CHICAGO—Direct vacancy in MBRE's index of the CBD's 30 newest class A buildings remained relatively steady at 10.7% in the second quarter, according to data just released by the company, which tracks the buildings as a leading indicator of office market conditions. At the same time, the CBD as a whole saw vacancy tick up to 13.55% from a low of 13.44%.

“Class A is doing quite well,” Andrew J. Davidson, MBRE's executive vice president and managing director of corporate services, tells GlobeSt.com. “The index buildings have held steady even though many people continue to right-size and get more efficient." In addition, rental rates in the city's top properties have consistently improved. One year ago, space was going for about $21 or $22 net, but today that has increased to about $25 to $26.

A few large vacancy outliers among the 30 properties do exist however, including 515 N. State, 500 W. Monroe and 525 W. Van Buren. The American Medical Association left 515 N. State in 2013, leaving one of the largest direct blocks in the CBD. The top nine floors of 500 W. Monroe has 231,000 square feet of contiguous vacant space. And the tenant-in-common owned tower at 525 W. Van Buren has had greater than 25% vacancy since 2011.

515 N. State might be “a little further into River North than some would prefer,” Davidson says. Furthermore, it has had to compete directly with 330 N. Wabash, the building now occupied by the AMA. However, 330 N. Wabash is now “pretty well-leased up and they're asking for big numbers.” He expects that the 515 building will now have an easier time and would work well for “someone looking for a new corporate headquarters.”

The MBRE index will see some significant changes in the next few years. The proposed office tower at 151 N. Franklin recently secured a letter of intent from the law firm Hinshaw & Culbertson for 100,000 square feet, Davidson notes. If 151 N. Franklin gets the go-ahead, it will become the third major new building added to the index in the next few years along with 150 N. Riverside and Hines' River Point at 444 W. Lake. Together, these three properties will add more than three million square feet to the market.

“I don't think we are going to see a big spike in vacancy,” Davidson says. “In fact, we predict it will be rather flat even with all of the new stuff coming online.” He points out that much of the space has been taken by occupiers from the suburbs or tertiary markets. As reported in GlobeSt.com, for example, Mead Johnson, one of the world's largest manufacturers of infant formula, will relocate from suburban Glenview to River Point. The company has leased three floors, or about 75,000 square feet of office space, and will move in mid-2017.

“While the index saw a drop-off in large deals through second quarter, we believe that this tight and stabilized survey market is representative of growing space demand in Chicago,” the MBRE report notes. “This is reflected in the record setting investment sales market and the flurry of new construction projects.”