Research
July 2017

Second Quarter 2017 Market Peek

Second Quarter 2017 Market Peek

2Q 2017 Market Peek | NAI Hiffman

Second Quarter 2017

 Market Peek 2Q 2017

NAI Hiffman is pleased to present the Second Quarter 2017 Market Peek, a first look at the market statistics for the Chicago metropolitan office and industrial real estate markets.
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Industrial: More than 5.6 MSF delivered second quarter, bringing YTD total to 9.9 MSF
  • The Chicago industrial market recorded positive net absorption as over 4.23 million square feet was absorbed during the second quarter. This brings the year-to-date total to just under 9.86 million square feet through the first half of 2017. Contributing to net absorption, five tenants took occupancy this quarter in spaces larger than 300,000 square feet each.

  • The Chicago industrial vacancy rate dropped six basis points during the second quarter, measuring 6.25 percent, and down 100 basis points from the 7.25 percent recorded this time last year. Strong leasing activity should continue to tighten the market’s overall vacancy rate in the coming quarters.

  • Over 5.67 million square feet of new supply delivered second quarter, of which half was built on a speculative basis. Nearly 4.44 million square feet of new construction broke ground this quarter, including The Opus Group and AEW’s 1.22 million square foot joint venture in the Joliet Rock Creek Logistics Center. Currently 17.34 million square feet is under construction in the Chicago industrial market, with 11.76 million square feet scheduled to deliver by the end of 2017.
2Q2017 Industrial Vacancy & Absorption

Office: Suburbs see increase in vacancy after decrease in previous quarter; CBD starts to feel impact of new trophy towers

SUBURBS
  • The vacancy rate for the suburban office market measured 19.30 percent second quarter, a 17 basis point increase over the previous quarter. However, O’Hare and the East-West Corridor submarkets saw a decrease in overall vacancy while the other three suburban submarkets saw slight increases. Average gross asking rental rates increased by 0.80 percent for Class A properties, mostly driven by the continued increase in the O’Hare submarket where Class A rents reached an average of $30.45 per square foot this quarter.

  • New leasing activity remained strong and totaled nearly 1.0 million square feet. The largest leases signed during the quarter included Caterpillar’s commitment to 116,000 square feet in Deerfield where it will lease the sublease space from Jim Beam, Pharmaceutical Research Associates’ lease of 52,000 square feet in Deerfield, and ISACA’s lease of 45,245 square feet in Schaumburg.
2Q2017 Suburban Office Vacancy & Absorption

CBD
  • The downtown office market reported a 54 basis point uptick in vacancy from the previous quarter as large sublease spaces became available from tenants moving into the new trophy assets. Gross asking rental rates increased for Class A and Class B properties by 2.67 and 2.40 percent, respectively.

  • New leasing activity increased from the previous quarter by 40.88 percent as more than 2.4 million square feet was recorded. The largest lease of the quarter was signed by Bank of America who committed to 500,000 square feet in the proposed office building at 110 N Wacker Drive. This lease will likely give the project the green light to begin construction on the new tower.
2Q2017 Downtown Office Vacancy & Absorption

For further information regarding the content of this market peek or if you are interested in
attending a custom market overview presentation, please contact:

AMANDA ORTIZ
Director of Research
630.693.0645
aortiz@hiffman.com
 
NAI Hiffman
 
NAI Hiffman, One Oakbrook Terrace, Suite 400, Oakbrook Terrace, IL 60181
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