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Monthly Archives: July 2016

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.

 

Mid-Year 2016 Chicago Suburban Office Market Report

This quarter in the suburban market major leases signed by Paylocity, US Cellular and Combined Insurance helped leasing activity for the suburbs reach over 2.5 million square feet. Absorption dropped following Kraft Heinz’s move out of 650,000 square feet in the North Central region. Oak Brook based McDonald’s announced that they too would be moving operations downtown, relocating to the former Harpo Studios in Fulton Market.

 

To read the full report click here.

 

Second Quarter 2016 Chicago Downtown Office Market Report

This quarter in the downtown market absorption reached 262,000 square feet aided by moves from ConAgra and ACGME. Thanks to this positive absorption vacancy dropped to 11.9 percent, the third consecutive quarter since 2008 to reach that low. Rental rates remained steady, declining a nominal $.17 to $36.23.

 

To read the full report click here.