Downtown office glut will grow over next 2 years: report

The Downtown office vacancy rate could spike to 16.5% by the end of 2020, according to a new CBRE report

Chicago /
Jan.January 21, 2019 01:00 PM

Old Post Office (Credit: iStock)

Major new office developments like 601W Companies’ rehab of the Old Main Post Office could push Downtown office vacancy next year to its highest rate in a decade.

Even if office leasing maintains its current robust pace, 16.5 percent of Downtown office space could sit un-leased by the end of 2020, according to a CBRE report cited in Crain’s. The rate has hovered around 13 percent for the past two years.

The Downtown office market is projected to add about 7.3 million square feet of so-called “shadow space,” defined as the sum of soon-to-expire leases and unclaimed space in buildings under construction, in 2019 and 2020, according to the report. About 6.1 million square feet of such space came onto the market in 2017 and 2018.

In addition to the post office redevelopment, landlords are bracing for new office towers like the Bank of America Tower at 110 North Wacker Drive and White Oak Realty Partners’ 20-story building at 625 West Adams Street to lure their tenants away. They’ll join new office projects being built in Fulton Market by developers like Sterling Bay and Shapack Partners, pulling the city’s commercial center of gravity west. [Crain’s] — Alex Nitkin


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