November 17, 2021
CHICAGO – The Chicago office sector remained in tenants’ favor during the third quarter, according to Transwestern’s third quarter Chicago office market report. Despite an elevated vacancy rate of 17.0%, asking rents continue to hold firm and rose to $42.90 per square foot, up 6.2% year over year.
“The Chicago office sector continues to face strong headwinds, as a pause in leasing activity during 2020 along with a significant amount of sublease space, has created a supply and demand imbalance through the first three quarters of 2021,” said Nick Schlanger, Research Manager at Transwestern. “Due to these conditions, the market will remain in tenant favor, with landlords offering generous concession packages to attract and retain tenants.”
Additional highlights from the report include:
- Sales activity remains low in 2021, totaling $1.3 billion, including $591 million during Q3. Despite limited activity, pricing held firm at $210 per square foot in 2021.
- There are 2.2 million square feet of office product under construction in Chicago, with all construction taking place in the West Loop and Fulton Market submarkets.
- While the market posted negative 1.7 million square feet of net absorption in Q3, the North Michigan Avenue and Fulton Market submarkets reported positive net absorption with 35,859 square feet and 54,889 square feet, respectively.
“Looking ahead, there are signs of optimism for Chicago’s office market,” said Kathleen Bertrand, Senior Vice President at Transwestern. “With steady market fundamentals, and corporate leadership moving to return their talent back to the office, we are expecting increased leasing velocity downtown in 2022.”
Download Transwestern’s third quarter Chicago office market report here.
About Transwestern Real Estate Services
Transwestern Real Estate Services (TRS) adds value for investors, owners and occupiers of all commercial property types through a comprehensive perspective and by providing solutions grounded in sound market intelligence. Part of the Transwestern companies, the firm applies a consultative approach to Agency Leasing, Asset Services, Tenant Advisory + Workplace Solutions, Capital Markets, and Research & Investment Analytics.
The privately held Transwestern companies have been delivering a higher level of personalized service and innovative real estate solutions since 1978. Through an integrated, customized approach that begins with good ideas, the firm drives value for clients across commercial real estate services, development, and investment management. Operating from 33 U.S. offices, Transwestern extends its platform capabilities globally through strategic alliance partners whose unique geographic, cultural, and business expertise fuels creative solutions. Learn more at transwestern.com and @Transwestern.