Third Quarter 2017 Market Peek
NAI Hiffman is pleased to present the Third Quarter 2017 Market Peek, a first look at the market statistics for the Chicago metropolitan office and industrial real estate markets.
Industrial: Speculative Deliveries Cause Slight Vacancy Uptick
- The overall vacancy rate for the Chicago industrial market increased to 6.33 percent third quarter, following the completion of speculative facilities during the quarter. A total of 4.2 mil-lion square feet of speculative deliveries and 2.9 million square feet of build-to-suit projects were completed third quarter, bringing the year-to-date total to 7.1 million square feet. This includes two million-square-foot projects in the I-80 Corridor and Uline’s 1.0 million square foot build-to-suit facility in Kenosha.
- An additional 3.9 million square feet is scheduled to be delivered by year-end. If completed, construction deliveries would total 24.1 million square feet for the year, falling below last year’s total of 24.9 million square feet.
- Net absorption totaled 5.0 million square feet third quarter, bringing the year-to-date total to 14.1 million square feet. Contributing to absorption this quarter – Amazon completed two buildings totaling 1.8 million square feet, and took occupancy of an additional 438,000 square feet in Crest Hill and 403,000 square feet in Aurora – for a total of 2.6 million square feet third quarter. Other tenants taking more than 300,000 square feet included Richwill Enterprises, Samsung, and Xpedient.
Office: Suburban Vacancy Increases Despite Strong Leasing Activity; CBD Continues to Feel Impact of New Trophy Towers
- The overall vacancy rate for the suburban office market measured 19.74 percent third quarter, a 44 basis point increase over the previous quarter due to tenants decreasing their footprint and returning space to the market. Average gross asking rental rates increased by 3.23 percent for Class A properties, mostly due to the continued increase in the O’Hare submarket where Class A rents reached $32.23 per square foot in the third quarter.
- New leasing activity remained strong and totaled 1.9 million square feet. The largest leases signed during the quarter included Amita Health’s lease of 225,000 square feet in Lisle and United Healthcare’s lease of 92,727 square feet in Downers Grove.
- The overall vacancy rate for the downtown office market measured 13.19 percent third quarter, a 74 basis point increase over the previous quarter. Companies remain attracted to recent trophy developments in the city, however, in many cases they are signing on for less space than previously occupied.
- Notable leases signed third quarter included Northern Trust’s consolidation to 462,000 square feet at 333 S Wabash Ave and McDonald’s commitment to a 110,000 square foot expansion of its original 390,000 square foot lease in the Fulton Market District.
For further information on the market peek or if you are interested in attending a custom market overview presentation, please contact:
Director of Research