F I R S T SECOND Q U A R T E R
Q U A R T E R
2 011
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CHICAGO SUBMARKET SNAPSHOTS
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SECOND QUARTER
2 011 CHICAGO SUBMARKET SNAPSHOTS
TABLE OF CONTENTS SECTION ONE
CHICAGO CENTRAL BUSINESS DISTRICT CBD SUBMARKET SNAPSHOTS 01 Central Business District Map 02 Central Loop 03 East Loop 04 North Michigan Avenue 05 River North 06 South Loop 07 West Loop
SECTION TWO
SUBURBAN CHICAGO
08 09 10 11 12
SUBURBAN SUBMARKET SNAPSHOTS Suburban Map East-West North Northwest O’Hare
SE CT ION T H RE E
ABOUT MB REAL ESTATE 13 Company Overview
Th e C h ic a g o M a r ke t O v e r v i e w S ubm a r ke t Sn a p sh ot s a re publ i s h e d qua r te r l y by M B R e a l Es ta te. To o b t a in ad d i ti o na l co pi e s o r fo r fur the r in f or ma ti o n, p l e a s e c o nta c t:
KRYS TA BAV LS IK Manager of Research and Analytics or JAC K G AV IN Research Coordinator 1 8 1 We st M a d i s o n S tre e t, S ui te 4 7 0 0 Ch ic a go, I l l i no i s 6 0 6 0 2 (312) 726-1700 w w w. m b r e s . c o m
CENTRAL BUSINESS DISTRICT
CENTRAL BUSINESS DISTRICT MAP
SUBMARKET SNAPSHOTS SECOND QUARTER 2011 | CHICAGO SUBMARKET SNAPSHOTS
1
Occupancy falls across all asset classes
The Central Loop saw occupancy fall across each building class as the direct vacancy rate climbed 0.9 percent since the end of 2010. However, the occupancy rate in these properties still remains among the highest in the CBD. Two large lease transactions will result in positive demand over the next few quarters. The Legal Assistance Foundation signed a 10-year lease to occupy 56,000 square feet at 120 South LaSalle, which is roughly 35,000 square feet larger than its current space at 111 West Jackson. The Private Bank will also occupy two additional floors at 120 South LaSalle.
LARGEST BLOCKS Building Address
Size (sf)
Building Class C
11 S LaSalle St
155,822
21 S Clark St *
151,000
A
161 N Clark St
116,964
A
111 W Jackson Blvd
102,943
C
1 N Dearborn St
97,261
B
231 S LaSalle St
91,962
B
111 W Jackson Blvd
83,612
C
79 W Monroe St
82,921
C
200 N LaSalle St
71,728
B
120 S LaSalle St
69,519
B
The Central Loop, which is largely occupied by financial organizations and law firms, will continue to see a gradual decline in office occupancy in the near-term. However, constrained supply and its desirable location will keep the Central Loop’s vacancy rate below most of the CBD’s submarkets.
SUBMARKET SNAPSHOTS
The disparity in demand between Class A and Class B buildings continues * Indicates future available space to mount. Despite each class having roughly 14 million square feet of Italicized addresses indicate new blocks this quarter inventory, Class B buildings have 2.5 million square feet vacant, while Class A buildings have only 1.3 million square feet of vacancy. Also, there are 10 contiguous blocks of space greater than 50,000 square feet available in Class B buildings, compared to only 5 blocks in Class A. This demonstrates soft market conditions, as well as tenants’ desire for space in newer buildings.
CENTRAL BUSINESS DISTRICT
CENTRAL LOOP
The Central Loop’s boundaries are the Chicago River (North), Wells Street (West), State Street (East), and Van Buren Street (South). CENTRAL LOOP SUMMARY
A
B
C
Total
13,553,757
14,000,312
8,619,499
36,173,568
68,421
(91,587)
(213,183)
(236,349)
Direct Vacancy Rate
9.8%
17.9%
16.4%
14.5%
Total Vacancy Rate (Direct + Sublease)
12.1%
21.3%
18.1%
17.1%
Inventory (square feet) Year to Date Absorption (square feet)
Numbers in parentheses are negative
CENTRAL LOOP SUBMARKET HISTORICAL DIRECT VACANCY
SECOND QUARTER 2011 | CHICAGO SUBMARKET SNAPSHOTS
2
Activity ramps up as vacancy retreats from record high levels
After several quarters of tepid demand, the East Loop saw leasing activity rise and vacancy rate fall by 1.0 percent. Nearly 200,000 square feet was absorbed, making the East Loop one of the best performing submarkets in the CBD this quarter.
