Year-over-year net absorption increased 45.5 percent over mid-year 2018 and totaled nearly 10.7 million square feet (msf) year-to-date. Second quarter 2019 absorption of 6.5 msf also marks a 56.8 percent increase over the 4.1 msf recorded last quarter. The largest quarterly increases occurred in the I-55 Corridor and Southeast Wisconsin submarkets where nine companies took occupancy of spaces larger than 100,000 square feet (sf) and totaled nearly 2.8 msf during the quarter.
Nearly 9.6 msf of new leasing activity was signed during the second quarter, on par with the 9.8 msf signed during the previous quarter. A total of 50 new leases were signed greater than 50,000 sf during the second quarter alone, further solidifying forecasts suggesting healthy market fundamentals will continue through the remainder of the year.
Office: Class A Space Posts Positive Absorption in the Suburbs at Mid-Year; Net Absorption in the West Loop Continues to Thrive
The suburban overall vacancy rate increased a nominal 15 basis points from the 18.55 percent recorded during the first quarter to measure 18.70% mid-year 2019. Class A average asking rents increased slightly to $26.85 per square foot (psf) over the $26.66 psf recorded in the previous quarter.
Net absorption was positive during the second quarter and totaled 35,120 sf. Class A space contributed 128,522 sf of positive absorption, while Class B and Class C spaces didn’t fare as well and posted negative totals. Companies taking occupancy during the second quarter included UHAUL moving into the former Verizon space in Elgin (127,000 sf), Baxter Credit Union moving to Vernon Hills (75,000 sf), and Intelligent Medical Products moving into the O’Hare Gateway Office Center in Rosemont (44,000 sf).
Positive absorption was recorded for the second consecutive quarter, largely due to continued activity in the West Loop. Companies including Benesch, Friedlander, Copland & Aronoff, LLP (63,000 sf), Holland & Knight (57,000 sf), Home Partners (38,000 sf) and Andersen Tax (32,000 sf) all took occupancy in the West Loop during the quarter.
The overall vacancy rate in the Central Business District (CBD) decreased 59 basis points from the first quarter, to measure 12.24% second quarter. Class A asking rents increased to $44.13 psf in the second quarter, up from $43.81 psf in the previous quarter. Nearly 5.7 msf of office space remains under construction downtown, including The Old Main Post Office located at 433 W Van Buren, where Uber is considering a substantial lease of nearly 450,000 sf.