With the industry data recently release for Q3 2020, we wanted to provide a snapshot update on the Chicago Suburban Office Market.
While we saw a significant increase activity in Q3 compared to Q2, but the COVID-19 pandemic continues to have significant impact on our overall office market.
The forecast of downtown tenants racing to secure suburban office space to avoid public transportation and reduce commit time has not materialized to date. That said, many downtown companies are evaluating this option going forward, or opening satellite offices.
We are seeing a surge in the amount of sublease inventory hit the market, coupled with the limited absorption that has pushed suburban availability to the highest rates seen in many years. The northwest suburban sub-market continues to remain the softest, with appropriately 30% vacancy, while O’Hare continues to be the best performer with vacancy in the high teens. O’Hare is closely followed by the east side of the east-west corridor Oak Brook area, as well as the North Suburban market and west end of the east-west corridor Lisle Naperville area — all of which are tracking at about 20% vacancy.
Face rates have maintained throughout the suburbs; however, landlords are starting to get very aggressive in chasing tenants that are active in the market, specifical with upfront concessions, like free rent and above-market tenant improvement packages. Landlords are also starting to invest in spec suites. Clearly the demand in the market has been for plug-and-play ready spaces, and landlords are investing in that area as well as amenities to do everything possible to secure active tenants.
Overall, this is a great opportunity for tenants looking for suburban office space who can take advantage of a soft market, which we anticipate continuing for the foreseeable future.
An uptick in activity is expected going into 2021.
In this video, CBIZ Gibraltar’s Executive Vice President Bill Main Bdiscusses the market and it’s overall impact on office space.