Monday, April 18, 2011

Grubb & Ellis: Chicago Office Market Snapshot, First Quarter 2011


CHICAGO, IL--The following summary from Grubb & Ellis Co. is designed to provide a brief overview of the Chicago metro office market during the first quarter of 2011.

 For more information or to speak with one of the company’s local market experts, please contact Erin Mays at 312.698.6735 or via email at


The region’s vacancy rate dropped 20 basis points to 20.6 percent from the previous quarter, posting 16,300 square feet of positive absorption.  

With the delivery of a 48,000-square-foot build-to-suit project in the I-88 East submarket during the first quarter 2011, the area’s construction pipeline has nearly been exhausted, leaving no new construction underway thus far in 2011 with the exception of Astellas Pharma U.S. Inc. new build-to-suit headquarters in Glenview.

Average Class A asking rental rates for the region dropped $0.31 from the fourth quarter 2010 to $29.44 per square foot.

The investment market continued to see increased activity as debt & equity players showed a willingness to take more calculated risks.  A number of undercapitalized owners, particularly those in the suburban markets, have been pushed to give their keys back to the lender as well-funded and recapitalized landlords reset the bar on rental rates.


The vacancy rate in the Chicago CBD office market decreased 40 basis points from the previous quarter to 17 percent, with the market posting nearly 130,000 square feet of positive net absorption.



The vacancy rate in the suburbs increased 20 basis points from the previous quarter to 25 percent after negative net absorption totaling more than 110,000 square feet posted to the market.

Average Class A asking rental rates in the Chicago suburbs stood at $24.14 per square foot, an increase of $0.38 from the previous quarter.


  • Encouraged by improved occupancy, owners of Class A+ assets in the CBD have become slightly more aggressive with their asking rates.
  •  While not representing an overall market trend, their efforts are likely to trickle down to all building classes, indicating continued improvement in the downtown market.

  • In the suburban market, large, well-capitalized buildings are resetting rental rates, enabling them to more effectively compete for tenants with very attractive offers.

  • Going forward, researchers expect modest improvement through the balance of the year.

  • Remaining sublease space will continue to push downward pressure on rental rates, but the lack of new development projects positions the region well for recovery.

To access the full Chicago Metro Office Trends report and other Grubb & Ellis research publications, visit

Class A average asking rental rates decreased $0.83 per square foot from the previous quarter, full service gross, to $35.82 per square foot.

No comments: