State of the Office Market Video — Suburban Chicago 2023 Year End Update
The tenant-favorable Chicago Suburban office market conditions present interesting opportunities for occupiers in their current and future leases.
In this video, CBIZ Gibraltar’s Executive Vice President Bill Main discusses the current state of the office market in the Chicago Suburbs.
As landlords continue to face challenges between lender issues and increased vacancy, they have a lot to overcome to retain and secure tenancy. While adhering to lender covenants and restrictions, landlord currently are not able to significantly reduce rental rates and instead are working to entice tenants with lease concessions and stronger incentive packages or tenant improvement allowances.
Vacancy remains consistent, ranging from mid-twenty percent to an excess of thirty percent depending on the submarket being considered. O’Hare remains the best performing submarket, and Northwest showing as the softest.
With an abundance of available inventory, adaptive reuse continues to lead conversation around the suburban office markets. The phrase, used in conversation related to the city, refers to the idea of exploring ways to convert office space or buildings into hotels or multifamily use; and in the suburban office market has meant evaluating converting office parks and large buildings to industrial use. In fact, industrial continues to be a driver of activity in the commercial space, which has performed well since the start of the pandemic.
Of course, challenges around adaptive reuse in the Chicago submarkets are expected with great potential for ongoing pushback from communities, among other considerations in an environment with no new development.
Overall, the market will remain tenant favorable for the majority, and perhaps all, of 2024 — a time when 90% of companies forecast a return to the office (according to a ResumeBuilder survey). The research found that executives believe the return to office is a driver of revenue (reported by 72% of decision makers), productivity (81%), worker retention (63%), employee relationships (79%) and company culture (75%).
As many of these decision-makers actively evaluate everything from the amount of space they need to where the offices are located and the amenities they offer, they are turning to tenant representation firms, like CBIZ Gibraltar, to better understand the costs and savings opportunities associated with their current and future lease.
As the leading provider of integrated real estate services with a 100% commitment to advocating the interests and needs of tenants, CBIZ Gibraltar understands that no two companies are alike and works to deliver the best possible solutions for our clients. Together, we uncover the potential of your work environment, maximize human capital and map the path to critical business success.