Research
January 2017

Fourth Quarter 2016 Market Peek

Fourth Quarter 2016 Market Peek

4Q 2016 Market Peek | NAI Hiffman

Fourth Quarter 2016

 Market Peek 4Q 2016

NAI Hiffman is pleased to present the Fourth Quarter 2016 Market Peek, a first look at the market statistics for the Chicago metropolitan office and industrial real estate markets.
Market Peek

Industrial: Construction Deliveries Reach Highest Level Since 2008
  • Construction deliveries totaled 21.0 million square feet at the end of 2016, the most since 2008 when construction deliveries reached nearly 22.9 million square feet. Demand remains strong with an additional 19.4 million square feet under construction, of which 52 percent will be completed on a speculative basis.

  • Amazon.com continues to increase its Midwest footprint and signed leases totaling over 4.4 million square feet during 2016. The company is scheduled to move into an additional 2.2 million square feet in the coming year, bringing its total occupancy to more than 6.0 million square feet in the Chicago market.

  • Positive absorption of nearly 4.3 million square feet was recorded fourth quarter, however, with the delivery of more than 4.3 million square feet of speculative construction, the vacancy rate rose slightly to 6.59 percent. Absorption will continue to trend positive in the quarters ahead, as space leased by Amazon.com and Exel Logistics will be occupied in 2017.
4Q2016 Industrial Vacancy & Absorption

Office: Chicago Market Vacancy Rises But Demand Remains Strong

SUBURBS
  • The vacancy rate for the suburban office market rose by 153 basis points during fourth quarter, due to the completion of Zurich North America’s build-to-suit project in Schaumburg and AT&T’s departure from its 1.3-million-square-foot building in Hoffman Estates. Paylocity absorbed a significant amount of that vacancy when the firm relocated to the former Zurich Towers.

  • Despite the uptick in vacancy, companies continue to show interest in the suburban market. More than fifteen new leases greater than 10,000 square feet were signed fourth quarter, with the largest signed by Vyaire and Brunswick Corporations, who will occupy 89,000 square feet and 55,000 square feet, respectively, in Mettawa.
4Q2016 Suburban Office Vacancy & Absorption

CBD
  • Chicago CBD vacancy spiked fourth quarter as construction was completed at River Point, 444 W Lake St. The office tower brings 1.1 million square feet to the CBD inventory and is 79 percent leased. The largest tenant in the building, DLA Piper, will occupy 175,000 square feet in the first quarter of 2017.

  • Some of Chicago’s largest law firms solidified their commitment to the CBD as three long-term renewals, greater than 100,000 square feet, were signed during fourth quarter. Sidley Austin LLP renewed its 574,000 square foot lease at 1 S Dearborn St, Reed Smith LLP renewed its 110,000 square foot space at 10 S Wacker Dr, and Barnes & Thornburg LLP recommitted to 107,000 square feet at 1 N Wacker Dr.
4Q2016 Downtown Office Vacancy & Absorption

For further information regarding the content of this Market Peek, or if you are interested in
attending a custom market overview presentation, please contact:

AMANDA ORTIZ
Senior Research Manager
630.693.0645
aortiz@hiffman.com
 
NAI Hiffman
 
NAI Hiffman, One Oakbrook Terrace, Suite 400, Oakbrook Terrace, IL 60181
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