State of the Office Market – Year End Update
Curious about how the COVID-19 pandemic has impacted the U.S. and Chicago office markets? CBIZ Gibraltar’s President and CEO Steve Joseph shares key statistics about the current state of the office market and important insights on what these indicators may mean for tenants and the future of office space.
Landlords are clearly seeing the impact of the virus is having on the office marketplace—and clearly, we are seeing a reduction in rates. The overall impact has generally been a 15% to 20% reduction, with only a small portion being the base rent.
We continue to see concessions range with tenant opportunities in the current market take shape in the form of reduced rent and more tenant improvement contributions, as well as greater latitude of how such contributions can be used.
Forecasting timing for the recovery is difficult. For Chicago, right now, vacancy is over 16% and headed higher. 5.3 million sq ft is under construction with pre-lease only making up 37%, and about 5.5 million sq ft of new sublease space is available and expected to grow.
Once the path is clear, with the vaccine and subsequent recovery, we will see activity in the leasing market begin to pick up— and we expect to see strong opportunities for tenants in the years ahead.