Suburban office market vacancy rate nudges up

The 23% vacancy for Q2 is slightly above Q1, but investors remain optimistic amid Covid-19’s new reality

TRD CHICAGO /
Jul.July 21, 2020 02:33 PM
The suburban office market saw a slight rise in second quarter vacancy rate

The suburban office market saw a slight rise in second quarter vacancy rate

In a work world upended by the coronavirus, there is optimism among investors that demand will continue to rise in the suburban office market, as companies and employees search for more space outside Chicago.

But the current reality is a bit different.

The suburban office market vacancy rate in the second quarter was 23 percent, a fraction higher than the 22.1 percent in Q1, according to JLL, Crain’s reported. Net absorption also fell by about 86,000 square feet.

But all is not lost. The modest rise in vacancy from April through June stands in contrast to the previous six straight quarters of falling rates, according to JLL’s findings. The brokerage, Crain’s reported, also found that about 90 percent of office tenants paid their rent in June.

Earlier this month, Somerset Development said it was repositioning the vacant former AT&T campus in Hoffman Estates into a $200 million mixed-use project with 1.2 million square feet of office space. Somerset President Ralph Zucker said that “suburbia is getting a fresh look.” Stonemont Financial recently listed two office buildings — a combined 500,000 square feet — at the former Motorola Solutions campus in Schaumburg for about $100 million.

Meanwhile, the Downtown Chicago office market vacancy rate reached its highest point in more than eight years, according to a report last month. That was attributed to the pandemic. Office vacancy in the central business district jumped to 15.1 percent as of June 30, according to CBRE, up from 13.8 percent in Q1. And in the last month, two companies have either scaled back on their office leasing plans in Fulton Market or abandoned them altogether, citing Covid-19 as a reason to reevaluate their Chicago footprint. [Crain’s]Alexi Friedman


Related Articles

arrow_forward_ios
Somerset Development President Ralph Zucker and renderings of Bell Works Chicagoland

The suburban office market is making a comeback

The suburban office market is making a comeback
353 N. Clark with Chester Kamin of Jenner & Block (Google Maps)

Actually, you owe us money: Chicago law firm fires back at landlord

Actually, you owe us money: Chicago law firm fires back at landlord
If there’s a 20% drop in users of the downtown office market, Chicago’s character could massively decline (iStock)

The double whammy hitting Chicago’s downtown

The double whammy hitting Chicago’s downtown
Thomas Roszak and 145 S. Wells (Credit: Cgarner123 via Wikipedia and 145 South Wells)

Spec Loop office project developers land White Claw producer as latest tenant

Spec Loop office project developers land White Claw producer as latest tenant
CareerBuilder CEO Irina Novoselsky and 200 N. LaSalle (Credit: Google Maps)

CareerBuilder plans to sublet its entire Chicago HQ

CareerBuilder plans to sublet its entire Chicago HQ
Groupon space at 600 W. Chicago, Groupon interim CEO Aaron Cooper (Credit: Sterling Bay and Groupon)

Groupon looks to sublet huge office space at Sterling Bay-owned building

Groupon looks to sublet huge office space at Sterling Bay-owned building
The Chicago office leasing market was strong in the first quarter of 2020, but the good times appear to be over. (Credit: Unsplash)

In the age of Coronavirus, Chicago real estate’s biggest bright spot fades

In the age of Coronavirus, Chicago real estate’s biggest bright spot fades
Uber CEO Dara Khosrowshahi and the Old Post Office at 433 West Van Buren Street (Credit: Khosrowshahi by Vipin Kumar/Hindustan Times via Getty Images; Google Maps)

Ride canceled: Uber pauses construction at Old Post Office

Ride canceled: Uber pauses construction at Old Post Office
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...