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

Chicago Office Real Estate Market Report 2019

This year, Chicago’s office real estate market is 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 economic fallout of the current pandemic remains to be seen. However, our office team believes that there are opportunities within the Chicago commercial real estate market even during this challenging time.

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. Based on where we are today and the uncertainty that still is ahead, we feel strongly this trend will continue, and emerging submarkets around Chicago will see an upward trend.

Zach Pruitt, Principal @ Cawley Chicago

Read Zach’s Full Article about Chicago’s Office Real Estate Market in the Pandemic

Cawley Chicago Office Real Estate Lease Stats Q2 2020

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

12 Month Deliveries (Square Feet): 5.3 million (5.6 million in Q1 2020)
12 Month Net Absorption (Square Feet): 340,000 (2.7 million in Q1 2020)
Vacancy Rate: 12.5% (12.2% in Q1 2020)
12 Month Rent Growth: 2.0% (2.3% in Q1 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: The Old Post Office
Submarket:
West Loop
Leased SF:
463,000
Quarter:
Q3 2019
Tenant:
Uber
Tenant Rep:
CBRE
Leasing Rep:
The Telos Group LLC

3) Property: 311 W Monroe St
Submarket:
West Loop
Leased SF:
270,123
Quarter:
Q4 2019
Tenant:
West Monroe Partners LLC
Leasing Rep:
Sterling Bay

4) Property: 311 W Monroe St
Submarket:
West Loop
Leased SF:
270,123
Quarter:
Q4 2019
Tenant:
West Monroe Partners LLC
Leasing Rep:
Sterling Bay

5) Property: The Old Post Office
Submarket:
West Loop
Leased SF:
192,000
Quarter:
Q4 2019
Tenant:
PepsiCo
Leasing Rep:
The Telos Group LLC

Cawley Chicago Office Real Estate Sales Stats Q2 2020

Top Chicago Office Sales Statistics (Past 12 Months)

Sales Comparables: 843 (925 in Q1 2020)
Average Cap Rate:
9.2% (8.9% in Q1 2020)
Average Price/ SF: 
$171 ($165 in Q1 2020)
Average Vacancy at Sale: 10% (10.9% in Q1 2020)

Top Chicago Office Real Estate Property Sales

1) Property: 500 W Monroe St
*Rating: 4
Year Built: 1992
Building SF: 967,000
Vacancy:
0.9%
Price (PSF): $412,000,000 ($426)
Cap Rate: 7.0%

2) Property: 190 S LaSalle Street
*Rating: 4
Year Built: 1986
Building SF: 798,782
Vacancy: 
5.2%
Price (PSF): $230,000,000 ($288)
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: 3500 Lacey Rd
*Rating: 4
Year Built: 1992
Building SF: 583,982
Vacancy: 
1.2%
Price (PSF): $128,500,000 ($220)
Cap Rate: 7.7%

5) Property: 905 W Fulton Market
*Rating: 3
Year Built: 2020
Building SF: 98,000
Vacancy: 
10.8%
Price (PSF): $85,500,00 ($872)
Cap Rate: Not Listed

*Rating is 1-5, 5 being the best

Cawley Chicago Office Real Estate Construction Stats Q2 2020

Chicago Office Construction Projects Statistics

Properties Currently Under Construction: 28 (32 in Q1 2020)
Total Size: 
7,000,181 SF (7,384,083 SF in Q1 2020)
Percent of Inventory:
1.4% (1.5% in Q1 2020)
Preleased: 48.9% (46.9% in Q1 2020)

Top Chicago Office Projects Under Construction

1) Property: Bank of America Tower (110 North Wacker)
Rating*:
5
Building SF:
1,546,909
Stories:
55
Completion:
Q1 2020
Developer/ Owner:
Riverside Inv & Development / The Howard Hughes Corporation

2) Property: BMO Tower (320 S Canal St)
Rating*:
5
Building SF:
1,463,000
Stories:
50
Completion:
Q1  2022
Developer/ Owner:
Riverside Investment & Development

3) Property: Salesforce Tower Chicago (333 W Wolf Point Plz)
Rating*:
5
Building SF:
1,200,202
Stories:
59
Completion:
Q1 2023
Developer/ Owner:
Shapack Partners / Walton Street Capital, LLC

4) Property: 167 N Green St
Rating*:
5
Building SF:
600,000
Stories:
17
Completion:
Q4 2020
Developer/ Owner:
Shapack Partners / Walton Street Capital LLC

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

*Rating is 1-5, 5 being the best

See the Top 10 Chicago Office Projects Currently Under Construction

Cawley Chicago East-West Corridor Office Real Estate Stats Q2 2020

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

12 Month Deliveries (Square Feet): 0 (0 in Q1 2020)
12 Month Net Absorption (Square Feet): -287,000 (-538,000 in Q1 2020)
Vacancy Rate: 14.9% (14.6% in Q1 2020)
12 Month Rent Growth: +1.5% (+2.3% in Q1 2020)

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

1) Property: Oakbrook Terrace Tower (1 Tower Ln)
Rating: 
4
Deals:
8
Square Feet:
211,216
Vacancy:
16.4%
Net Absorption:
44,729

