Chicago Office Real Estate Report: Leases, Sales & Construction Projects

Chicago Office Real Estate Market Report 2019

In 2020, Chicago’s office real estate market was seen as one of the Top-5 markets nationwide in terms of activity. It is one of the regions with the most office property construction* to date according to GlobeSt. The development projects are a sign of the confidence investors have in the The Windy City due to its advantageous location, and flourishing economy.

It should be noted that the full economic fallout of the current pandemic remains to be seen. However, our office real estate team believes that there are opportunities within the Chicago CRE market even during this challenging time.

For example, while unemployment rates spiked nationwide in Q1 and Q2 2020, the job market recovered losses heading into the latter part of the year. Chicago’s unemployment rate hit as high as 16.3% in June 2020, and recovered to 7% by November 2020 according to the U.S. Bureau of Labor Statistics. While that is high, Chicago’s unemployment rate could be much worse, especially given the situation and considering other major markets hit and held double digit unemployment rates throughout the year.

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 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.

For Chicago’s urban market, there are many dynamics and idiosyncrasies in play right now, and to characterize the market with any broad stroke statement would just be inadequate. Specific to the urban office sector, we have started to see an uptick of activity over the past 30 – 45 days with tenants in the market. Many of the tenants in the market today were in the market 3 – 6 months ago, but they hit the pause button with news of the pandemic.

Many of these tenants are businesses that need to maintain a presence in a physical location, and there is a need driving their search (existing lease expiration, need to expand, etc). Because of that need, these groups are relaunching their process. However, what we are observing is that many of these groups are taking a few steps back from where they left off 3 – 6 months ago, and they are now reevaluating. They are not only reevaluating the options they were considering, but their needs as a whole.

In doing so, these businesses are now considering options that may have been excluded, overlooked, or alternative solutions that were not originally considered.”

Zach Pruitt, Principal @ Cawley Chicago

Chicago Office Real Estate Lease Statistics Q4 2020 - Cawley Chicago Real Estate

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

12 Month Deliveries (Square Feet): 4.6 million (6.6 million in Q3 2020)
12 Month Net Absorption (Square Feet): -3.2 million (-1.5 million in Q3 2020)
Vacancy Rate: 13.4% (13.0% in Q3 2020)
12 Month Rent Growth: 3.5% (0.4% in Q3 2020)

Top Chicago Office Leases (Past 12 Months)

1) Property: Citadel Center
Submarket:
Central Loop
Leased SF:
533,889
Quarter:
Q1 2020
Tenant:
Citadel Enterprise America
Tenant Rep:
JLL
Leasing Rep:
The Telos Group LLC

2) Property: 800 W Fulton St
Submarket:
Fulton Market
Leased SF:
182,643
Quarter:
Q1 2020
Tenant:
Aspen Dental 
Leasing Rep:
Cushman & Wakefield

3) Property: Innovation Park
Submarket:
Central North
Leased SF:
152,312
Quarter:
Q1 2020
Tenant:
Medline
Leasing Rep:
JLL

4) Property: 600 West Chicago
Submarket: 
River North
Leased SF:
150,000
Quarter:
Q2 2020
Tenant:
Tempus Labs
Leasing Rep:
Sterling Bay

5) Property: One O’Hare Center
Submarket:
O’Hare
Leased SF:
140,831
Quarter:
Q4 2020
Tenant:
CCC Information Systems
Tenant Rep Company: JLL
Leasing Rep:
Shapack Partners

Chicago Office Real Estate Sales Statistics Q4 2020 - Cawley Chicago Real Estate

Top Chicago Office Sales Statistics (Past 12 Months)

Sales Comparables: 712 (765 in Q3 2020)
Average Cap Rate:
8.9% (8.8% in Q3 2020)
Average Price/ SF: 
$183 ($187 in Q3 2020)
Average Vacancy at Sale: 10.5% (10% in Q3 2020)

Top Chicago Office Real Estate Property Sales

1) Property: Randolph West (1045 W Randolph St)
*Rating: 4
Year Built: 2018
Building SF: 575,208
Vacancy:
2.7%
Price (PSF): $412,500,000 ($717)
Cap Rate: Not Listed

