CHICAGO—As reported earlier this week in GlobeSt.com, the Chicago office market has recently seen a lot of leasing activity and rising rental rates. Savills Studley But although other developments this year can't exactly be termed storm clouds, they do show that the current picture is more complicated. The availability rate recently went up, for example, an I don't think we'll see the same level of aggressive leasing Robert Sevim Savills Studley's executive vice president and co-branch manager, tells GlobeSt.com. “But I also think we will continue to see an active market.” “The supply of sublease space has increased dramatically,” he adds, rising by nearly 20% in just the past year. Similar spikes have occurred in other tech-heavy markets such as San Francisco. Among tech firms, “there was a mindset of grow first, and deliver profits later.” But business leaders in the tech world, and perhaps its investors, have started to push a more cautious approach. “They are definitely the ones leading the pack in terms of space disposition efforts. Many technology companies are being more cautious before taking on additional space.” Savills Studley's report highlights the recent experience of Avant . The online lending startup laid off 60 employees, most at its Chicago headquarters. Funding has become more difficult to secure, and the firm has said it will now focus on “achieving profitability as soon as possible.” “The landlord community needs to be aware of the current supply and demand dynamics,” Sevim adds. “If you include sublease space, tenants have plenty of choices. There is no shortage of space.” Still, the market shows many signs of strength. , o The class A space coming to the market in neighborhoods such as West Loop accounts for much of this increase, Sevim says. Many of the spaces in Chicago's new trophy office towers rent for considerably more than $50.00, and have contributed to driving up average asking rates. “But it's not just the trophy buildings,” he adds. Last year saw about $6 billion in downtown office sales, and many other owners have pushed up rates to perhaps position their buildings for sale, although the market is unlikely to hit the heights of 2015. “We are seeing a general upward trend in asking rents,” although at the same time landlords are also offering more economic concessions to tenants. CHICAGO—As reported earlier this week in GlobeSt.com, the Chicago office market has recently seen a lot of leasing activity and rising rental rates. Savills Studley But although other developments this year can't exactly be termed storm clouds, they do show that the current picture is more complicated. The availability rate recently went up, for example, an I don't think we'll see the same level of aggressive leasing Robert Sevim Savills Studley's executive vice president and co-branch manager, tells GlobeSt.com. “But I also think we will continue to see an active market.” “The supply of sublease space has increased dramatically,” he adds, rising by nearly 20% in just the past year. Similar spikes have occurred in other tech-heavy markets such as San Francisco. Among tech firms, “there was a mindset of grow first, and deliver profits later.” But business leaders in the tech world, and perhaps its investors, have started to push a more cautious approach. “They are definitely the ones leading the pack in terms of space disposition efforts. Many technology companies are being more cautious before taking on additional space.” Savills Studley's report highlights the recent experience of Avant . The online lending startup laid off 60 employees, most at its Chicago headquarters. Funding has become more difficult to secure, and the firm has said it will now focus on “achieving profitability as soon as possible.” “The landlord community needs to be aware of the current supply and demand dynamics,” Sevim adds. “If you include sublease space, tenants have plenty of choices. There is no shortage of space.” Still, the market shows many signs of strength. , o The class A space coming to the market in neighborhoods such as West Loop accounts for much of this increase, Sevim says. Many of the spaces in Chicago's new trophy office towers rent for considerably more than $50.00, and have contributed to driving up average asking rates. “But it's not just the trophy buildings,” he adds. Last year saw about $6 billion in downtown office sales, and many other owners have pushed up rates to perhaps position their buildings for sale, although the market is unlikely to hit the heights of 2015. “We are seeing a general upward trend in asking rents,” although at the same time landlords are also offering more economic concessions to tenants. NOT FOR REPRINT
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
