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Chicago’s CBD is Still a Landlord’s Market
Although rental rate growth has moderated, the fundamentals of the downtown Chicago office market have yet to turn favorable to tenants, Savills’ Sarah Dreyer writes in the firm’s first-quarter report on the CBD. The overall availability rate in Chicago finished the first quarter at 15.9%, declining by 70 basis points quarter-over-quarter.
Class A availability declined by 180 basis points from Q4 2018, falling to 14.8%. In particular, Dreyer notes, new construction is in high demand as tenants seek quality and efficient space options. Of the 18 largest deals completed in Q1, eight occurred in new downtown construction.
Two-thirds of all leasing this quarter took place in the West Loop, led by United Airlines’ 850,000-square-foot extension at Willis Tower (pictured), and USG’s 220,000-square-foot renewal at 550 W. Adams St.
Overall asking rents averaged $41.01-per-square-foot gross, a 4.1% increase year-over-year. However, rents ticked up just 0.6% from the previous quarter.
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