Northbrook office space is at it’s lowest level in almost a decade.
Crain’s Chicago Real Estate Daily highlights the lowest slump in suburban office vacancies since 2007. To the delight of landlords, vacancies show a consistent decline with 2014 reporting a 24.4 percent vacancy that spun down to 22.6 percent the quarter after and 21.3 percent during the last period. Highest vacancies have been in Lake County with Cook County (13.9 percent) sinking towards the bottom.
The three largest leases occurred in Lake County, topped by Baxter International spinoff that displaced pasta maker Barilla America. Barilla is moving to a 75,620-square-foot building in Northbrook.
In another large deal, Fortune 500 company CDW leased 209,000 square feet in adjacent buildings in Lincolnshire.
The north seems to be loosening its belt, whilst western suburbs continue battling recession-syndrome.
Landlords may be at fault there, explains tenant broker Todd Schaefer, a senior vice president at JLL. “They’re pushing rents and reducing concession packages. The farther west you go, it’s still a tough time.”
Highest-quality buildings have also recovered much faster.
“Class B and C buildings are definitely still having a hard time,” Schaefer said. “Tenants in Class B buildings were able to take a step up to Class A buildings and pay no more than they had been paying. Class A buildings, although they had to drop their rents, are now reaping the benefits of having increased occupancy. They’re now looking to push rents and offset some of their more aggressive deals from a year or two ago.”
What does this vacancy trend tell us?
O’Donnell Commercial Real Estate (Elgin) comes away with two ideas:
1. The market is shifting from a buyer’s market to a seller’s market.
Landlords and developers can now raise their rates, become more competitive in negotiations, and reject the “loss leader” mentality to fill their buildings.
2. Buy or lease your office space now!
As the vacancy rate decreases, price will increase. Mortgage and lending rates are also on the uprise. Want to get a great deal? Lock in your competitive leasing structure or purchase at the best price – now. Locking in your office space now will not only save you money in the present, but also in the future.
O’Donnell may be onto something particularly since Schaefer doubts that the momentum will continue. Too many fingers are scraping that pie. You may want to get in there before it’s spooned up.
Article by: Leah Zitter, www.dbfchicago.com Writer