Second Quarter 2016 Market Peek

NAI Hiffman is pleased to present the Second Quarter 2016 Market Peek, a first look at the market statistics for the Chicago Metropolitan office and industrial real estate markets.

Industrial: Spec Construction Deliveries Increase Vacancy Rate

• A slight rise in the overall industrial vacancy rate, from 7.20% first quarter to 7.25% second quarter, was largely due to more than 2.2 million SF of vacant speculative construction facilities that were delivered second quarter. However, the market continues to perform with over 2.1 million SF of positive absorption recorded.
• Swedish furniture retailer IKEA broke ground on its 1.25-million-SF distribution center in Joliet, contributing to the nearly 16.8 million SF of projects under construction, of which 9.7 million SF is being built on a speculative basis.

Office: Vacancy Drops in the Suburbs; Slight Rise in the CBD

SUBURBS

• The four largest suburban submarkets saw positive absorption second quarter, with the Northwest submarket being the largest recipient of increased occupancy. Verizon completed their 159,000 SF move from Elgin to Rolling Meadows and HSBC took occupancy of their new 162,000 SF space in Arlington Heights. 
• There is no sign of slowing in the suburbs as multiple tenants committed to large leases during the quarter. Paylocity committed to 309,000 SF at Zurich Towers, US Cellular expanded into 119,000 SF at US Cellular Plaza, and Valent Biosciences leased 85,000 SF at the former Motorola Mobility Campus in Libertyville.

CBD

• Large sublease availabilities in the Central Loop gave the CBD an increase in overall vacancy, despite an 80 basis points dip in River North. The remainder of the CBD remained relatively unchanged.
• McDonald’s confirmed their plan to exit the suburbs by spring 2018. The fast-food giant will be leaving their corporate campus in Oak Brook in favor of the West Loop’s Fulton Market District. The company announced they will take approximately 80% of the 600,000 SF structure that will begin construction at the former site of Oprah Winfrey’s Harpo Studios.