In an otherwise dismal suburban office market, the O’Hare area is gaining.
The submarket boasted the highest average asking rent in Chicago’s suburbs last quarter, with rents up 5.5 percent year-over-year, according to Transwestern. The submarket’s average rent climbed to $33.07 per-square-foot, outpacing the average suburban Chicago office rent of $27.12 per square foot.
No other suburban Chicago submarkets tracked by Transwestern saw rents increase by more than 1.5 percent year-over-year, and rents fell by more than 5 percent in two submarkets.
Even with O’Hare’s slight advantage, the overall region is in worse shape than it was pre-pandemic.
In 2019, the suburban office market’s direct vacancy rate hovered around 15 percent and now sits at 20 percent. The overall vacancy rate, which includes space being marketed, is at 26 percent.
Demand had softened in the suburban markets before the pandemic, but the steep decline in office demand since then accelerated the trend.
Now, class A offices, landlords with significant tenant-improvement dollars to offer or properties with close proximity to the airport appear to be attracting the few tenants that are looking for space.
Significant transactions in the second quarter included a 79,800-square-foot lease signed by the Illinois Municipal Retirement Fund for the entire building at 800 Commerce Drive in Oak Brook. The lease did little to improve overall market conditions, however, as the firm is relocating from a 60,000 square-foot space at 2211 York Road, also in Oak Brook.
Just down the road, Ashley Capital bought an 183,400-square-foot office building at 2001 York Road for $10 million, under $55 per square foot, from Varde Partners. Though the sale was rare for the slow market, it marked a significant decline in value for the property.
The building last sold in 2013 for $34 million, or $185 per square foot.