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4Q16 Suburban Chicago Hospital & On-Campus Medical Office Summary

Suburban Chicago’s medical office market continued to thrive through the end of 2016, but some uncertainty awaits in 2017.

Check out Bradford Allen’s latest report here.

 

2Q16 Hospital & On-Campus Medical Office Summary

At mid-year 2016 the total occupancy for on-campus medical office space in suburban Chicago remained flat from the start of the year. Activity and overall deal velocity has remained strong, but the vast majority of Q1 and Q2 deals have not resulted in any positive space absorption. This is due to several ongoing trends:

  • “Retail” consolidations of formerly separate offices, usually occurring after multiple independent practices become employed by the same hospital system.
  • General space reductions, usually by 5-15% of the total square footage. This stems from medical tenants no longer needing to house medical records on-site, a reduced demand for large private physician offices, and medical equipment shrinking in size due to technological advancements.

There is still ongoing demand for regional hospital systems to continue to merge operations (Northshore and Advocate are the most recent), that these trends in health care real estate will likely continue, resulting in flat absorption rates for vacant space.

 

Click here to see full report. 

 

Chicago Commercial Real Estate – In the News

Jill’s Top 5 Articles From This Week

  1. Bradford Allen Realty Services has arranged a 7,700-square-foot lease renewal in Northbrook, approximately 25 miles northwest of Chicago. Lubin-Bergman Organization Inc. will continue occupying its headquarters in a building located at 5 Revere Drive. – REBusiness
  2. What trends in architecture and design for commercial real estate will we see in 2016? Based on the opinion of experts in the field, here are some possibilities: – Chicago Architecture Blog
  3. Due to maxing out on current space and staff, many companies will need to expand their office footprint in order to accommodate growth this year, PM Realty Group‘s EVP and managing director Jim Proehl tells GlobeSt.com.
  4. Why 2016 is looking like 2015 all over again. The new year in Chicago business is starting out like the old one, with another multibillion-dollar buyout of a local company in the works. Baxalta is in advanced talks to sell itself to Shire for nearly $33 billion in cash and stock, according to Bloomberg News and the Wall Street Journal. – Crain’s Chciago 
  5. Chicago-based law firm Clark Hill PLC has doubled its space in its new lease of 71,813 square feet at Prudential Plaza, 130 E. Randolph Street in Chicago.  The move marks a major expansion for the firm. – REJournals
 

Chicago Commercial Real Estate – In the News

Jill’s Top 5 Articles From This Week

  1. The beginning of a tightening cycle is a positive sign for the way experts view the economy, Auction.com‘s chief economist Peter Muoio tells GlobeSt.com. The firm recently released its latest Commercial Real Estate Nowcast, which revealed that commercial valuations in November increased 46 basis points from October. – Globe St.
  2. This morning, the U.S. Bureau of Labor Statistics (BLS) released preliminary November 2015 unemployment rates for all Metropolitan Statistical Areas (MSAs). The unemployment rate measures the percentage of the local workforce that reports itself as being out of work, information that the government collects by surveying households. – World Business Chicago
  3. The downtown office market continues to heat up as real estate powerhouse John Buck Company has announced a deal for Chicago-based CNA Financial to anchor its upcoming 35-story Class A office tower at 151 N. Franklin. – Curbed Chicago
  4. But the office market was strong too, highlighted by the $1.3 billion sale of the Willis Tower in June. Office landlords were also busy chasing big corporate tenants like Kraft Heinz, ConAgra and Motorola Solutions, which all decided to move their headquarters downtown. Here’s a look back at 10 of the biggest deals of the year. – Crain’s Chicago
  5. Experts say it’s time to move in these design directions to keep workers engaged and get the most out of your office space. You might think that the reams of analysis done on office space would have by now turned every workplace into a humming hive of engagement and productivity. Earlier this year, we even got an advance look at a research paper that outlined alternative design strategies to make workers happier. – Fast Company
 

Chicago Commercial Real Estate – In the News

Jill’s Top 5 Articles From This Week

  1. This week in real estate numbers – Bisnow
  2. More foreign money than ever has poured into Chicago-area real estate in 2015, and the year isn’t over yet. International investors paid $3.27 billion for properties here through last week, already well above the full-year record of $2.18 billion set in 2013, according to New York-based research firm Real Capital Analytics. – Crain’s Chicago
  3. CBRE Arranges 265,000 SF Lease Extension for Law Firm Mayer Brown in Chicago – REBusiness
  4. VelocityEHS, a growing Chicago-based software provider, has decided to move its global headquarters from 350 N. Orleans St. in River North to a new space across the street in the Merchandise Mart. The company will sublease more than 90,000 square feet of the Motorola Mobility top floor offices, further boosting the building’s reputation as a hub for the city’s tech scene. – Globe St.
  5. From all sides of the country, these new complexes give a whole new meaning to the term “office space.” With the help of our pals at Reis, Bisnow put together this list of the 10 biggest office complexes set to open for business in 2016. – Bisnow