year leases; we are just breaking them up.”

Although many tenants in the portfolio only occupy about 1,500 square feet, at least as a start, others grow and graduate to bigger spaces. Softchoice Corp., an IT provider, recently renewed at Urban Innovations' 314 W. Superior, and now occupies about 16,000 square feet in a long-term lease. And SpotHero, a company with an on-demand parking app and website, outgrew its space but things were so tight it had to move out of the Urban Innovations portfolio for about a year until the latter found it about 7,100 square feet in 325 W. Huron St.

In the submarket as a whole, “vacancy is still very low and rents are climbing steadily.” This could bring significant changes. According to Colliers, by the end of 2014, rents in River North had hit $35.25 per square foot gross, up from $33.47 one year earlier. “I don't know how long that is sustainable,” Zaretsky says. Rents in the Central Loop submarket at the end of 2014 were $34.94 and the East Loop stood at $31.79.

“There is going to be a tipping point,” he adds, where tenants that historically looked in River North will start to cast their eyes on spaces in the heart of downtown. He points to “spot-on” plans by Chicago-based Blue Star Properties Inc. to renovate 125 S. Clark, the former home of Chicago Public Schools, into offices that tech firms will find appealing. The company will remove the drop ceilings in the 507,000 square-foot building, let more natural light in, add new retail and make many other changes that will essentially “transform it into the type of product we have in River North.”