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 7.7% as of March 2021 according to the U.S. Bureau of Labor Statistics. While that is relatively 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 Leases Q1 2021 - Commercial Real Estate Statistics - Cawley Chicago

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

12 Month Deliveries (Square Feet): 4.1 million (4.6 million in Q4 2020)
12 Month Net Absorption (Square Feet): -5.3 million (-3.2 million in Q4 2020)
Vacancy Rate: 14.0% (13.4% in Q4 2020)
12 Month Rent Growth: -0.9% (3.5% in Q4 2020)

Top Chicago Office Leases (Past 12 Months)

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

2) 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

3) Property: 167 N Green St
Submarket:
Fulton Market
Leased SF:
140,000
Quarter:
Q2 2020
Tenant:
CCC Information Systems
Tenant Rep: 
Cushman & Wakefield
Leasing Rep:
Shapack Partners

4) Property: Catham Village Square
Submarket:
South Chicago
Leased SF:
126,500
Quarter:
Q1 2021
Tenant:
Discover
Leasing Rep:
Not Listed

5) Property: Mural Park
Submarket:
South Chicago
Leased SF:
103,106
Quarter:
Q2 2020
Tenant:
Health Care Service Corporation
Tenant Rep:
JLL

 

Chicago Office Real Estate Sales Q1 2021 - Commercial Real Estate Statistics - Cawley Chicago

Top Chicago Office Sales Statistics (Past 12 Months)

Sales Comparables: 712 (712 in Q4 2020)
Average Cap Rate:
8.7% (8.9% in Q4 2020)
Average Price/ SF: 
$185 ($183 in Q4 2020)
Average Vacancy at Sale: 11% (10.5% in Q4 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

 

Chicago Office Real Estate Construction Projects Q1 2021 - Commercial Real Estate Statistics - Cawley Chicago

Chicago Office Construction Projects Statistics

Properties Currently Under Construction: 24 (28 in Q4 2020)
Total Size: 
4,561,781 SF (5,345,932 SF in Q4 2020)
Percent of Inventory:
0.9% (1.1% in Q4 2020)
Preleased: 44.5% (42.7% in Q4 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: Fulton Labs (400 N Aberdeen St)
Rating*:
5
Building SF:
423,454
Stories:
16
Completion:
Q4 2021
Developer/ Owner:
Trammell Crow Company

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

5) Property: Old Town Park Three
Rating*:
5
Building SF:
175,000
Stories:
5
Completion:
Q2 2021
Developer/ Owner:
Omni Group

*Rating is 1-5, 5 being the best

 

Chicago Office Real Estate Leases Q1 2021 - East West Corridor Real Estate Statistics - Cawley Chicago

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

12 Month Deliveries (Square Feet): 56,000 (0 in Q4 2020)
12 Month Net Absorption (Square Feet): -1M (-209,000 in Q4 2020)
Vacancy Rate: 17.5% (16.1% in Q4 2020)
12 Month Rent Growth: -0.9% (+0.2% in Q4 2020)

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

1) Property: Highland Landmark II (3025 Highland Pky)
Rating:
4
Deals: 
1
Square Feet:
36,274
Vacancy:
16.8%
Net Absorption:
29,605

2) Property: One Lincoln Centre (18W140 Butterfield Rd)
Rating: 
4
Deals:
5
Square Feet:
29,269
Vacancy:
18.3%
Net Absorption:
11,749

3) Property: Mid America Plaza (2 Mid America Plz)
Rating:
4
Deals:
7
Square Feet: 
30,412
Vacancy:
15.4%
Net Absorption:
11,441

 

Chicago Office Real Estate Leases Q1 2021 - Schaumburg Real Estate Statistics - Cawley Chicago

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

12 Month Deliveries (Square Feet): 180,000 (180,000 in Q4 2020)
12 Month Net Absorption (Square Feet): -677,000 (-750,000 in Q4 2020)
Vacancy Rate: 23.5% (23.2% in Q4 2020)
12 Month Rent Growth: -1.2% (-1.3% in Q4 2020)

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

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

2) Property: Crossroads of Commerce III (3501 Algonquin Rd)
Rating:
4
Deals: 
3
Square Feet:
6,921
Vacancy:
47.1%
Net Absorption:
10,804

3) Property: 25 Northwest Point Bldg (25 NW Point Blvd)
Rating:
4
Deals:
5
Square Feet:
12,321
Vacancy:
20.5%
Net Absorption:
5,205

 

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

Sales Comparables: 55 (57 in Q4 2020)
Average Cap Rate: 
8.5% (8.6% in Q4 2020)
Average Price/ SF: 
$109 ($114 in Q4 2020)
Average Vacancy at Sale: 13.6% (12.4% in Q4 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: 31 (36 in Q4 2020)
Average Cap Rate: 
7.7% (8.4% in Q4 2020)
Average Price/ SF: 
$49 ($43 in Q4 2020)
Average Vacancy at Sale: 28.5% (23.6% in Q2 2020)

Top Schaumburg Office Real Estate Property Sales

1) Property: Remington Office Court (1305 – 1375 Remington Rd)
*Rating: 3
Year Built: 1990
Building SF: 83,370
Vacancy: 
0%
Price (PSF): $6,500,000 ($78)
Cap Rate: 9.1%

2) 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

3) Property: 1355 Remington Rd
*Rating: 3
Year Built: 1979
Building SF: 21,203
Vacancy: 
5.7%
Price (PSF): $6,194,000 ($292)
Cap Rate: 8%

 

Eastern East-West Corridor Office Construction Projects Statistics

All-Time Annual Average Square Feet: 279,364 (281,220 in Q4 2020)
Delivered SF (Past 8 Qs):
65,920 (9,920 in Q4 2020)
Delivered SF (Next 8 Qs):
290,320 (290,320 in Q4 2020)
Proposed SF (Next 8 Qs): 911,814 (1,085,420 in Q4 2020)

Top Eastern East-West Corridor Office Project Deliveries

1) Property: Compass Health Center (750 Oakmont Dr)
Rating*:
4
Building SF:
56,000
Stories:
3
Completion:
Q1 2021
Developer/ Owner:
Ryan Companies

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: 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 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: 267,144 (269,916 in Q4 2020)
Delivered SF (Past 8 Qs):
184,716 (180,000 in Q4 2020)
Delivered SF (Next 8 Qs):
0 (5,000 in Q4 2020)
Proposed SF (Next 8 Qs): 982,288 (982,288in Q4 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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