Chicago’s commercial office space below national average

Office space availability in Chicago is above the national average.

The second quarter was a slight improvement for Chicago proprietors of commercial office space, according to an analysis from Studley, but a single second quarter boost still can't make up for months of lethargy.

Studley's report stated that the overall office availability fell for the first time since the third quarter of 2012, dropping 0.4 percent to 24 percent from the previous quarter.

The analysis revealed that more than 20 percent of commercial office space in Chicagoland is available in every market except for O'Hare, which posts a 19.6 percent availability level. The national availability for commercial space is 17.4 percent.

"It's remained a bloodbath; particularly in the northwest and in the class B space," Joe Learner, executive vice president and a branch manager of Studley's Chicago office, told "There is activity in many of the better class A buildings, but it's not really absorption. It's really just musical chairs. Many times, they leave as much space as they're taking."

Over that same time, asking rents dipped 1.6 percent to $20.08 per-square-foot and class A rents decreased 2.1 percent to $21.19 per-square-foot. In contrast, the national average commercial renters pay is $30.93 per-square-foot.

The per-square-foot cost of office space also hinges on what type of property it is. Existing office space is going $20.30, while sublet property clocks in at $15.76 and new property goes for $24.06.

Many companies have left Illinois for better tax breaks in nearby states, and that's led to largely vacant corporate campuses. Studley pointed to the North Corridor, which "made some headway filling some of this vacancy as Illinois Tool Works announced plans to buy a portion (58 acres and 500,000 sf) of the former Kraft Foods campus in Glenview," the report stated.

This region still stumbling
The northwest region is struggling the most out of any Chicago sector. The arrival of Capital Financial Corp., gave the area reason for optimism when it leased approximately 150,000-square-feet at the Atrium Corporate Center in Rolling Meadows, but Capital Financial left a space in Elmhurst to do so.

The northwest has the highest availability rate in class A at nearly 31 percent and the the class A asking price for rent dropped 6.9 percent quarter-over-quarter to $19.07 per-square-foot, which is the lowest asking price since the change of the century.

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