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Chicago CBD’s Shrinking Vacancy Rate Favors Class A
Chicago’s CBD office vacancy rate shed 50 basis points from last quarter to finish the third quarter at 11.8%, Colliers International research analyst Will Goldstick reported. Over a five-year timespan, downtown’s vacancy rate has shed an average of 170 basis points per year.
The steeper quarterly decline in vacancies was for Class A product, which saw a 100-bp drop to 10.1%. Class B’s quarter-to-quarter vacancy decline was shallower at 20 bps, and that has proven to be the case over the past five years as well.
“Class B assets have encountered more pressure than other assets as tenants have flocked to more efficient space in newer developments,” Goldstick wrote.
Long-term, the CBD may see fewer tenant migrations from the suburbs, Goldstick wrote.
“Conversely, it is expected that more tech firms from the coasts may look to Chicago as a cost-effective, yet valuable, option for talent,” according to Goldstick.
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