CHICAGO—JLL recently released its 2015 Digital Skyline, a study of the top downtown office properties throughout the US, and the firm's researchers say leasing velocity among Chicago's trophy spaces increased during 2014. In fact, these top properties had their best year since the onset of the recession.
“Absorption reached an historic high of over five million square feet in 2014 and that is continuing into 2015 with almost 200,000 square feet of Skyline space absorbed in the first quarter alone,” the researchers found.
The 65 Chicago properties included in the report stretch from 300 E. Randolph St. near the lake to 1000 W. Fulton, one of the newest additions to Skyline, in the West Loop. All are all larger than 750,000 square-feet or taller than 30 stories. In addition, a Skyline building in Chicago has to meet three or more of the following criteria: it competes at the top of its respective submarket, it was built or significantly renovated since 1985, has a high-profile location, a recognized tenant profile, or has architectural significance.
Any company looking for trophy space in 2015 will find itself in a landlord-friendly market, JLL also found. The vacancy rate within these properties was just 6.3% at the end of 2014 versus 15.5% in the rest of the downtown. This lack of space, coupled with historic demand from tenants, allowed owners to push up trophy rents $1.01 per square foot, or 2.7%, since the start of 2014.
Owners will continue to hold this leverage until new downtown office towers such as River Point at 444 W. Lake St. begin opening for business in late 2016. But by 2017, the increased supply of trophy space will shift the market from landlord-friendly to neutral.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more inforrmation visit Asset & Logo Licensing.
