Suburban Chicago offices endure winter freeze

Vacancy rate hit record lows each quarter last year

500-540 Lake Cook Road (LPC Midwest)
500-540 Lake Cook Road (LPC Midwest)

Suburban office landlords got another splash of cold water in the fourth quarter.

Office vacancy rates jumped to a record 26.9 percent in December, Crain’s reported, citing data from JLL.

The suburbs have lost 2.8 million square feet of office space since the start of the pandemic as companies rethink their office needs. Meantime, offices in downtown Chicago have shown signs of recovery.

One silver lining. Net absorption fell by 51,000 square feet, by far the smallest loss of the past eight quarters. An influx of new offices is mitigating the loss, JLL Senior Vice President Jim Carris told Crain’s. Smaller and midsize companies are more confident about the amount of office space they need.

“The thaw is on for sure,” Rose told Crain’s.

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Some big sales did take place in the last quarter. New York’s Opal Holdings paid about $180 million for a four-building complex at 500-540 Lake Cook Road. United Airlines bought 200,000-square-foot property late last year at 1501 Shure Drive in Arlington Heights.

Landlords are staying aggressive by offering long periods of free rent, cash to build out offices and more lease term flexibility. Some companies are upgrading to better buildings to lure workers back in the office.

“You’re getting Class A buildings at Class B pricing,” Rose told Crain’s.

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[Crain’s] – Harrison Connery


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