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THE STATE OF THE CBD OFFICE MARKET – Q2 2013
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CHICAGO MARKET OUTLOOK Q3 2012
Signs of Life Continue
Chicago’s economy – along with the downtown office leasing market – continue to show signs of life.
Important indicators, like unemployment, vacancies, absorption, and rental rates, continued to improve this quarter. We’ve seen demand from historically suburban-based
companies like Sara Lee, Google and others, relocating downtown. And, we’ve seen increased demand from technology companies as Chicago focuses on building jobs in this sector.
The Chicago Economy
Chicago’s unemployment rate fell to 9.4% at the end of Q3 2012, the lowest rate since 2008. This may be a hopeful sign for the Chicago economy, but it is still well above the state and national average.
Though we’ve seen some improvement in the Nonfarm Payrolls prints over the last few months, there are not enough jobs to sustain a strong recovery, and therefore, a strong landlord market. A significant proportion of those jobs, however, are in occupations whose growth bodes well for the CBD real estate market. One analysis shows that as much as 17% of available jobs are in information technology fields, with 13% in management, 10% in office and administrative support, and 8% in business and financial. With job gains distributed among these fields, even small …Read more...
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WHAT LIES AHEAD IN 2013
Rental rates across the country continue at historic lows and landlords continue to offer attractive concessions packages to attract or retain an office user’s tenancy. Will these advantages for tenants continue to prevail in 2013? Across the country, the office sector has shown signs of improvement in 2012. Our expectation is this will continue incrementally and unevenly throughout 2013. In other words, the recovery is expected to move at a snail’s pace and may even deteriorate in 2013. The impending Fiscal Cliff and tax climate continue to present headwinds. Deloitte echoes this sentiment in their recent Commercial Real Estate Outlook report saying,
“the impact of European uncertainty on U.S. capital markets may act as a damper. While average rents are likely to grow, a more robust recovery is not expected to begin until 2015.”
What does that mean for occupiers of office space? Landlords are still hungry for your business. The ball is in your court.Read more...
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THE STATE OF THE CBD OFFICE MARKET – Q3 2011
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MARKET REVIEW: Q1 2011
At a glance…
- Chicago office vacancy remains above ‘equilibrium’ by four points (14.4%), yet virtually unchanged from the previous quarter.
- Rental rates continue to soften, slipping to $28.30 per rentable square foot (rsf), a decrease from last quarter’s $29.25.
- Landlords continue to be aggressive in negotiating to retain existing tenants.
- The bulk of market activity involves flight to quality in the leasing market with tenants taking advantage of historically low pricing.
- Office space absorption figures suggest a slight increase in overall demand and leasing activity. Absorption is positive 80,622 rsf for the quarter, compared to the previous quarter of negative 27,582 rsf.
- Sublease vacancy decreased to 2,511,330 available rsf from 2,658,482 available rsf
- Many companies have excess, underutilized space. The bulk of this ‘shadow space’ must be absorbed before a healthy market returns
Issues impacting Chicago office space, and many other markets, include: high unemployment, housing foreclosures and weak pricing, stagnant economic growth and diminished financial reserves of the small business.
We expect the recovery to move slowly for commercial office space in Chicago.
Major transactions this quarter:
- Groupon at 303 E Wacker (150,000 rsf short term sublease expansion)
- PNC Bank at 1N Franklin (116,000 rsf renewal/expansion)
- University Health Consortium at 155 N Wacker Drive …
This entry was posted in Commercial Real Estate, Market Statistics and tagged Chicago, Chicago Business District, Commercial Real Estate, Downtown Chicago, Market Statistics, Office Leasing Conditions, Q1 2011. Bookmark the permalink. |