Chicago Q3 2021 | Office Real Estate Report

Chicago Office Real Estate Market Report 2019

The coronavirus pandemic continues to depress demand in Chicago’s office market which has driven a sharp uptick in the amount of available space on the market. A historical high of 95.2 million SF of space (18.6% of total inventory) is currently available in Chicago, an increase of more than 13 million SF since 20Q1.

Given the significant rise in competitive space and an overall weaker demand environment, market rents have declined by approximately -0.2% over the past year. This performance is slightly ahead of the national market, which has seen an even stronger pullback in rents at -0.2%.

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 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.

While some small and medium size companies have remained active in the Chicagoland office market, the return back to the office for larger companies still remains uncertain. Many of these groups have pushed their return into 2022. We can expect to see some shifting activity in the early part of next year as these companies navigate how their office space will look, feel, and operate going forward.”

Justin Harris, Senior Associate @ Cawley Chicago

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

12 Month Deliveries (Square Feet): 3.6 million (4.1 million in Q2 2021)
12 Month Net Absorption (Square Feet): -6.3 million (-5.3 million in Q2 2021)
Vacancy Rate: 14.6% (14.0% in Q2 2021)
12 Month Rent Growth: -0.2% (-0.9% in Q2 2021)

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: Chatham Village Square
Submarket:
South Chicago
Leased SF:
126,500
Quarter:
Q1 2021
Tenant:
Discover

3) Property: Prudential Plaza
Submarket:
East Loop
Leased SF:
114,383
Quarter:
Q3 2021
Tenant:
SMS Assist, LLC
Tenant Rep:
Savills
Leasing Rep:
Sterling Bay

4) Property: 1911 – 1921 S Indiana Ave
Submarket:
South Chicago
Leased SF:
106,575
Quarter:
Q3 2021
Tenant:
CMS
Leasing Rep:
Imperial Realty Company

5) Property: Amnurst Lake Business Park
Submarket:
Far North
Leased SF:
99,657
Quarter:
Q2 2021
Tenant:
AbbVie Inc.

Top Chicago Office Sales Statistics (Past 12 Months)

Sales Comparables: 875 (712 in Q2 2021)
Average Cap Rate:
8.7% (8.7% in Q2 2021)
Average Price/ SF: 
$177 ($185 in Q2 2021)
Average Vacancy at Sale: 13.9% (11% in Q2 2021)

Top Chicago Office Real Estate Property Sales

1) Property: Randolph West (110 Carpenter St.)
*Rating: 4
Year Built: 2018
Building SF: 575,208
Vacancy:
0%
Price (PSF): $412,500,000 ($717)
Cap Rate: Not Listed

2) Property: 1K Fulton
*Rating: 4
Year Built: 2015
Building SF: 531,190
Vacancy:
5.2%
Price (PSF): $355,000,000 ($668)
Cap Rate: 4.7%

3) 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

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: 555 W Monroe St.
*Rating: 4
Year Built: 2002
Building SF: 429,316
Vacancy: 
0%
Price (PSF): $73,250,000 ($171)
Cap Rate: Not Listed

*Rating is 1-5, 5 being the best

 

Chicago Office Construction Projects Statistics

Properties Currently Under Construction: 17 (24 in Q2 2021)
Total Size: 
4,302,986 SF (4,561,781 SF in Q2 2021)
Percent of Inventory:
0.8% (0.9% in Q2 2021)
Preleased: 53.6% (44.5% in Q2 2021)

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

4) Property: Ally (1229 W Concord Pl)
Rating*:
5
Building SF:
280,000
Stories:
8
Completion:
Q2 2023
Developer/ Owner:
Sterling Bay

5) Property: 345 N Morgan St.
Rating*:
4
Building SF:
230,000
Stories:
10
Completion:
Q3 2022
Developer/ Owner:
Sterling Bay

*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): 106,000 (56,000 in Q2 2021)
12 Month Net Absorption (Square Feet): -492K (-1M in Q2 2021)
Vacancy Rate: 17.5% (17.5% in Q2 2021)
12 Month Rent Growth: +0.1% (-0.9% in Q2 2021)

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

1) Property: Corridors One (2651 Warrenville Rd)
Rating:
4
Deals:
2
Square Feet:
83,278
Vacancy:
12.9%
Net Absorption:
53,948

