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CHICAGO-Tenants have another 18 months to take advantage of the current “tenants’ market,” while corporate real estate owners might want to think about sale-leasebacks. Those are among the recommendations offered by Transwestern Commercial Services’ appraisal and consulting affiliate Delta Associates’ mid-year market report

Institutional investors seeking to buy well-leased class-A buildings in the stronger submarkets are pursuing a wise strategy, Delta Associates concludes. Capitalization rates on 2002 office building sales dropped below 8% in 2002 and are expected to remain there this year, according to Delta Associates.

Direct vacancy Downtown began July at 12.7%, according to Delta Associates, while the overall vacancy rate rose nearly a quarter-point to 15.0%. Meanwhile, overall vacancy in the suburbs dipped more than a quarter-point to 17.8%. However, that ranges from a relatively healthy 14.3% in the north suburbs to 24.3% in the O’Hare submarket, according to the report.

“We expect metro Chicago’s overall vacancy rate to remain relatively stable in the balance of 2003 before beginning its cyclical decline in 2004,” according to the Delta Associates report. “The overall vacancy rate will likely remain above 15% over the next two years.”

Asking gross rents for class A space average $35 per sf Downtown while comparable space in the suburbs can be had for less than $25 per sf, according to the company’s research.

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