Size (sf)
Building Class
200 E Randolph St *
243,803
A
303 E Wacker Dr *
241,206
B
130 E Randolph St *
185,042
B
55 E Monroe St
175,263
B
333 S Wabash Ave *
163,800
B
303 E Wacker Dr *
143,960
B
205 | 225 N Michigan Ave
120,446
B
33 S State St
117,207
C
401 S State St
110,898
C
76,855
C
360 N Michigan Ave *
* Indicates future available space Despite a strong quarter, the East Loop still faces an uphill battle in gaining occupancy levels that match its competitive submarkets. The East Loop has nine blocks of contiguous, direct space greater than 100,000 square feet available. Of these nine blocks, five represent space that will be vacated in 2012, totaling nearly 1 million square feet. Also, short-term leases for Groupon (150,000 square feet scattered about 303 East Wacker) and Obama for America (50,000 square feet at 130 East Randolph) are set to expire next year. Considering large block availability across the CBD and speculation regarding a new office development, it remains likely that the East Loop will continue to have the highest vacancy rate of the CBD’s submarkets.
The East Loop is bordered by the Chicago River (North), State Street (West), Lake Shore Drive (East), and Van Buren Street (South). It is inhabited mostly by advertising and media firms and corporate tenants.
EAST LOOP SUMMARY
A
B
C
Total
4,001,516
10,193,867
8,484,560
22,679,942
(71,578)
212,175
(52,983)
87,614
Direct Vacancy Rate
27.2%
21.9%
13.8%
19.8%
Total Vacancy Rate (Direct + Sublease)
31.9%
24.4%
14.2%
21.9%
Inventory (square feet) Year to Date Absorption (square feet)
SUBMARKET SNAPSHOTS
Adding to the East Loop’s momentum was two of the largest new lease transactions in the entire CBD. Banker’s Life and Casualty Company signed an 11.5 year lease for 135,000 square feet at 111 East Wacker. The firm will relocate from 600 West Chicago in River North during the first quarter of 2012 and will backfill former Blue Cross Blue Shield space. McKinsey & Company will occupy 100,000 square feet at the recently completed vertical addition at 300 East Randolph and vacate 162,000 square feet at 21 South Clark at the end of the year.
LARGEST BLOCKS Building Address
CENTRAL BUSINESS DISTRICT
EAST LOOP
Numbers in parentheses are negative
EAST LOOP SUBMARKET HISTORICAL DIRECT VACANCY
SECOND QUARTER 2011 | CHICAGO SUBMARKET SNAPSHOTS
3
Leasing activity slows as another building hits the market
All building classes in the submarket experienced negative absorption during the second quarter. At 19.2 percent, the North Michigan Avenue direct vacancy rate has reached its highest level in MB Real Estate’s tracked history for the second consecutive quarter. The direct vacancy rate for Class B buildings reached 24.0 percent as the entire submarket has struggled to sustain positive demand. No lease transactions greater than 20,000 square feet were signed this quarter besides Interpublic Group’s GolinHarris and Weber Shandwick, which was announced last quarter.
