Suburban office vacancies pile up, but rents are still on the rise: report

Suburban office vacancies nudged up during the third quarter, but rents still appear to be rising across the board.

The office vacancy rate in Chicago’s suburbs hit 20.1 percent at the end of September, up from 19.8 percent at the end of the second quarter this year, according to a report from Colliers International. Suburban office landlords have about 332,000 more square feet of vacant space on their hands than at this time last year.

Out of the five suburban submarkets studied in the report, only the west suburban Oak Brook area registered positive net absorption, swallowing up about 263,000 more square feet of space than last year to hit a vacancy rate of 22.5 percent.

But the Lisle-Naperville submarket and the city’s Far Northwest suburbs combined for nearly 500,000 square feet of negative year-over-year absorption. Those regions measure 22.5 percent and 23.8 percent office vacancy rates, respectively.

Counting only class-A office buildings, 412,000 fewer square feet of commercial space was absorbed into the suburban market than during the third quarter of 2017. But class-B and class-C absorption were both positive compared to last year, respectively hitting about 45,000 and 36,000 square feet.

Meanwhile, average gross asking rents for suburban offices continued their slow upward march last quarter, hitting $21.19 per square foot. The average is up from $21.03 in the second quarter, and $20.60 during the third quarter of 2017.

The report counted eight suburban office complexes that changed hands between July and September, with another six under contract. Glenstar’s purchase of the Continental Towers in Rolling Meadows and the Blackstone Group’s sale of the Downers Grove Executive Towers complex to Group RMC ranked among the top sales of the quarter.