Chicago Q1 2022 | Office Real Estate Report

Chicago Office Real Estate Market Report 2019

Flexible and hybrid workplace trends continue to depress demand in Chicago’s office market, driving up the amount of available space on the market. A historical high of 95.3 million SF of space (18.7% of total inventory) is currently available in Chicago, an increase of more than 20 million SF since 20Q1.

Even as demand is expected to continue drifting lower over the coming quarters, Chicago remains in the midst of its largest supply wave in over a decade, with 2.7 million SF of space delivering over the past year and another 2.2 million SF currently under construction. In total, demand for office space (absorption) posted -5.0 million SF in Chicago over the past 12 months, pushing vacancy to a 10-year high of 15.2%. The most recent sizable delivery was from Riverside Development’s 1.5 million-SF Union Station redevelopment as the BMO Tower at 320 S Canal. Upon completion, the property was 52% leased to a tenant lineup including its banking namesake (500,000 SF) and law firm Chapman & Cutler (88,000 SF), both expected to move into their spaces in early 2023.

Cawley Chicago’s office experts gather the top statistics for leases, sales, and projects under construction in Chicago’s office real estate market every quarter. This provides a view of where office real estate stands currently and what lies ahead in the future. Additionally, the overall office real estate stats are compared to Chicago’s suburban areas, Schaumburg and the Eastern East-West Corridor, in order to get an idea of how the markets perform in relation to one another.

“While the data still shows a macro level lack of positive leasing absorption, the office market activity has clearly picked up since the start of 2022. We continue to see an evolvement in how companies are reacting to this “New Normal”

Rawly Lantz, SIOR, Principal @ Cawley Chicago

office real estate

Top Overall Chicago Office Real Estate Lease Statistics (Past 12 Months)

12 Month Deliveries (Square Feet): 2.8 million (3.6 million in Q4 2021)
12 Month Net Absorption (Square Feet): -5 million (-7.8 million in Q4 2021)
Vacancy Rate: 15.2% (15.3% in Q4 2021)
12 Month Rent Growth: +0.4% (-0.1% in Q4 2021)

Top Chicago Office Leases (Past 12 Months)

1) Property: Salesforce Tower Chicago
Submarket: 
River North
Leased SF:
662,400
Quarter:
Q3 2021
Tenant:
Kirkland & Ellis
Tenant Rep Company: Newmark; Savills
Leasing Rep:
Hines

4) Property: AON Center
Submarket:
East Loop
Leased SF:
169,717
Quarter:
Q3 2021
Tenant:
Kraft Heinz

3) Property: Lake Forest
Submarket:
Central North
Leased SF:
160,085
Quarter:
Q1 2022
Tenant:
N/A

4) Property: 3500 Lacey Rd.
Submarket:
Eastern East / West Corridor
Leased SF:
133,077
Quarter:
Q1 2022
Tenant:
Health Care Service Corp
Tenant Rep:
Cushman & Wakefield
Leasing Rep:
Cushman & Wakefield

5) Property: 190 South LaSalle
Submarket:
Central Loop
Leased SF:
121,000
Quarter:
Q4 2021
Tenant:
U.S. Bank
Tenant Rep: Cushman & Wakefield
Leasing Rep:
Cushman & Wakefield

Top Chicago Office Sales Statistics (Past 12 Months)

Sales Comparables: 929 (929 in Q4 2021)
Average Cap Rate:
8.4% (8.7% in Q4 2021)
Average Price/ SF: 
$181 ($157 in Q4 2021)
Average Vacancy at Sale: 14.0% (11.5% in Q4 2021)

Top Chicago Office Real Estate Property Sales

1) Property: Leo Burnette Building (35 W Wacker Dr.)
*Rating: 4
Year Built: 1989
Building SF:1,118,042
Vacancy:
0.4%
Price (PSF): $415,000,000 ($371)
Cap Rate: Not Listed

2) Property: 1K Fulton
*Rating:
4
Year Built:
2015
Building SF:
531,190
Vacancy:
5.2%
Price (PSF): 
$355,000,000 ($668)
Cap Rate:
4.7%

3) Property: Bank of America Tower (110 N Wacker Dr.)
*Rating: 5
Year Built: 2020
Building SF: 1,546,909
Vacancy:
22.2%
Price (PSF): $210,000,000 ($136)
Cap Rate: Not Listed

