Chicago Office Real Estate Report Q4 2019: 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.

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.

Heading into 2020 we continue to see solid market leasing fundamentals mainly in the Class A and higher-end Class B asset classes.  These underlying fundaments are especially true within those buildings who have recent renovations and more modern updates.

Furthermore, for building owners, there is a clearly a positive rental rate advantage for those suburban markets closer to interstate infrastructure, train system and the
city. We continue to see small and large companies alike wanting and needing a suburban presence, but looking for the amenities they might see within the downtown Chicago market. This is true both within their leased premises, within the building common areas, and in nearby restaurant and retail developments.”

Rawly Lantz, Principal @ Cawley Chicago

Chicago Office Real Estate Summary Q4 2019

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

12 Month Deliveries (Square Feet): 5 million (5.1 million in Q3 2019)
12 Month Net Absorption (Square Feet): 1.1 million (2.1 million in Q3 2019)
Vacancy Rate: 12.3% (12% in Q3 2019)
12 Month Rent Growth: 0.9% (2.4% in Q3 2019)

Top Chicago Office Leases (Past 12 Months)

1) Property: Willis Tower
Submarket:
West Loop
Leased SF:
816,301
Quarter:
Q1 2019
Tenant:
United Continental Holdings
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: USG Building
Submarket:
West Loop
Leased SF:
220,800
Quarter:
Q1 2019
Tenant:
USG Corporation
Tenant Rep: Cushman & Wakefield 
Leasing Rep:
The Telos Group LLC

5) Property: 311 W Monroe St
Submarket:
West Loop
Leased SF:
208,000
Quarter:
Q3 2019
Tenant:
West Monroe Partners
Leasing Rep:
Sterling Bay

Top Chicago Office Sales Statistics (Past 12 Months)

Sales Comparables: 1,010 (1,052 in Q3 2019)
Average Cap Rate: 
8.7% (8.4% in Q3 2019)
Average Price/ SF: 
$163 ($159 in Q3 2019)
Average Vacancy at Sale: 11.7% (11.1% in Q3 2019)

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: Esplanade II (3500 Lacey Rd)
*Rating: 4
Year Built: 1992
Building SF: 583,982
Vacancy: 
1.2%
Price (PSF): $128,500,000 ($220)
Cap Rate: Not Listed

4) Property: Burnham Center (111 W Washington St)
*Rating: 4
Year Built: 1914
Building SF: 584,149
Vacancy: 
5.6%
Price (PSF): $80,250,000 ($137)
Cap Rate: Not Listed

5) Property: Union Tower (550 W Van Buren St)
*Rating: 4
Year Built: 2001
Building SF: 332,608
Vacancy: 
13.6%
Price (PSF): $78,000,000
Cap Rate: Not Listed

*Rating is 1-5, 5 being the best

Chicago Office Construction Projects Statistics

Properties Currently Under Construction: 37 (39 in Q3 2019)
Total Size: 
7,140,370 SF (6,010,263 SF in Q3 2019)
Percent of Inventory:
1.4% (1.2% in Q3 2019)
Preleased: 36.3% (40.4% in Q3 2019)

Top Chicago Office Projects Under Construction

1) Property: 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: 24 E Washington St
Rating*:
5
Building SF:
652,452
Stories:
13
Completion:
Q2 2020
Developer/ Owner:
Not Listed / Brookfield Asset Management Inc

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

Chicago Office Real Estate Eastern East-West Corridor - Cawley Chicago

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

12 Month Deliveries (Square Feet): 0
12 Month Net Absorption (Square Feet): -645,000
Vacancy Rate: 14.2%
12 Month Rent Growth: +1.5%

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

1) Property: Finley Point (3333 Finley Rd)
Rating: 
4
Deals:
3
Square Feet:
56,852
Vacancy:
38%
Net Absorption:
9.893

2) Property: Corridors Two (2655 Warrenville Rd)
Rating:
4
Deals: 
3
Square Feet:
149,896
Vacancy:
4.2%
Net Absorption:
0

3) Property: Corridors One (2651 Warrenville Rd)
Rating:
4
Deals:
2
Square Feet:
4,738
Vacancy:
7.6%
Net Absorption:
0

Chicago Schaumburg Office Real Estate Summary Q4 2019

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

12 Month Deliveries (Square Feet): 14,300 (77,200 in Q3 2019)
12 Month Net Absorption (Square Feet): -502,000 (-254,000 in Q3 2019)
Vacancy Rate: 21.5% (20.4% in Q3 2019)
12 Month Rent Growth: -0.3% (0.7% in Q3 2019)

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

1) Property: Schaumburg Corporate Center (1515 E Woodfield Rd)
Rating: 
4
Deals:
3
Square Feet:
18,414
Vacancy:
31.8%
Net Absorption:
8,756

2) Property: Tower III (1701 Golf Rd)
Rating:
4
Deals: 
2
Square Feet:
259,164
Vacancy:
32.5%
Net Absorption:
0

3) Property: Woodfield Preserve II (20 N Martingale Rd)
Rating:
4
Deals:
2
Square Feet:
11,764
Vacancy:
18.8%
Net Absorption:
0

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

Sales Comparables: 73
Average Cap Rate: 
8.9%
Average Price/ SF: 
$141
Average Vacancy at Sale: 29.6%

Top Eastern East-West Corridor Office Real Estate Property Sales

1) Property: Esplanade II (3500 Lacey Rd)
*Rating:
4
Year Built: 
1992
Building SF:
583,982
Vacancy: 
1.2%
Price (PSF): 
$128,500,000 ($220)
Cap Rate: 
Not Listed

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: 54 (56 in Q3 2019)
Average Cap Rate: 
9.3% (9.1% in Q3 2019)
Average Price/ SF: 
$68 ($72 in Q3 2019)
Average Vacancy at Sale: 6.7% (7.2% in Q3 2019)

Top Schaumburg Office Real Estate Property Sales

1) Property: 2600 Forbs Ave
*Rating: 4
Year Built: 2008
Building SF: 90,000
Vacancy: 
0%
Price (PSF): $7,385,000 ($82)
Cap Rate: Not Listed

2) 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

3) Property: 2359 Hassell Rd
*Rating: 3
Year Built: Not Listed
Building SF: 27,000
Vacancy: 
0%
Price (PSF): $6,450,000 ($239)
Cap Rate: Not Listed

Eastern East-West Corridor Office Construction Projects Statistics

All-Time Annual Average Square Feet: 292,960
Delivered SF (Past 4 Qs):
127,293
Delivered SF (Next 4 Qs):
135,000
Proposed SF (Next 4 Qs): 877,955

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

2) Property: The York Building (134 N York St)
Rating*:
3
Building SF:
34,800
Stories:
3
Completion:
Q2 2018
Developer/ Owner:
Not Listed / First Course Productions

Top Eastern East-West Corridor Office Projects Under Construction

1) Property: Hub Group Building (2000 Clearwater Dr)
Rating*:
5
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: 286,364 (46,348 in Q3 2019)
Delivered SF (Past 4 Qs):
106,922 (15,922 in Q3 2019)
Delivered SF (Next 4 Qs):
0 (0 in Q3 2019)
Proposed SF (Next 4 Qs): 695,224 (275,224 in Q3 2019)

Top Schaumburg Office Projects Delivered

1) Property: One Arlington (3400 W Stonegate Blvd)
Rating*:
3
Building SF:
15,922
Stories:
1
Completion:
Q1 2019
Developer/ Owner:
Not Listed / 25N Coworking

2) 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 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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