2) Property: Finley Point (333 Finley Rd)
Rating:
4
Deals: 
3
Square Feet:
52,852
Vacancy:
35.6%
Net Absorption:
36,060

3) Property: Oakmont Point East Building (700 Oakmont Ln)
Rating:
4
Deals:
2
Square Feet:
56,000
Vacancy:
86.7%
Net Absorption:
28,000

Cawley Chicago Schaumburg Office Real Estate Stats Q2 2020

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

12 Month Deliveries (Square Feet): 0 (0 in Q1 2020)
12 Month Net Absorption (Square Feet): -582,000 (-183,000 in Q1 2020)
Vacancy Rate: 22.5% (21.5% in Q1 2020)
12 Month Rent Growth: +0.7% (-2% in Q1 2020)

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

1) Property: Schaumburg Towers (1450 American Ln)
Rating: 
4
Deals:
5
Square Feet:
73,892
Vacancy:
62.2%
Net Absorption:
55,329

2) Property: One Woodfield Lake (1000 E Woodfield Rd)
Rating:
4
Deals: 
4
Square Feet:
16,854
Vacancy:
86.1%
Net Absorption:
14,942

3) Property: 1933 North Meacham (1933 N Meacham Rd)
Rating:
4
Deals:
3
Square Feet:
12,479
Vacancy:
10.1%
Net Absorption:
5,866

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

Sales Comparables: 57 (70 in Q1 2020)
Average Cap Rate: 
8.1 (8.1% in Q1 2020)
Average Price/ SF: 
$145 ($139 in Q1 2020)
Average Vacancy at Sale: 18.9% (31.0% in Q1 2020)

Top Eastern East-West Corridor Office Real Estate Property Sales

1) Property: 3500 Lacey Rd
*Rating:
4
Year Built: 
1992
Building SF:
583,982
Vacancy: 
1.2%
Price (PSF): 
$128,500,000 ($220)
Cap Rate: 
7.7%

2) Property: One Lincoln Centre (18W140 Butterfield Rd)
*Rating: 4
Year Built: 1986
Building SF: 317,525
Vacancy: 
21.4%
Price (PSF): $45,000,000 ($142)
Cap Rate: Not Listed

3) Property: 815 Pasquinelli Dr
*Rating: 3
Year Built: Not Listed
Building SF: 36,842
Vacancy: 
0%
Price (PSF): $17,350,000 ($471)
Cap Rate: Not Listed

Top Schaumburg Office Sales Statistics (Past 12 Months)

Sales Comparables: 38 (52 in Q1 2020)
Average Cap Rate: 
8.2% (7.8% in Q1 2020)
Average Price/ SF: 
$86 ($83 in Q1 2020)
Average Vacancy at Sale: 3.3% (4.8% in Q1 2020)

Top Schaumburg Office Real Estate Property Sales

1) Property: 141 NW Point Blvd 
*Rating: 3
Year Built: 1982
Building SF: 114,642
Vacancy: 
0%
Price (PSF): $7,000,000 ($61)
Cap Rate: Not Listed

2) Property: 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: 601 – 641 S Roselle Rd
*Rating: 3
Year Built: 1978
Building SF: 10,842
Vacancy: 
7.4%
Price (PSF): $3,740,000 ($345)
Cap Rate: 5.2%

Eastern East-West Corridor Office Construction Projects Statistics

All-Time Annual Average Square Feet: 286,960 (290,120 in Q1 2020)
Delivered SF (Past 4 Qs):
38,920 (125,788 in Q1 2020)
Delivered SF (Next 4 Qs):
240,100 (240,100 in Q1 2020)
Proposed SF (Next 4 Qs): 1,011,140 (728,175 in Q1 2020)

Top Eastern East-West Corridor Office Projects Delivered

1) Property: 172 E Schiller St
Rating*:
4
Building SF:
29,000
Stories:
2
Completion:
Q4 2018
Developer/ Owner:
Ryan Companies / Bob Babiak

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:
Q3 2020
Developer/ Owner:
Not Listed / Hub Group, 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

2) Property: 600 E Butterfield Rd 
Rating*:
4
Building SF:
207,955
Stories:
1
Completion:
Q2 2021
Developer/ Owner:
Not Listed / Northern Baptist Theological Seminary

Schaumburg Office Construction Projects Statistics

All-Time Annual Average Square Feet: 265,144 (279,112 in Q1 2020)
Delivered SF (Past 4 Qs):
91,000 (106,922 in Q1 2020)
Delivered SF (Next 4 Qs):
185,000 (180,000 in Q1 2020)
Proposed SF (Next 4 Qs): 677,224 (695,224 in Q1 2020)

Top Schaumburg Office Projects Delivered

1) Property: James Paul Petri Public Works (450 E Devon Ave)
Rating*:
4
Building SF:
91,000
Stories:
1
Completion:
Q4 2018
Developer/ Owner:
Not Listed / Village of Elk Grove

Top Schaumburg Office Projects Under Construction

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 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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