Class A Buildings a Bright Spot in Chicago
Chicago’s office market is continuing to struggle with negative net absorption and record-high vacancy rates, though Class A buildings are bucking the trend and the suburbs are weathering the storm somewhat better than the city.
“It’s a little depressing with some of these numbers, but I do see a silver lining,” said Aubrey Englund, executive vice president at NAI Hiffman, who specializes in office tenant representation, of a new report from the firm outlining a sometimes bleak picture of the metro’s office fortunes.
The city’s Central Business District saw almost 603K SF of negative net absorption in Q4 2022, and office vacancy increased to 19.9%. In the suburbs, negative net absorption was much lower at just over 5K SF, though vacancies remained near record highs at 26%, according to the report.
“Many companies are embracing the employee-driven hybrid model in their long-term real estate decisions, which has created the desire to give back space, and I think this is a huge significant contributing factor to the negative leasing absorption,” Englund said.
“The trend has opened new doors for companies to upgrade, so what we’re seeing in Chicago and in the suburbs, companies are taking less office space, but they’re realizing that they can move to a higher-end building with nicer amenities while keeping the same monthly rent as before or even saving money.”
In the suburbs, for example, Class A office saw nearly 100K SF positive net absorption in Q4 2022. In the city, 5.9M SF Class A space was leased during 2022, equal to 77.1% of all new leases signed.
About Hiffman National:
Hiffman National is one of the US’s largest independent commercial real estate property management firms, providing institutional and private clients exceptional customized solutions for property management, project management, property accounting, lease administration, marketing, and research. The firm’s comprehensive property management platform and attentive approach to service contribute to successful life-long relationships and client satisfaction. As a nationally bestowed Top Workplace, and recognized CRE award winner, Hiffman National is headquartered in suburban Chicago, with more than 250 employees nationally and an additional six hub locations and 25 satellite offices across North America.
About NAI Hiffman:
NAI Hiffman is one of the largest independent commercial real estate services firms in the US, with a primary focus on metropolitan Chicago, and part of the NAI Global network. We provide institutional and private leasing, property management, tenant representation, capital markets, project services, research, and marketing services for owners and occupiers of commercial real estate. To meet our clients’ growing needs outside of our exclusive NAI Hiffman territory, we launched Hiffman National, our dedicated property solutions division, which provides property management, project services, and property accounting services across the country. NAI Hiffman | Hiffman National is an award winning company headquartered in suburban Chicago, with more than 250 employees strategically located throughout North America.