Tag Archives: Market Report

Year-End 24 Suburban Office Market Report

Bradford Allen is pleased to share with you our latest office market report.

The second half of the year in the suburban office market:

  • Vacancy was effectively unchanged in the second half of the year at 24.6%.
  • Year-end direct net absorption was negative 1.4 million square feet, significantly worse than 2023’s negative 173,000 square feet.
  • Much of the market’s distress lies in older, poorly located properties, which only account for 2.7% of the market’s overall inventory.
  • Investment sales activity was up this year as $368 million traded hands, with properties selling for an average discount of 17% from their previous purchase price.

 

Q4/24 Downtown Chicago Office Market Report

Bradford Allen is pleased to share with you our latest office market report.

This quarter in the downtown office market:

  • 2024 net absorption was negative 3.6 million square feet, nearly double the negative 1.9 million square feet recorded in 2023.
  • Direct vacancy continued to climb, reaching a record high of 23.2%.
  • The average gross asking rates were $42.85 per square foot.
  • Spec suites and full build-outs continued to outperform the market, accounting for an increasing share of leasing activity—28.6% in 2024 up from 9% in 2019.

 

Q3/24 Downtown Chicago Office Market Report

Bradford Allen is pleased to share with you our latest office market report. 

It was a familiar story in Q3 for Chicago’s downtown office market as headline statistics didn’t improve, nor degrade, materially over the prior quarter. 

  • Absorption was negative 600,000 square feet, bringing the year-to-date absorption to negative 2.6 million square feet.
  • The direct vacancy rate in the CBD reached 22.5%.
  • The CBD’s average gross asking rate dropped slightly to $42.85 per square foot.
  • Well-capitalized owners continued to withstand market fluctuations, attracting and retaining a strong tenant base.

 

Mid-Year 24 Suburban Chicago Office Market Report

Bradford Allen is pleased to share with you our latest office market report.

The second half of the year in the suburban office market:

  • Absorption levels declined as -800,000 square feet was absorbed through the first half of 2024.
  • The direct vacancy rate held steady at 24%.
  • Available sublease space on the market decreased to 2.7 million square feet.
  • The average gross asking rate is $27 per square foot.

 

Q2/24 Downtown Chicago Office Market Report

Bradford Allen is pleased to share with you our latest office market report.

This quarter in the downtown office market:

  • Absorption improved but remained negative with -67,000 square feet absorbed through Q2/24, resulting in a total of -1.9 million square feet through the first half of 2024.
  • The direct vacancy rate reached 22% in Chicago’s CBD.
  • Demand for move-in-ready suites has increased significantly over the past several years.
  • The average gross asking rate for the CBD held steady at $43 per square foot.

 

Q1 Chicago Office Report: CBD Rents Hold Steady as Vacancy Rate Continues to Rise

CHICAGO — Bradford Allen, a national full-service real estate firm, today released its Q1/24 Downtown Chicago Office Market Report showing that CBD average gross asking rents held steady at $43 per square foot. At the same time, the office vacancy rate continued to rise, surpassing 21%, and demand was soft, with negative absorption of 1.4 million square feet.

Leasing volume remained below historic levels, with only 1.3 million square feet leased in the first quarter versus 2.1 million square feet in first-quarter 2023 and 4.9 million square feet in first-quarter 2019, before the pandemic. Continuing a post-pandemic trend, many tenants are seeking prebuilt, move-in ready suites. Last quarter, 38% of leases signed in the CBD were for move-in-ready space. For all of 2023, approximately 33% of leases signed were for move-in-ready suites, compared with 15% in 2019, according to Bradford Allen research.

“The distress in Chicago’s CBD office market is likely to continue as owners, lenders and tenants navigate turbulent market conditions,” said Neil Bouhan, senior managing director, research and communications, for Bradford Allen. “Our data indicates more than half of all square footage leased prior to the pandemic has not yet expired, suggesting that many companies have yet to address their actual space needs in the CBD. This is likely to result in continued downsizing. But even in this environment, owners in the financial position to reinvest in their buildings and negotiate flexible lease terms with tenants have been able to keep their assets well occupied, outperforming the overall market.”

The benefit of financial strength in this market is exemplified by Ivanhoe Capital’s $75 million repositioning of 10 and 120 S. Riverside Plaza, a two-building, 1.4 million-square-foot office complex on the Chicago River in the West Loop. After renovations, Ivanhoe leased 156,000 square feet of office space in the property last year and an additional three leases totaling 75,000 square feet so far this year, with Attorneys’ Liability Assurance Society taking the largest lease at 37,000 square feet.

