The suburbs may have been the place where some residents relocated during the pandemic, but the suburban office market never benefited. And the situation has only worsened now that Chicago’s housing market has rebounded and its rental market is improving.
The suburban office market vacancy rate hit 26.1 percent at the end of June, according to new data from JLL. That’s a record-high in the 20 years the brokerage has tracked the market, according to Crain’s, which first reported the figures. That’s a rise from 25.5 percent in the first quarter, also a record at the time.
The vacancy rate keeps climbing. It hit 23 percent in the second quarter of 2020, up from 22.1 percent in the first quarter.
For the quarter that just ended, net absorption dropped by 470,000 square feet, the second-biggest quarterly dip in four years. There has been an uptick in leasing activity from 2020 — including Costco and Ajinomoto — but the gains don’t outweigh the losses in the market.
HSBC, Q-Tech, Omron and Protective Life were among the companies to leave the western and northwest suburbs last quarter, Crain’s noted, citing JLL. Combined, they emptied out nearly 250,000 square feet.
The void has left opportunities for investors hunting for a potential deal. Office complexes in Downers Grove and Oak Brook hit the market in May, and some landlords are open to concessions like free rent.
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[Crain’s] — Holden Walter-Warner