Chicago Office Real Estate Report Q3 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 area, Schaumburg, in order to get an idea of how the markets perform in relation to one another.

The Schaumburg Area is the fifth-largest office submarket in the metro and contains many large-scale suburban office campuses.  There’s a larger presence of headquarters and regional/local offices for firms engaged in things like the manufacturing and electronics than traditional office in the Schaumburg market. Of course, there are still plenty of traditional office-using companies in the submarket.  Following a year of positive net absorption last year, in the last twelve months this market has seen a -424K SF net absorption.  Several suburban markets are still dealing with negative net absorption based on the flow of large corporations to Chicago to attract the millennial workforce.

I do believe as the millennial workforce gets married and has kids; we will see the trend shift back towards the suburbs. At the very least, the large corporations will have suburban satellite offices to accommodate the same workforce.  Potentially large co-working spaces for groups of employees in the suburbs.  Schaumburg Area asking rents are similar to the Central North, North DuPage and O’Hare submarkets, which all maintain average asking rents between $19/SF and $26/SF.”

Tony Russo, Principal @ Cawley Chicago

Chicago Office Real Estate Summary Q3 2019

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

12 Month Deliveries (Square Feet): 5.1 million
12 Month Net Absorption (Square Feet): 2.1 million
Vacancy Rate: 12%
12 Month Rent Growth: 2.4%

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: Union Station Redevelopment
Submarket:
West Loop
Leased SF:
500,000
Quarter:
Q4 2018
Tenant:
BMO Financial Group
Tenant Rep:
JLL

3) 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

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: 625 W Adams St
Submarket:
West Loop
Leased SF:
249,429
Quarter:
Q4 2018
Tenant:
CDW
Leasing Rep:
Newmark Knight Frank

Top Chicago Office Sales Statistics (Past 12 Months)

Sales Comparables: 1,052
Average Cap Rate: 
8.4%
Average Price/ SF: 
$159
Average Vacancy at Sale: 11.1%

Top Chicago Office Real Estate Property Sales

1) Property: OSW (1 S Wacker Dr)
*Rating: 4
Year Built: 1982
Building SF: 1,195,170
Vacancy: 
10.2%
Price (PSF): $310,000,000 ($259)
Cap Rate: Not Listed

2) Property: The National (125 S Clark St)
*Rating: 3
Year Built: 1930
Building SF: 577,000
Vacancy: 
19.3%
Price (PSF): $196,600,000 ($341)
Cap Rate: 5.9%

3) Property: 444 North Michigan Ave
*Rating: 4
Year Built: 1976
Building SF: 518,713
Vacancy: 
20.1%
Price (PSF): $138,000,000 ($266)
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: 39
Total Size: 
6,010,263 SF 
Percent of Inventory:
1.2%
Preleased: 40.4%

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

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

4) Property: 333 N Green St
Rating*:
4
Building SF:
553,412
Stories:
19
Completion:
Q1 2020
Developer/ Owner:
Sterling Bay

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 Schaumburg Office Real Estate Summary Q3 2019

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

12 Month Deliveries (Square Feet): 77,200
12 Month Net Absorption (Square Feet): -254,000
Vacancy Rate: 20.4%
12 Month Rent Growth: 0.7%

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

1) Property: Schaumburg Corporate Center (1515 E Woodfield Rd)
Rating: 
4
Deals:
9
Square Feet:
23,006
Vacancy:
23.9%
Net Absorption:
13,161

2) Property: 425 N Martingale Rd
Rating:
4
Deals:
6
Square Feet:
96,002
Vacancy:
5.2%
Net Absorption:
12,806

3) Property: One Woodfield Lake (1000 E Woodfield Rd)
Rating:
4
Deals:
4
Square Feet:
16,854
Vacancy:
85.4%
Net Absorption:
7,498

Top Schaumburg Office Sales Statistics (Past 12 Months)

Sales Comparables: 56
Average Cap Rate: 
9.1%
Average Price/ SF: 
$72
Average Vacancy at Sale: 7.2%

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

Schaumburg Office Construction Projects Statistics

All-Time Annual Average Square Feet: 46,348
Delivered SF (Past 4 Qs):
15,922
Delivered SF (Next 4 Qs):
0
Proposed SF (Next 4 Qs): 275,224

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: Medical Arts Campus (999 N Elmhurst Rd)
Rating*:
4
Building SF:
206,224
Stories:
3
Completion:
Q4 2020
Developer/ Owner:
Not Listed / DLC Management

2) Property: Randhurst Village (999 N Elmhurst Rd)
Rating*:
3
Building SF:
30,000
Stories:
1
Completion:
Q2 2020
Developer/ Owner:
Not Listed / DLC Management

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

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