LARGEST BLOCKS Building Address
Size (sf)
Building Class
330 N Wabash Ave
371,945
B
330 N Wabash Ave
97,932
B
455 N Cityfront Plaza Dr
90,207
A
740 N Rush St
73,294
C
980 N Michigan Ave
62 384 62,384
A
401 N Michigan Ave
51,870
B
Despite being the second-smallest in the CBD, the North Michigan Avenue submarket contains six blocks of direct, contiguous space greater than 50,000 square feet including the 37th through 47th floors at 330 North Wabash, which total 372,000 square feet. Additionally, there are two blocks of sublease space greater than 50,000 square feet, adding to the glut of vacancies. Without significant job growth, demand will continue to falter. Vacancy rates are expected to remain high. The North Michigan Avenue submarket is home to retailers, hotels, restaurants, entertainment venues, advertising and marketing agencies, and the large Northwestern Memorial Hospital campus. Its borders include Division Street (North), State Street (West), Lake Michigan (East), and the Chicago River (South). NORTH MICHIGAN AVENUE SUMMARY
A
B
C
Total
3,952,669
4,622,071
4,448,708
13,023,448
(49,933)
(43,610)
(32,882)
(126,424)
Direct Vacancy Rate
20.1%
24.0%
13.2%
19.2%
Total Vacancy Rate (Direct + Sublease)
23.5%
27.1%
14.3%
21.6%
Inventory (square feet) Year to Date Absorption (square feet)
SUBMARKET SNAPSHOTS
In response to the recent trend of investors seeking well-leased assets, Golub & Company is marketing the 541,000 square foot, 98 percent leased 541 North Fairbanks. The building joins the 80 percent leased 444 North Michigan as the only buildings for sale in the North Michigan Avenue Submarket.
CENTRAL BUSINESS DISTRICT
NORTH MICHIGAN AVENUE
Numbers in parentheses are negative
NORTH MICHIGAN AVENUE SUBMARKET HISTORICAL DIRECT VACANCY
SECOND QUARTER 2011 | CHICAGO SUBMARKET SNAPSHOTS
4
Occupancy continues to rise; Groupon grows
Demand for space in River North increased again as the direct vacancy rate fell to 12.4 percent. The submarket has been the fastest to recover from the recession and currently boasts the lowest vacancy rate in the CBD due to its inventory of new, desirable buildings. Groupon signed the second-largest lease in the entire CBD during the second quarter, though it will not result in new demand for the River North submarket. The daily deal site will sublease 220,000 square feet in its headquarters at 600 West Chicago, backfilling Bankers Life and Casualty space as it relocates to the East Loop.
LARGEST BLOCKS Building Address
Size (sf)
Building Class
111 W Illinois St
141,503
A
350 W Mart Ctr
126,535
C
353 N Clark St
62,390
A
321 N Clark St
61,431
A
353 N Clark St
55 370 55,370
A
222 Merchandise Mart Plz
50,000
B
While direct vacancy has continued its decline, a large amount of sublease space may push direct vacancy up in the next few quarters. 5.4 percent of inventory is available for sublease, compared to 2.3 percent for the entire CBD. Once the underlying leases expire, the spaces will convert to direct vacancy. The borders of the River North submarket are defined as Division Street (North), Racine Avenue (West), State Street (East), and Fulton Street and the Chicago River (South). It has historically been home to small, older buildings catering to art galleries, furniture studios, and small businesses, but has seen new development which has brought law firms and financial institutions to the submarket.
RIVER NORTH SUMMARY Inventory (square feet)
A
B
C
Total
4,011,664
3,545,977
5,772,321
13,329,962
Year to Date Absorption (square feet)
(9,633)
142,067
13,260
145,694
Direct Vacancy Rate
15.7%
7.5%
13.0%
12.3%
Total Vacancy Rate (Direct + Sublease)
18.4%
17.1%
17.6%
17.7%
SUBMARKET SNAPSHOTS
600 West Chicago remains under contract to CommonWealth REIT for $390 million ($249 per square foot). The sellers, a joint venture of David Werner, Jacob Gerstein and Victor Gerstein, paid $290 million for the building at the height of the real estate bubble in 2007 when the building was 78 percent leased. Today, the building is more than 98 percent leased and has benefitted by attracting rapidly growing technology firms such as Groupon.
CENTRAL BUSINESS DISTRICT
RIVER NORTH
Numbers in parentheses are negative
RIVER NORTH SUBMARKET HISTORICAL DIRECT VACANCY
SECOND QUARTER 2011 | CHICAGO SUBMARKET SNAPSHOTS
5
Vacancy rate stabilizes, but demand continues to be weak
After several consecutive quarters of negative absorption, the CBD’s smallest submarket saw flat demand in the second quarter. Vacancy rates are just shy of the record levels reached at the end of 2003 and are significantly elevated since the end of 2009.
