CHICAGO, IL -- The following summary is designed to provide a brief overview of the Chicago metro office and market during the third quarter of 2011. The Chicago office market continued to improve in the third quarter as vacancy dropped 80 basis points to 19.3 percent overall.
(Downtown retail district top left photo)
o Vacancy in Chicago’s CBD decreased 60 basis points to 16 percent in the third quarter. Five leases were signed for more than 100,000 square feet in the CBD during the same time period.
The market recorded nearly 2 million square feet of positive net absorption, bringing the year-to-date total to more than 2.6 million square feet absorbed.
The only submarket to post negative net absorption was North Michigan Avenue, where 75,782 square feet of space was put back on the market.
Asking rental rates for Class A space averaged $29.23 per square foot in the third quarter, down $0.02 from the previous quarter. During the same time, asking rental rates for Class B space declined $0.30 to $23.98 per square foot.
(O'Hare International Airport lower left photo)
Approximately 5.9 million square feet of sublease space remained available in the region at the end of the quarter, a 600,500-square-foot reduction from the second quarter.
Key transactions of the third quarter include Fifth Third Bank’s renewal and expansion for a total of 218,135 square feet at 222 S. Riverside Plaza.
Additionally, State Farm Insurance renewed its lease of 132,520 square feet at 1400 Opus Place in Downers Grove.
Analysis and Forecast:
National economic concerns, an increase in the state and local unemployment rates and layoff announcements have caused concerned in the Chicago area. Local unemployment increased 70 basis points to 10.4 percent between April and August.
As a result of this uncertainty, the local office market is expected to see a setback in improvement into 2012. Asking rental rates will likely remain flat as the layoffs remain a concern. Companies with large office space requirements are expected to support the CBD and suburban leasing market throughout 2011.
To access the full Chicago Metro Trends reports and other Grubb & Ellis research publications, visit www.grubb-ellis.com/research.
For more information or to speak with one of the company’s local market experts, please contact Damon Elder at 714.975.2659 or via email at damon.elder@grubb-ellis.com.
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