Other highlights of the Bradford Allen report include:

  • Bradford Allen researchers estimate there are 23 buildings in the CBD with distressed loans, almost half in the Central Loop. If interest rates remain high, the financial pressure on leveraged owners will mount as $2.8 billion of debt is set to expire by the end of 2025.
  • Investment sales remained at historic lows, with only $98 million trading last quarter, in line with first-quarter 2023 but still far below the average $750 million in sales in the first quarters of 2015 through 2019. Of the $98 million that has traded so far this year, $60 million was for the sale of 150 N. Michigan Ave., which was purchased by Chicago real estate firm R2.
  • The amount of sublease space on the market declined last quarter to 7 million square feet but remains at historically elevated levels. Most is large space; for example, a tenant seeking less than 10,000 square feet can only access about 9% of current sublease inventory. Meanwhile, 80% of leases signed in 2023 were for less than 10,000 square feet.


About Bradford Allen:
Bradford Allen (BA) is a commercial real estate firm based in the heart of downtown Chicago. Founded in 2003 by principals Jeffrey Bernstein and Laurence Elbaum as an office brokerage, the firm has grown into a vertically integrated commercial real estate company, offering a full array of services and expertise across multiple U.S. markets to entrepreneurial, corporate and not-for-profit clients, including strategy, marketing and transaction execution for occupiers, investors and owners. For more information, visit bradfordallen.com.

For immediate inquiries, contact Jeremy Barewin, jbarewin@taylorjohnson.com, (312) 267-4533.

 

Q1/24 Downtown Chicago Office Market Report

Bradford Allen is pleased to share with you our latest office market report.

This quarter in Chicago’s downtown office market:

  • Absorption remained negative with -1.4 million square feet absorbed through Q1/24.
  • The direct vacancy rate surpassed 21% in the CBD.
  • Demand is increasing for move-in ready office suites which accounted for more than 38% of deals in Q1/24.
  • The average gross asking rate in Chicago’s CBD remained at $43 per square foot.

 

Year-End 23 Suburban Chicago Office Market Report

Bradford Allen is pleased to share with you our latest office market report.

The second half of the year in the suburban office market:

  • Leasing activity remained above pre-pandemic levels with more than 5.2 million s.f. leased through 2023.
  • Absorption remained negative with -930,000 s.f. absorbed through the back half of 2023, resulting in -1.2 million s.f. of net absorption through the year.
  • The direct vacancy rate increased to 28.3%.
  • The average gross asking rate for the market is $27 per s.f.

 

Q4/23 Downtown Chicago Office Market Report

Bradford Allen is pleased to share with you our latest office market report.

This quarter in the downtown office market:

  • Absorption remained negative with -530,000 s.f. absorbed through Q4/23, resulting in a total of -1.6 million s.f. of net absorption through 2023.
  • The direct vacancy rate surpassed 20% in the CBD.
  • Available sublease space on the market remained steady, sitting at 7.7 million s.f.
  • The average gross asking rate for the CBD declined to $43 per s.f.

 

Q3/23 Downtown Market Report

Bradford Allen is pleased to share with you our latest office market report.

This quarter in the downtown office market:

  • Absorption turned negative with -431,000 s.f. of net absorption through Q3/23, resulting in year-to-date levels of -933,000 s.f.
  • The direct vacancy rate remained steady, sitting at 19.8% for the CBD.
  • Available sublease space ticked down to 7.6 million s.f.
  • The gross asking rate for the market remained at $44 p.s.f.

 

Mid-Year 2015 Chicago Suburban Office Market Report

Suburban Office Market Continues to Strengthen; Vacancy and Availability Rates Decrease

The Suburban office market continued to improve going into the 3Q of 2015. The vacancy rate decreased from 18.9% to 17.8% and the availability rate decreased from 24.4% to 22.3% year over year, respectively. While YTD net absorption is essentially flat at negative 27,182 SF thru the mid-year, it is significantly better than the negative 518,096 thru mid-year 2014. Overall these statistics indicate that the suburban market is becoming healthier and more dynamic.

Read Full Market Report Here

 

Second Quarter 2015 Chicago Downtown Office Market Report

Downtown Market Approaches Equilibrium as the Vacancy Rate Continues to Decrease and Asking Rates Increase

Chicago’s downtown office market is continuing to become tighter. The overall vacancy rate has decreased from 13.4% to 12.6%, year over year. This is the lowest it has been since the end of 2008 and now brings the market almost to equilibrium. Simultaneously Chicago’s unemployment rate continued to improve in the second quarter. According to the Illinois Department of Employment Security, Chicago’s unemployment rate decrease from 7.7% in May 2014 to 6.7%, May 2015.

Read Full Market Report Here