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Office Demand May Hinge on Amazon’s HQ2 Decision
The big question-mark hanging over Downtown Chicago’s office sector is Amazon’s final decision on where to build its second North American headquarters. “Chicago is on the cusp of another wave of development activity, including projects in emerging micro-districts like Fulton Market and the Clybourn Corridor,” said Eric Feinberg, EVP with Savills Studley in Chicago. “Unless Chicago lands Amazon, it remains to be seen whether current demand is sustainable, as more than seven million square feet delivers downtown in the next three years.”
As it is, CBD office leasing declined in the first quarter from Q4 2017, although over the past four quarters it has exceeded the long-term market average by 26.2%. Rent growth has also slowed, with landlords eking out a 0.4% increase in Q1.
What has been on the rise is investment sales. Over six months through Feb. 28, office sales totaled $2.6 billion across the market.
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