Chicago Q2 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 96.8 million SF of space (18.9% of total inventory) is currently available in Chicago, an increase of approximately more than 20 million SF since 20Q1. Adding insult to injury, the sublet availability rate is stubbornly stuck at 2.1%. And if the last few quarters are any indication, we are seeing many employers letting these lease obligations expire, with no thoughts about
moving their stakes elsewhere.

There are exceptions, of course. Early in 2022, Horizon Therapeutics found a sublessor for its 160,000 SF at 150 S Saunders, Lake Forest, which it vacated in 2020 to be the owner occupier of the former Takeda campus in Deerfield. In total, demand for office space (absorption) decreased by -2.5 million SF in Chicago over the past 12 months, pushing vacancy to a 10-year high of 15.3%.

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.

“Despite Chicagoland office vacancy reaching a ten-year high, many companies are signing new lease deals as they are beginning to make decisions in regards to what their office footprints should be post-pandemic.” – Justin Harris, Senior Associate

 

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

12 Month Deliveries (Square Feet): 2.5 million (2.8 million in Q1 2022)
12 Month Net Absorption (Square Feet): -2.5 million (-2.5 million in Q1 2022)
Vacancy Rate: 15.3% (15.2% in Q1 2022)
12 Month Rent Growth: +0.8% (+0.4% in Q1 2022)

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

2) Property: 2915 Jorie Blvd
Submarket: 
Eastern East / West Corridor
Leased SF:
297,125
Quarter:
Q2 2022
Tenant:
JLL

3) Property: Lincolnshire Corp Center
Submarket:
Central North
Leased SF:
283,257
Quarter:
Q2 2022
Tenant: Zebra Technologies Corporation

Tenant Rep: JLL 

Leasing Rep: 
N/A

4) Property: 360 North Green
Submarket:
Fulton Market
Leased SF:
223,000
Quarter:
Q2 2022
Tenant:
Boston Consulting Group

5) Property: 600 West Chicago
Submarket:
River North 
Leased SF:
186,000
Quarter:
Q4 2021
Tenant:
Echo Global Logistics Inc.
Tenant Rep: JLL
Leasing Rep:
Sterling Bay

Top Chicago Office Sales Statistics (Past 12 Months)

Sales Comparables: 1,050 (929 in Q1 2022)
Average Cap Rate:
8.3% (8.4% in Q1 2022)
Average Price/ SF: 
$202 ($181 in Q1 2022)
Average Vacancy at Sale: 13.6% (14% in Q1 2022)

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): $420,000,000 ($376)
Cap Rate: Not Listed

2)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:
7.1%

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: 225 W Randolph St.
*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: 16 (15 in Q1 2022)
Total Size: 
2,381,303SF (2,218,416 SF in Q1 2022)
Percent of Inventory:
0.5% (0.4% in Q1 2022)
Preleased: 80.4% (85.1% in Q1 2022)

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: 311 W Huron St. 
Rating*:
4
Building SF:
200,000
Stories:
10
Completion:
Q2 2022
Developer/ Owner:
Sterling Bay

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

 

*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): 0K (43K in Q1 2022)
12 Month Net Absorption (Square Feet): 232K (-101K in Q1 2022)
Vacancy Rate: 17.3% (17.4% in Q1 2022)
12 Month Rent Growth: 1.1% ( 0.6% in Q1 2022)

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: Imperial Place (1 East 22nd St.)
Rating:
4
Deals:
3
Square Feet:
165,410
Vacancy:
53.9%
Net Absorption:
19,037

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

12 Month Deliveries (Square Feet): 0 (0 in Q1 2022)
12 Month Net Absorption (Square Feet): -306K (-576K in Q1 2022)
Vacancy Rate: 24.0% (23.5% in Q1 2022)
12 Month Rent Growth: 0.5% (0.2% in Q1 2022)

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

1) Property: Tower III (1701 Golf Rd.)
Rating:
4
Deals:
5
Square Feet:
63,831
Vacancy:
39,3%
Net Absorption:
50,737

2) Property: One Century Centre (1750 E Golf Rd.)
Rating:
4
Deals: 3
Square Feet: 45,658
Vacancy:
28.6%
Net Absorption:
22,528

3) Property: Centennial Center (1450 American Ln)
Rating:
4
Deals:
3
Square Feet:
12,082
Vacancy:
21.8%
Net Absorption: 18,972

 

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

Sales Comparables: 78 (83 in Q1 2022)
Average Cap Rate:
8.4% (9.1% in Q1 2022)
Average Price/ SF: 
$147 ($143 in Q1 2022)
Average Vacancy at Sale: 16.4% (17.3% in Q1 2022)

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: 55 (54 in Q1 2022)
Average Cap Rate: 
7.3% (7.5% in Q1 2022)
Average Price/ SF: 
$99 ($124 in Q1 2022)
Average Vacancy at Sale: 18.3% (25.1% Q1 2022)

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: 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

3) Property: Golf Tower (2550 W Golf Rd. )
*Rating: 3
Year Built: 1979
Building SF: 276,516 
Vacancy:
0%
Price (PSF): $13,000,000 ($49)
Cap Rate: Not Listed

 

Eastern East-West Corridor Office Construction Projects Statistics

All-Time Annual Average Square Feet: 271,460 (273,884 in Q1 2022)
Delivered SF (Past 8 Qs):
106,220 (106,220 in Q1 2022)
Delivered SF (Next 8 Qs):
216,544 (221,644 in Q1 2022)
Proposed SF (Next 8 Qs): 1,183,275 (847,275 in Q1 2022)

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: Oak Brook Commons Medical 
Rating*:
4
Building SF:
81,544
Stories:
7
Completion:
Q1 2023
Developer/ Owner:
Not Listed

Top Eastern East-West Corridor Office Projects Proposed

1) Property: Oak Brook Commons  
Rating*: 
5
Building SF:
351,000
Stories:
13
Completion:
Q3 2024
Developer/ Owner:
Oakbrook Hines Development

 

Schaumburg Office Construction Projects Statistics

All-Time Annual Average Square Feet:  259,256 SF (262,448 SF in Q1 2022)
Delivered SF (Past 8 Qs):
180,000 SF (180,000 SF in Q1 2022)
Delivered SF (Next 8 Qs):
0 (0 in Q1 2022)
Proposed SF (Next 8 Qs): 732,228 (737,758 SF Q1 2022)

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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