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Lengthy “Up” Cycle Has Something for Owners, Tenants
Chicago’s office landlords and tenants continue reaping the benefits of commercial real estate’s longest “up” cycle in 40 years, according to Savills Studley. The firm’s report cites two main reasons that this up cycle is different: low interest rates enabling owners to justify higher rents through up-front concessions, and densification enabling tenants to afford the higher rents.
”Owners are also leveraging their buying power to build ‘ready-to-go’ speculative suites for organizations that have immediate needs or don’t want to absorb all of the details associated with a new buildout, as well as to offer ‘turnkey’ solutions minimizing risk to tenants,” observed Robert Sevim and Eric Feinberg of Savills Studley’s Chicago office.
In Chicago, the amount of occupied space increased by 5.3% between 2010 and 2017, while employment rose by 10.1%, nearly twice that rate. Over the same time period, the amount of square footage occupied by employees decreased by 5.1%.
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