One early indicator of leasing activity shows tenant interest rising in the Chicago office market despite a vacancy rate that climbed to a record high this year.
The monthly VTS Office Demand Index for Chicago jumped 28 percent from July to August, and is now higher than its pre-pandemic average. The West Loop and Fulton Market — where firms have signed several leases recently — led the increase, according to the report.
Interest was the highest it has been since before the pandemic outbreak in March 2020, VTS’ August index showed.
The report tracks unique tenant tours, both in-person and virtual, of office properties in the seven core U.S. markets that include — in addition to Chicago — Boston, New York, Los Angeles, San Francisco, Seattle and Washington, D.C. Seattle was the only other city that showed rising number of tours in August, according to the report.
Chicago’s August spike, however, may have been a blip, said VTS’ Ryan Masiello.
“The recent volatility is driven by a number of large tenants entering the market over the past few months, something we don’t expect to repeat itself moving forward in the near term,” he said.
Chicago’s downtown office market vacancy rate rose to 19.4 percent in the second quarter as companies continued to shed space, exit deals entirely or cancel planned leases. While Fulton Market’s vacancy rate was the highest of any neighborhood in the city, developers are still proposing projects and tenants are inking more deals.
Snapchat’s parent company is planning to double its existing office space in River North with a move to Jeff Shapack and Focus’ 167 North Greet Street. Logistics provider MoLo Solutions is also looking to triple its office space at the same building. The landlords have faced challenges, however. In July 2020, software provider CCC Information cut its space at the massive development to 125,000 square feet, from 180,000.