4)Property: 210 N Carpenter St.
*Rating:
4
Year Built:
2019
Building SF:
206,315
Vacancy:
0%
Price (PSF): 
$169,000,000 ($819)
Cap Rate:
Not Listed

5) Property: AT&T Headquarters
*Rating: 4
Year Built: 1967
Building SF: 849,252
Vacancy: 
20.3%
Price (PSF): $155,818,000 ($183)
Cap Rate: Not Listed

*Rating is 1-5, 5 being the best

 

Chicago Office Construction Projects Statistics

Properties Currently Under Construction: 15 (14 in Q4 2021)
Total Size: 
2,218,416 SF (2,584,478 SF in Q4 2021)
Percent of Inventory:
0.4% (0.5% in Q4 2021)
Preleased: 85.1% (61.9% in Q4 2021)

Top Chicago Office Projects Under Construction

1) Property: Salesforce Tower Chicago (333 W Wolf Point Plz)
Rating*:
5
Building SF:
1,200,202
Stories:
59
Completion:
Q1 2023
Developer/ Owner:
Hines

2) Property: Ally Lincoln Yards(1229 W Concord Pl)
Rating*:
5
Building SF:
280,000
Stories:
8
Completion:
Q2 2023
Developer/ Owner:
Sterling Bay

3) Property: 345 N Morgan St.
Rating*:
4
Building SF:
230,000
Stories:
10
Completion:
Q3 2022
Developer/ Owner:
Sterling Bay

4) Property: Hub Group Building (2000 Clearwater Dr)
Rating*:
4
Building SF:
135,000
Stories:
4
Completion:
Q1 2022
Developer/ Owner:
Hub Group, Inc.

5) Property: Oak Brook Common Meadows (Commerce Dr.)
Rating*:
4
Building SF:
81,544
Stories:
7
Completion:
Q1 2023
Developer/ Owner:
N/A

*Rating is 1-5, 5 being the best

 

Top Eastern East-West Corridor Office Real Estate Lease Statistics (Past 12 Months)

12 Month Deliveries (Square Feet): 43K (98.8K in Q4 2021)
12 Month Net Absorption (Square Feet): -101K (-191K in Q4 2021)
Vacancy Rate: 17.4% (17.1% in Q4 2021)
12 Month Rent Growth: 0.6% (0.2% in Q4 2021)

4 & 5 Star Office Properties Leasing Activity in Eastern East-West Corridor (Past 12 Months)

1) Property: Commerce Office Bldg (814 Commerce Dr.)
Rating:
4
Deals:
4
Square Feet:
46,305
Vacancy:
32.6%
Net Absorption:
21,977

2) Property: One Lincoln Centre (18W140 Butterfield Rd.)
Rating: 
4
Deals:
6
Square Feet:
317,519
Vacancy:
14.3%
Net Absorption:
20,089

3) Property: Drake Oak Brook Plaza (2211 – 2215 S York Rd.)
Rating:
4
Deals:
4
Square Feet:
251,943
Vacancy:
18.8%
Net Absorption:
16,962

Top Schaumburg Office Real Estate Lease Statistics (Past 12 Months)

12 Month Deliveries (Square Feet): 0 (0 in Q4 2021)
12 Month Net Absorption (Square Feet): -567K (-2.8M in Q4 2021)
Vacancy Rate: 24.0% (30.4% in Q4 2021)
12 Month Rent Growth: 0.2% (0.1% in Q4 2021)

4 & 5 Star Office Properties Leasing Activity in Schaumburg (Past 12 Months)

1) Property: One Century Centre (1750 E Golf Rd.)
Rating:
4
Deals:
9
Square Feet:
45,658
Vacancy:
28.6%
Net Absorption:
22,528

2) Property: Crossroads Center (3701 Algonquin Rd)
Rating: 
4
Deals:
13
Square Feet:
29,055
Vacancy:
27.9%
Net Absorption:
17,397

3) Property: Schaumburg Tower II (1450 American Ln)
Rating:
4
Deals:
4
Square Feet:
69,796
Vacancy:
50.3%
Net Absorption:
15,375

 

Top Eastern East-West Corridor Office Sales Statistics (Past 12 Months)

Sales Comparables: 83 (75 in Q4 2021)
Average Cap Rate: 
9.1% (8.9% in Q4 2021)
Average Price/ SF: 
$143 ($153 in Q4 2021)
Average Vacancy at Sale: 17.3% (19.3% in Q4 2021)

