Cooling Economy Has Minimal Impact on CBD Office Market in Chicago

(Above, The Magnificent Mile shopping district in Downtown Chicago,)

CHICAGO, IL — After a solid performance in 2007, office fundamentals in Chicago began to soften in the first half of this year due to a cooling local economy, according to a second-quarter Office Research Report by Marcus & Millichap, the nation’s largest real estate investment services firm. (O'Hare International Airport, top right photo)

The CBD office market, on the other hand, is relatively insulated from housing-related weakness, and fundamentals in the area are anticipated to remain healthy this year.

“Investors with market knowledge and elevated risk tolerance are seeking value-add properties in the Northwest suburbs and O’Hare submarkets, where cap rates are in the low- to-mid-8 percent range,” says John Przybyla, regional manager of the Chicago Downtown office of Marcus & Millichap.

Following are some of the most significant aspects of the Chicago Office Research Report:

· Completions are expected to reach nearly 2.6 million square feet in 2008, adding 1.1 percent to inventory.

· Vacancy is forecast to end the year at 16.4 percent.

· Asking rents are projected to finish the year at $27.43 per square foot, rising 2.9 percent.

· Effective rents will gain 1.9 percent to $22.39 per square foot.

· Office-using employment growth in Lake and Kenosha counties has outpaced the rest of the metro with roughly 2,000 jobs added, a 1.9 percent increase.

For a copy of the complete Chicago Office Research Report, as well as reports on other markets nationwide, visit our website at http://www.marcusmillichap.com/.

Press Contact: Stacey Corso
Communications Department
(925) 953-1716

(Bottom right photo, Downtown shopping district)