In Q2 ’16 Chicago Office Space Market Summary: Part 1 we covered the positive absorption rate and decreasing vacancy rates in the Chicago office space market. This second article installment reviews Q2 ’16 large office lease signings, office sales activity, and new office construction in the Chicagoland office market.
Chicago Office Lease Signings in Q2 ’16
While we saw some tenants vacating space, such as Navistar and K&L gates, we saw Verizon Communications relocate into a larger space, along with new tenants HSBC and The Kraft Heinz Company moving into Chicago space. Large lease signings and great news for Chicago included a lease renewal for 642,545-square-feet by Leo Burnett Worldwide, Inc., a new 486,400-square-foot signing by McDonald’s Corporation and lease of 309,559-square-feet by Paylocity Corporation.
Chicago Office Sales Activity in Q2 ’16
Sales for buildings 15,000 square feet or larger fell at the beginning of 2016 in terms of dollars with 42 closed transactions for a total of 5,800,677 square feet at an average per square foot price of $136.98. This is down significantly from Q4 2015 with 54 sales of 11,341,021 square feet at an average price of $210.29.
Total office building sales trended down as well with 42 sales transactions at the same per square foot price of $136.98. This is significantly less than what we saw in the same three-month period in 2015 where the price per square foot averaged $212.48.
Chicago Office Construction in Q2 ’16
Three new buildings with 128,579 square feet completed in the second quarter. This compares negatively to the six buildings completed in Q1 2016 which created 517,997 new square feet of space but is only slightly lower in available square feet than the completions in Q3 and Q4 2015, even though those quarters saw the completion of a total of 14 new buildings together.
Another 7,824,262 square feet are currently under construction with two of these projects already pre-leased at 73 and 80 percent. A 450,000 square foot project completed in Q1 remains 0% occupied but a second project finished in Q2 is 85% occupied.
Hire a Local Commercial Real Estate Broker that Knows the Chicago Office Market
At Golden Group Real Estate, we specialize in tenant representation real estate services for office space users in the Chicago area, helping local business owners find office space and negotiate lease and purchase agreements. We never represent landlords, so we are prepared to negotiate aggressively on behalf of our tenant clients.
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