2) Property: 333 S Wabash Ave
*Rating: 4
Year Built: 1972
Building SF: 1,206,741
Vacancy: 
4.5%
Price (PSF): $376,000,000 ($312)
Cap Rate: Not Listed

3) Property: 225 Wacker
*Rating: 5
Year Built: 1989
Building SF: 650,812
Vacancy: 
3.8%
Price (PSF): $210,000,000 ($2323)
Cap Rate: 7.8%

4) Property: 1515 W Webster Ave
*Rating: 4
Year Built: 2018
Building SF: 207,000
Vacancy: 
0%
Price (PSF): $110,250,000 ($533)
Cap Rate: 5.4%

5) Property: 905 W Fulton Market
*Rating: 3
Year Built: 2020
Building SF: 98,000
Vacancy: 
0%
Price (PSF): $86,650,000 ($884)
Cap Rate: Not Listed

*Rating is 1-5, 5 being the best

View the Top 10 Recent Chicago Office Real Estate Sales

Chicago Office Real Estate Construction Statistics Q4 2020 - Cawley Chicago Real Estate

Chicago Office Construction Projects Statistics

Properties Currently Under Construction: 28 (33 in Q3 2020)
Total Size: 
5,345,932 SF (6,305,452 SF in Q3 2020)
Percent of Inventory:
1.1% (1.3% in Q3 2020)
Preleased: 42.7% (39.7% in Q2 2020)

Top Chicago Office Projects Under Construction

1) Property: BMO Tower (320 S Canal St)
Rating*:
5
Building SF:
1,497,000
Stories:
50
Completion:
Q1 2022
Developer/ Owner:
Riverside Inv & Development

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

3) Property: 800 W Fulton St
Rating*:
4
Building SF:
480,490
Stories:
19
Completion:
Q1 2021
Developer/ Owner:
Thor Equities

4) Property: Fulton Labs (400 N Aberdeen St)
Rating*:
5
Building SF:
423,454
Stories:
16
Completion:
Q4 2021
Developer/ Owner:
Trammell Crow Company

5) Property: 320 N Sangamon St 
Rating*:
5
Building SF:
301,979
Stories:
13
Completion:
Q1 2021
Developer/ Owner:
Tishman Speyer

*Rating is 1-5, 5 being the best

View the Top 10 Recent Chicago Office Real Estate Construction Projects

Chicago East West Corridor Real Estate Lease Statistics Q4 2020 - Cawley Chicago Real Estate

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

12 Month Deliveries (Square Feet): 0 (0 in Q3 2020)
12 Month Net Absorption (Square Feet): -209,000 (-209,000 in Q3 2020)
Vacancy Rate: 16.1% (15.2% in Q3 2020)
12 Month Rent Growth: +0.2% (+0.2% in Q3 2020)

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

1) Property: Oakmont Point East Building (700 Oakmont Ln)
Rating:
4
Deals: 
2
Square Feet:
56,000
Vacancy:
33.3%
Net Absorption:
84,000

2) Property: Oakbrook Terrace Tower (1 Tower Ln)
Rating: 
4
Deals:
5
Square Feet:
115,434
Vacancy:
14.7%
Net Absorption:
55,348

3) Property: Esplanade I (2001 Butterfield Rd)
Rating:
4
Deals:
7
Square Feet:
54,909
Vacancy:
13.7%
Net Absorption:
26,028

 

Chicago Schaumburg Office Real Estate Lease Statistics Q4 2020 - Cawley Chicago Real Estate

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

12 Month Deliveries (Square Feet): 180,000 (0 in Q3 2020)
12 Month Net Absorption (Square Feet): -750,000 (-587,000 in Q3 2020)
Vacancy Rate: 23.2% (23.8% in Q3 2020)
12 Month Rent Growth: -1.3% (-1.1% in Q3 2020)

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

1) Property: Windy Point I (1500 McConnor Pky)
Rating:
4
Deals: 
3
Square Feet:
28,564
Vacancy:
43.9%
Net Absorption:
49,199

2) Property: Schaumburg Tower II (1450 American Ln)
Rating: 
4
Deals:
3
Square Feet:
19,048
Vacancy:
54.6%
Net Absorption:
40,767

