C&W: Suburbs Beat Poor Expectations

CHICAGO—Due to its large numbers of obsolete buildings and office parks, the suburban office market has historically experienced much higher vacancy rates than downtown. That disparity will remain for a very long time, but over the past year, the gap has closed a bit, according to a recent report from Cushman & Wakefield. Yesterday, GlobeSt.com reported that overall vacancy in the CBD increased to 14.8% by the end of 2013, a 0.7% boost. But in the suburbs, C&W notes, “overall vacancy ended 2013 at 21.3%, a decline of 1.2 percentage points over the past 12 months.”

The class A market led the way in 2013 with overall vacancy declining 1.3% in the past year to 20.2%. Furthermore, in 2013 class A net absorption totaled 1.2-million-square-feet, about 84% of the overall total. Rents for class A also ended 2013 with a relatively strong gain, growing 2.0% since 2012 to $24.36-per-square-foot. Other classes fared worse, and rents in the entire suburban market increased only 0.4% to $21.60-per-square-foot.