Top Eastern East-West Corridor Office Real Estate Property Sales

1) Property: Highland Landmark II (3025 Highland Pky)
*Rating: 4
Year Built: 1998
Building SF: 281,416
Vacancy: 
4.4%
Price (PSF): $51,500,000 ($183)
Cap Rate: Not Listed

2) Property: Ensono (1501 Opus Pl)
*Rating:
3
Year Built: 
1987
Building SF:
115,352
Vacancy: 
0%
Price (PSF): 
$45,073,154 ($391)
Cap Rate: 
Not Listed

 

Top Schaumburg Office Sales Statistics (Past 12 Months)

Sales Comparables: 61 (54 in Q4 2021)
Average Cap Rate: 
7.5% (7.5% in Q4 2021)
Average Price/ SF: 
$120 ($85 in Q4 2021)
Average Vacancy at Sale: 25.1% (16.3% in Q4 2021)

Top Schaumburg Office Real Estate Property Sales

1) Property: 1501 W Shure Dr 
*Rating: 3
Year Built: 2017
Building SF: 200,000
Vacancy: 
0%
Price (PSF): $56,000,000($280)
Cap Rate: Not Listed

2) Property: Barrington Orthopedics (929 E Higgins Rd)
*Rating: 3
Year Built: 2009
Building SF: 58,000
Vacancy: 
0%
Price (PSF): $19,767,000 ($341)
Cap Rate: Not Listed

3) Property: Arlington Heights Medical Center (1100 W Central Rd.)
*Rating: 3
Year Built: 1974
Building SF: 162,808
Vacancy: 
27.1%
Price (PSF): $13,500,000 ($215)
Cap Rate: Not Listed

 

Eastern East-West Corridor Office Construction Projects Statistics

All-Time Annual Average Square Feet: 273,884 (276,844 in Q4 2021)
Delivered SF (Past 8 Qs):
106,220 (116,140 in Q4 2021)
Delivered SF (Next 8 Qs):
221,644 (140,100 in Q4 2021)
Proposed SF (Next 8 Qs): 847,275 (962,134 in Q4 2021)

Top Eastern East-West Corridor Office Project Deliveries

1) Property: DuPage Medical Group (301 – 3019 W Ogden Ave)
Rating*:
4
Building SF:
50,220
Stories:
3
Completion:
Q2 2021
Developer/ Owner:
Not Listed

Top Eastern East-West Corridor Office Projects Under Construction

1) Property: Hub Group Building 2 (2000 Clearwater Dr)
Rating*:
4
Building SF:
135,000
Stories:
4
Completion:
Q1 2021
Developer/ Owner:
Not Listed / Hub Group, Inc

2) Property: 229 Burlington Ave
Rating*:
3
Building SF:
2,600
Stories:
1
Completion:
Q1 2022
Developer/ Owner:
Holmes IV, LCC

Top Eastern East-West Corridor Office Projects Proposed

1) Property: Oak Brook Commons Offices 
Rating*:
4
Building SF:
300,000
Stories:
7
Completion:
Q3 2022
Developer/ Owner:
Hines / Hines

 

Schaumburg Office Construction Projects Statistics

All-Time Annual Average Square Feet: 259,420 SF (262,448 SF in Q4 2021)
Delivered SF (Past 8 Qs):
180,000 SF (184,716 SF in Q4 2021)
Delivered SF (Next 8 Qs):
0 (0 in Q4 2021)
Proposed SF (Next 8 Qs): 737,758 (737,758 SF Q4 2021)

Top Schaumburg Office Projects Delivered

1) Property: The Boler Company (Progress Pky)
Rating*:
4
Building SF:
180,000
Stories:
8
Completion:
Q4 2020
Developer/ Owner:
UrbanStreet Group, LLC

Top Schaumburg Office Projects Proposed

1) Property: Medical Arts Campus (999 N Elmhurst Rd)
Rating*:
4
Building SF:
209,224
Stories:
3
Completion:
Q2 2023
Developer/ Owner:
Not Listed / DLC Management

2) Property: Huntington 90
Rating*:
3
Building SF:
155,064
Stories:
6
Completion:
Q3 2023
Developer/ Owner:
Not Listed / McShane Development Co.

Data Sources: Cawley Chicago & CoStar
*Cited Sources: Globe St – Office Property Construction

 

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