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CHICAGO-For the third consecutive quarter, the Chicago CBD office market edged down in overall direct vacancy rate, reports the Chicago office of CB Richard Ellis. According to the company’s third quarter 2006 statistics, direct vacancy fell to 14.2% from 14.4% at second quarter and 15.1% during the first quarter.

While no new construction deliveries were reported during the third quarter, the Downtown market saw the fourth consecutive quarter of positive net absorption at 162,198 sf. According to CBRE’s estimates, this brings the year-to-date net absorption total to 1.4 million sf, thanks to 562,414 sf in the first quarter and 651,893 sf in the second quarter.

The Central Loop, which has been suffering from corporate downsizing and the relocation of tenants to the West Loop, saw the largest decrease in vacancy with a drop to 12.4% from 13% at second quarter 2006, as well as positive net absorption of 179,116 sf.

With regard to the suburban office market, CBRE reports that it experiencing “solid signs that a slow and measured recovery continues.” The vacancy rate declined during the quarter to 15.9% from 16.4% at second quarter, marking the third consecutive quarter of decreasing vacancy and the lowest vacancy rate in more than three years.

Market activity continues to be dominated by renewals and small expansions, reports CRRE, which helped the suburban market to post 392,428 sf of positive net absorption during the third quarter, bringing the year-to-date total to 1.9 million sf absorbed.

“This was another positive quarter for both the Downtown and suburban office markets, which has been the pattern throughout 2006,” says Jack Durburg, CBRE senior managing director. “It is this consistency of decreasing vacancy and positive net absorption that bodes well for the return of market equilibrium.”

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