Downtown Chicago Office Market Showing Signs of Life

Chicago’s downtown office market started its long-awaited recovery in the 3rd quarter, with a slight decline in the vacancy rate reported following seven consecutive quarters of decline.  According to statistics provided by CB Richard Ellis, the vacancy rate fell to 17 percent from 17.3 percent across all property types.  Class A space has the lowest direct vacancy rate at 14.2 percent, and totals 6,900,000 SF.  Class B vacancies total 15.9 percent, or 8,900,000 SF.  Class C space reports a 15.3 percent vacancy rate, or 3,500,000 SF.

This is cautious but good news for building owners.  “Armageddon has passed us,” said John Dempsey, a senior vice president with CB Richard Ellis.  “We’re not happy about how things are today, but we’re looking down the road and seeing things are getting better.”  He noted that electronic trading firms are currently dominating the market, with companies looking at upper tier Class A office buildings.  During the 3rd quarter, demand – measured by net absorption – was positive for the first time since the end of 2009.  A couple of significant deals completed during the 3rd quarter helped the market, such as the Getco LLC lease to double its space in the former Apparel Center at 350 North Orleans Street.