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CHICAGO—On the surface, the Chicago suburban office market still looks troubled. It continues to have an elevated vacancy rate, and experienced negative absorption during 2016. But behind the scenes, some developers see opportunity, especially when it concerns demand for new class A space, and have begun unveiling proposals for new developments. Time will tell if this group can secure prospective tenants for their proposed buildings and begin breaking ground.

The market remained relatively stable in the fourth quarter of 2016, ending the year with an overall direct vacancy rate of 20.24% percent, up from 19.86% at the end of 2015, according to a new report from MB Real Estate. And there was 327,562 square feet of negative absorption, which brought the year's total down to 686,468 square feet of negative absorption.

“There were 16 large deals signed in the fourth quarter in the suburban market, bringing the year's total up to 63,” according to MBRE. However, “only one of the deals signed in the fourth was larger than 100,000 square feet: Ingredion's renewal of 114,000 square feet at Westbrook Corporate Center in the East-West submarket.” And the suburbs' average direct gross asking rent hit $20.08 in the fourth quarter, a decline of 2.8% in the past year.

Still, as reported in GlobeSt.com yesterday, Ryan Cos. US, Inc. recently secured an undisclosed office user for an 11-acre parcel along the western side of York Rd. in Oak Brook that it acquired in 2015. Company officials say they will probably begin construction on a new development there this spring. And they have also begun looking for tenants to occupy a proposed 18-acre development called Oakmont Point in Westmont.

The Naperville, IL-based Ryan is not the only developer testing the market for new space. GlenStar Properties, which has successfully renovated and leased up Continental Towers in Rolling Meadows, is seeking an anchor tenant or single build-to-suit tenant to launch its proposed 300,000 square foot, 11-story office tower near O'Hare International Airport in Chicago, according to MBRE. Furthermore, Hamilton Partners wants to build several low- to mid-rise office buildings at Eola Rd. and I-88 in Aurora. That project, if it ever comes off the drawing board, could have as much as 330,000 square feet.

Instant Insights /

Suburban Office Market Showing Signs of Life

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