2) Property: Corridors Two (2655 Warrenville Rd)
Rating: 
4
Deals:
2
Square Feet:
23,000
Vacancy:
24.8%
Net Absorption:
41,107

3) Property: Commerce Office Bldg (814 Commerce Dr.)
Rating:
4
Deals:
4
Square Feet:
46,305
Vacancy:
46.9%
Net Absorption:
21,977

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

12 Month Deliveries (Square Feet): 127,000 (180,000 in Q2 2021)
12 Month Net Absorption (Square Feet): -686,000 (-677,000 in Q2 2021)
Vacancy Rate: 24.5% (23.5% in Q2 2021)
12 Month Rent Growth: 0% (-1.2% in Q2 2021)

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

1) Property: Crossroads Center (3701 Algonquin Rd)
Rating: 
4
Deals:
9
Square Feet:
22,918
Vacancy:
30%
Net Absorption:
17,404

2) Property: Schaumburg Tower II (1450 American Ln)
Rating:
4
Deals:
5
Square Feet:
76,746
Vacancy:
50.9%
Net Absorption:
16,894

3) Property: Chatham Centre (1901 N Roselle Rd)
Rating:
4
Deals:
7
Square Feet:
56,457
Vacancy:
8.2%
Net Absorption:
16,037

 

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

Sales Comparables: 72 (55 in Q2 2021)
Average Cap Rate: 
9.5% (8.5% in Q2 2021)
Average Price/ SF: 
$102 ($109 in Q2 2021)
Average Vacancy at Sale: 16.1% (13.6% in Q2 2021)

Top Eastern East-West Corridor Office Real Estate Property Sales

1) 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

2) Property: Advocate Good Samaritan (6840 Main St.)
*Rating: 3
Year Built: 2008
Building SF: 35,011
Vacancy: 
0%
Price (PSF): $17,390,000 ($497)
Cap Rate: Not Listed

 

Top Schaumburg Office Sales Statistics (Past 12 Months)

Sales Comparables: 51 (31 in Q2 2021)
Average Cap Rate: 
7.1% (7.7% in Q2 2021)
Average Price/ SF: 
$69 ($49 in Q2 2021)
Average Vacancy at Sale: 30% (28.5% in Q2 2021)

Top Schaumburg Office Real Estate Property Sales

1) Property: Barrington Orthopedic Surgery (929 W Higgins Rd)
*Rating: 3
Year Built: 2009
Building SF: 58,000
Vacancy: 
0%
Price (PSF): $19,767,000 ($341)
Cap Rate: Not Listed

2) Property: Arlington Heights Medical
*Rating: 3
Year Built: 1974
Building SF: 62,808
Vacancy: 
27.1%
Price (PSF): $13,500,000 ($215)
Cap Rate: Not Listed

3) Property: Barrington Orthopedics (120 E Higgins Rd)
*Rating: 2
Year Built: 1978
Building SF: 14,700
Vacancy: 
0%
Price (PSF): $5,012,000 ($341)
Cap Rate: Not Listed

 

Eastern East-West Corridor Office Construction Projects Statistics

All-Time Annual Average Square Feet: 280,460 (279,364 in Q2 2021)
Delivered SF (Past 8 Qs):
116,140 (65,920 in Q2 2021)
Delivered SF (Next 8 Qs):
140,100 (290,320 in Q2 2021)
Proposed SF (Next 8 Qs): 759,169 (911,814 in Q2 2021)

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: 229 Burlington Ave
Rating*:
3
Building SF:
2,600
Stories:
1
Completion:
Q1 2022
Developer/ Owner:
Holmes IV, LCC

Top Eastern East-West Corridor Office Projects Proposed

1) Property: Oak Brook Commons Offices 
Rating*:
4
Building SF:
300,000
Stories:
7
Completion:
Q3 2022
Developer/ Owner:
Hines / Hines

 

Schaumburg Office Construction Projects Statistics

All-Time Annual Average Square Feet: 263,532 (267,144 in Q2 2021)
Delivered SF (Past 8 Qs):
184,716 (184,716 in Q2 2021)
Delivered SF (Next 8 Qs):
0 (0 in Q2 2021)
Proposed SF (Next 8 Qs): 737,758 (982,288 Q2 2021)

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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