Suburban Class A Stronger Than People Realize

Kraft Heinz left this Northfield complex last year, but Medline quickly agreed to fill it.

CHICAGO—Corporate moves from the suburbs into the CBD typically generate headlines, but all that attention may be obscuring some of the good news happening outside the urban core. It’s true that many suburban submarkets have elevated rates of vacancy, but some areas, such as the O’Hare submarket, have recovered quite well from the recession, and many tenants have begun expanding. That energy is most noticeable within the best class A properties, and developers say suburban buildings that they can bring up to those standards have a bright future.

“Very few people have focused on the numbers,” Michael Klein, co-founder of GlenStar Properties, tells GlobeSt.com. Last year, for example, there was nearly 4.5 million square feet of absorption in the suburban market, versus about 4.1 million in the city, according to CBRE. And in the previous four years, the gap was wider. In total, from 2012 through the end of 2015, office users in the suburbs absorbed nearly 11 million square feet, and city users absorbed nearly 4.7 million.