Market Indicators
23Q2 Chicagoland CBD & Suburban Trends
Total Vacancy Rate
Direct Vacancy Rate
Sublease Vacancy Rate
Total Availability Rate
Direct Availability Rate
Sublease Availability Rate
Quarterly Net Absorption (SF)
YTD Net Absorption (SF)
Rental Rates (PSF)
Sublease Vacancy (SF)
Sublease Available (SF)
Under Construction (SF)
New Supply (SF)
CHICAGO
CBD OFFICE
CHICAGO SUBURBAN OFFICE
Key Takeaways |
Chicago CBD is trending positive in absorption for the first time since 2020, yet there remains few tenants from outside of Chicago moving to the area. We are still "robbing Peter to Paul" where Class B existing properties are being vacated to fill Class A Trophy and new developments.
New development delivery has slowed. 1.2 million square feet at Salesforce Tower delivered this quarter with little speculative vacancy available. There remains less than 780K square feet to deliver this year and less than 500K square feet to deliver in total in 2024. Speculative office construction is not expected as any new buildings that will break ground in 2024 will not commence without significant preleasing. With less new deliveries, tenant occupiers currently touring the market will occupy and start to lower vacancy rates in 2024.
CBD rental rates continue to climb-particularly in Class A space. Owners of premium Class A space can command 18.9% higher than lower Class A- space.
During the peak of the pandemic, Class A vacancy reached 28.2 percent. However, it has been slowly declining over the past several quarters as tenants in the suburbs continue to seek high-quality, Class A properties with the best amenities, including cafes, fitness centers, tenant lounges, etc.
Multi-tenant inventory reductions are expected to continue in the second half of 2023 as older, obsolete properties sold are for redevelopment. In addition there has been no significant speculative construction in the past few years in the suburbs and none is expected to break ground in 2024.
Landlords with near-term vacancy and maturing debt are becoming more vulnerable as they seek opportunities to secure financing for their properties.
Quality Getting Higher Rents Despite High Availability
Sandy McDonald
Senior Director of Research
sandy.mcdonald@colliers.com
+1 312 777 2616
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Regional Executive Managing Director
name.lastname@colliers.com
+1 123 123 1234
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Research & Forecast Report
Chicago CBD & Suburban Office Highlights 23Q2
Quest for Quality Remains as Vacancy Inches Down and Availability Inches Up
Read on for an overview of the office market.
23Q2
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Market Maps
There is a significant diffrence in trophy Class A gross average asking rents
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22.0%
19.7%
2.3%
28.0%
23.0%
5.0%
96,344
(2,164,902)
$42.67
3,679,360
8,006,434
779,180
1,200,202
24.80%
23.80%
1.40%
30.80%
27.60%
3.20%
40,668
66,410
$22.05
1,141,560
3,342,936
0
0
Suburban Chicago Office Market
Downtown Chicago Office Market
CBD CLASS A OFFICE COMPARISON
SUBURBAN CLASS A OFFICE COMPARISON
CBD Net absorption was positive at 96,34 square feet, however, new developments will keep CBD vacancy high as preleased tenants for new developments buildings are moving out of Class B existing space.
CBD Net Absorption Trending Positive
The Suburban office market saw an increase in leasing velocity in the second quarter. However, tightening of lending and strained financial conditions continue to soften overall market conditions.
Suburban Net Absorption Trending Positive
Ronna Larsen
Director of Research
ronna.larsen@colliers.com
+1 847 698 8517
CBD OFFICE
SUBURBAN OFFICE
18.9%
difference
10.0%
difference
