As reported a few months ago, suburban office vacancies show a consistent decline with 2014 reporting a 24.4 percent vacancy. Vacancies accelerated to 22.6 percent the quarter after and 21.3 percent during the last period.
In our area, highest vacancies have been in Lake County with Cook County sinking towards the bottom. Lake County’s vacancy remains 24.9 percent, although it is down from 30.3 percent a year earlier. The Cook County submarket’s vacancy is 12.2 percent, down from 16 percent a year earlier.
Tenants in Lake County, Deerfield, and Cook County continue to pay good money for territory. Fortune 500 CDW Corporation leased 209,000 square feet in adjacent buildings in Lincolnshire. Verizon beat records by moving to the largest amount of square feet in the quarter. The company located from 127,000 square feet at 777 Big Timber Road in Elgin to 160,000 square feet at 1701 W. Golf Road in Rolling Meadows.
Other moves seem like ‘musical-chairs’. Baxter International spinoff replaced pasta-maker Barilla America in Lake County. Barilla is moving to a 75,620-square-foot building in Northbrook.
Investment agencies joined the scramble. Examples included:
• New York-based Blackstone Group that bought GE Capital Real Estate’s suburban properties.
• Chicago-based Equity Commonwealth that sold three buildings—in Deerfield, Aurora and Lake Forest—to Dallas-based Lone Star Funds.
• GE Capital, Hartford, Conn.-based Cornerstone Real Estate Advisers that paid almost $154 million for a four-building complex in Deerfield.
But everything positive has its flip side.
“All the doom and gloom is gone,” said Eric Kunkel, a JLL executive vice president who represents tenants, “but landlords are pushing rents and there’s more competition for spaces. Before, we had the pick of the buildings. Now it’s more competitive and you need to be aware of which space could be taken out from under you by another tenant.”
Asking rents rose to $23.91 per square foot this last quarter. This was an 8.4 percent increase from 2014.
Owners of less-desirable territory or of older buildings continue to struggle but, on the whole, landlords in the suburbs were hit harder by the recession than downtown. And there are signs of recovery.
Article by Leah Zitter, dbfchicago.com Writer