3) Property: 1933 North Meacham (1933 N Meacham Rd)
Rating:
4
Deals:
2
Square Feet:
9,295
Vacancy:
7.8%
Net Absorption:
9,518

 

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

Sales Comparables: 57 (54 in Q3 2020)
Average Cap Rate: 
8.6% (7.8% in Q3 2020)
Average Price/ SF: 
$114 ($158 in Q3 2020)
Average Vacancy at Sale: 12.4% (15.2% in Q3 2020)

Top Eastern East-West Corridor Office Real Estate Property Sales

1) Property: Finley Point (3333 Finley Rd)
*Rating:
4
Year Built: 
1998
Building SF:
223,771
Vacancy: 
17.5%
Price (PSF): 
$43,000,000 ($192)
Cap Rate: 
Not Listed

2) Property: 12 Salt Creek Ln
*Rating: 3
Year Built: 1970
Building SF: 60,997
Vacancy: 
21.6%
Price (PSF): $19,700,000 ($323)
Cap Rate: Not Listed

 

Top Schaumburg Office Sales Statistics (Past 12 Months)

Sales Comparables: 36 (33 in Q3 2020)
Average Cap Rate: 
8.4% (9.7% in Q3 2020)
Average Price/ SF: 
$43 ($59 in Q3 2020)
Average Vacancy at Sale: 23.6% (12.9% in Q2 2020)

Top Schaumburg Office Real Estate Property Sales

1) Property: Countryside Medical 
*Rating: 3
Year Built: 1970
Building SF: 96,187
Vacancy: 
14.1%
Price (PSF): $6,500,000 ($68)
Cap Rate: Not Listed

2) Property: Northwest Community (1632 W Central Rd)
*Rating: 2
Year Built: 1997
Building SF: 16,097
Vacancy: 
0%
Price (PSF): $4,800,000 ($298)
Cap Rate: Not Listed

3) Property: 2815 Forbs Ave
*Rating: 4
Year Built: 2007
Building SF: 95,237
Vacancy: 
57.2%
Price (PSF): $1,794,000 ($19)
Cap Rate: Not Listed

 

Eastern East-West Corridor Office Construction Projects Statistics

All-Time Annual Average Square Feet: 281,220 (284,060 in Q3 2020)
Delivered SF (Past 4 Qs):
9,920 (38,920 in Q3 2020)
Delivered SF (Next 4 Qs):
290,320 (240,100 in Q3 2020)
Proposed SF (Next 4 Qs): 1,085,420 (1,141,640 in Q3 2020)

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: 700 Oakmont Ln
Rating*:
4
Building SF:
100,000
Stories:
3
Completion:
Q2 2021
Developer/ Owner:
Ryan Companies US, Inc

Top Eastern East-West Corridor Office Projects Proposed

1) Property: Oak Brook Commons Offices 
Rating*:
4
Building SF:
220,000
Stories:
7
Completion:
Q2 2021
Developer/ Owner:
Hines / Not Listed

 

Schaumburg Office Construction Projects Statistics

All-Time Annual Average Square Feet: 269,916 (266,012 in Q3 2020)
Delivered SF (Past 4 Qs):
180,000 (91,000 in Q3 2020)
Delivered SF (Next 4 Qs):
5,000 (185,000 in Q3 2020)
Proposed SF (Next 4 Qs): 982,288 (677,224 in Q3 2020)

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 / VennPoint Real Estate, LLC

Top Schaumburg Office Projects Under Construction

1) Property: 1500 – 1532 N Hicks Rd
Rating*:
3
Building SF:
5,000
Stories:
1
Completion:
Q2 2021
Developer/ Owner:
Not Listed

Top Schaumburg Office Projects Proposed

1) Property: Northwest Point (NW Point Blvd)
Rating*:
3
Building SF:
250,000
Stories:
6
Completion:
Q2 2021
Developer/ Owner:
Not Listed / Not Listed

2) Property: Medical Arts Campus (999 N Elmhurst Rd)
Rating*:
4
Building SF:
209,224
Stories:
3
Completion:
Q4 2021
Developer/ Owner:
Not Listed / DLC Management

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

 

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