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CBD Office Reaches Equilibrium Point
Chicago’s CBD has reached an equilibrium point, displaying signs of both a tenant-favorable market and a landlord-favorable one, according to Cushman & Wakefield. However, the firm’s latest report on Downtown Chicago suggests that the balance may tip toward tenants in the near future.
Although first-quarter leasing activity was up 13% from a year ago, overall absorption was down by 41.1%, and vacancy rose 60 basis points to 13.6%. And while asking rents increased during Q1, quarterly increases have been on a downward trend.
The CBD will see deliveries of 1.2 million square feet of trophy tower inventory this year, and another 1.2 million square feet from smaller projects. “Based on pre-leasing activity, demand has not outpaced supply,” according to Cushman & Wakefield. “As net effective rents level off and vacancy rises, the market may shift from an equilibrium point to being more tenant favorable.”
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