Suburban Chicago Office Market Showing Little Movement
Colliers states in its report that Class A vacancy in the suburbs also remained flat at 22.0%. However, when considering high quality, trophy assets in the suburban office market, vacancy was considerably lower at 16.5%, dropping 150 basis points from the same time period two years earlier.
CHICAGO—The latest statistics on the performance of the suburban Chicago office market by commercial brokerage firm Colliers International look strikingly similar to those recorded three months ago and in some cases two years ago.
While the data could lend some to have a slight case of déjà vu, the market is seeing consistent leasing and investment activity and a marked increase in office space absorption in some key markets.
In a report released by Colliers Research, the overall vacancy for the surrounding Chicago suburban office market for the second quarter of this year was flat at 21.5% as compared to two years ago. The overall suburban vacancy rate at the end of the first quarter of this year was 21.0%. At the end of the second quarter of 2018, the suburban vacancy rate stood at 21.2%.
Colliers states in its report that Class A vacancy in the suburbs also remained flat at 22.0%. However, when considering high quality, trophy assets in the suburban office market, vacancy was considerably lower at 16.5%, dropping 150 basis points from the same time period two years earlier.
The vacancy rates at the end of the second quarter of 2019 for the five suburban office markets were: O’Hare, 13.3%; Northwest, 29.2%; North, 21.2%; Lisle-Naperville, 20.1% and Oak Brook, 17.1%.
The O’Hare, North and Lisle-Naperville markets posted positive absorption of 71,108 square feet, 86,288 square feet and 21,832 square feet respectively in the second quarter of 2019, however the Northwest and Oak Brook markets continued to fluctuate.
The Northwest market posted a negative absorption of 54,046 square feet, while Oak Brook came in at a negative 132,167 square feet. The entire suburban Chicago office market posted a negative absorption of just 6,985 square feet in the second quarter.
However, year-to-date the only submarket to record positive absorption during the first six month of this year was O’Hare at a positive 69,971 square feet. The other four markets are all in the red: Northwest: -273,529 square feet; North: -117,507 square feet; Lisle/Naperville area: -10,597 square feet and Oak Brook: -191,993 square feet.
Year-to-date, the five markets have posted a collective negative office absorption of 523,655 square feet.
In terms of leasing activity and trends, Colliers states there were 1.3 million square feet of new leases and expansions in the suburbs, slightly higher than the 1.2 million square feet posted during the first three months of this year.
There were 17 new leases or lease expansions of 15,000 square feet or larger signed throughout the suburbs during the second quarter of 2019.
Investment and user sale velocity continued in the suburban office market as six assets traded hands in the second quarter of 2019 and four others are currently under contract, Colliers reports.
Overall suburban asking rents inched up in the second quarter to $21.50-per-square-foot from $21.39-per-square-foot at the end of the first quarter of this year. The priciest market for Class A space at the end of the second quarter of 2019 was O’Hare at $33.71-a-square-foot, followed closely by the Northern market at $32.33-a-square-foot; Oak Brook at $30.56-a-square-foot and Northwest at $26.17-a-square-foot.