Office rents in Chicago climbed slightly in 2017 but tenants effectively paid less than they did in 2016 thanks to landlord concessions, according to a new report by tenant representation brokerage Savills Studley.
Negotiated rents in Chicago were up by 0.3 percent year over year, according to the report. The jump in 2016 was 0.6 percent.
But handouts from landlords in the form of tenant-improvement allowances jumped 6.6 percent last year, which helped lower effective rent by 2.6 percent.
Chicago was near the top on tenant-improvement allowances nationally, but markets such as Washington D.C, Denver and Lower Manhattan each saw increases in the concessions last year that amounted to more than double Chicago’s.
According to the report, Atlanta, Seattle and Austin saw the largest gain in effective rents last year, while markets in and around New York City like Midtown Manhattan, Northern New Jersey and Downtown Manhattan took the largest hit on effective rents.
Gross office rents in Chicago, meanwhile, reached an average of $50.49 per square foot last year, according to the report, 20 percent above their pre-recession peak in 2007 of $41.99.