LARGEST BLOCKS Building Address
Size (sf)
Building Class
619 S LaSalle St
78,000
C
One Financial Place comprises nearly half of the total amount of office space in the South Loop and is the submarket’s only Class A building. Given such a small submarket, changes in occupancy within this building have the potential to drastically affect the performance of the submarket. The submarket’s vacancy rate is expected to continue its climb until the building secures new tenants or induces existing tenants to expand in the building.
The boundaries of the South Loop include Van Buren Street (North), I-90/I-94 (West), Lakeshore Drive (East), and 16th Street (South). The South Loop is populated primarily with education, small businesses, and converted residential properties.
SOUTH LOOP SUMMARY
A
C
Total
1,019,325
1,291,743
2,311,068
(45,466)
(19,461)
(64,927)
Direct Vacancy Rate
13.9%
24.9%
20.1%
Total Vacancy Rate (Direct + Sublease)
15.1%
25.1%
20.7%
Inventory (square feet) Year to Date Absorption (square feet)
SUBMARKET SNAPSHOTS
Goldman Sachs has begun to give back space at One Financial Place as part of its consolidation. Midwest Generation also vacated a full floor, adding to the vacancy of the building and submarket. As Goldman continues to reduce its space in the building from eight floors to four, it is possible that a record high vacancy rate could be reached in 2011.
CENTRAL BUSINESS DISTRICT
SOUTH LOOP
Numbers in parentheses are negative
SOUTH LOOP SUBMARKET HISTORICAL DIRECT VACANCY
SECOND QUARTER 2011 | CHICAGO SUBMARKET SNAPSHOTS
6
Tenants continue their “flight to quality”; Willis Tower hits the block
The West Loop continues to recover as the CBD’s largest submarket saw 213,000 square feet of positive absorption, dropping its direct vacancy rate to 14.8 percent. Leading the recovery are Class A buildings, which continue to be the most active and highest demanded assets in the CBD. During the second quarter, Wells Fargo signed the largest lease year-todate: a 17-year, 293,000 square foot lease at the Chicago Mercantile Exchange Center at 10 and 30 South Wacker. The firm will consolidate five offices in the West Loop and expand upon its current requirement by 43,000 square feet. Marsh will relocate its offices at 500 West Monroe and cut its space requirement by 56,000 square feet as it will occupy 120,000 square feet at 540 West Madison in November.
LARGEST BLOCKS Building Address
Size (sf)
Building Class
500 W Monroe St
369,207
A
233 S Wacker Dr
299,514
A
200 S Wacker Dr
112,929
A B
101 N Wacker Dr
106,732
500 W Monroe St *
106,475
A
500 W Madison St
92,924
A A
233 S Wacker Dr
91,216
333 W Wacker Dr *
87,954
A
1 S Wacker Dr
86,658
A
30 S Wacker Dr
81,478
A
Due to the amount of leasing activity the submarket has experienced, MB Real Estate expects further positive absorption in the West Loop next quarter. Also, the investment sales market will continue to heat up as institutional investors and high-net-worth individuals bid for the some of the largest and most iconic buildings in the CBD.
SUBMARKET SNAPSHOTS
* Indicates future available space The investment sales market continues to be robust. Billionaire investor Sam Zell made his first office purchase since 2007 as he partnered with Transwestern to acquire a 90 percent stake in 200 South Wacker for an estimated $156 per square foot. Three Wacker Drive skyscrapers hit the market during the second quarter. Most notably, the 3.8 million square foot Willis Tower (233 South Wacker) is being marketed for sale. Neighbor 311 South Wacker is also on the market. In addition, Hines is seeking a buyer to purchase up to a 50 percent stake in 1 North Wacker.
CENTRAL BUSINESS DISTRICT
WEST LOOP
The West Loop’s borders are defined as the Chicago River (North), I-94/I-90 (West), Wells Street (East), and Van Buren Street (South). WEST LOOP SUMMARY
A
B
C
Total
26,843,953
9,720,250
6,501,558
43,065,761
314,155
86,757
49,431
450,343
Direct Vacancy Rate
14.9%
12.8%
17.3%
14.8%
Total Vacancy Rate (Direct + Sublease)
17.7%
15.0%
18.0%
17.1%
Inventory (square feet) Year to Date Absorption (square feet)
Numbers in parentheses are negative
WEST LOOP SUBMARKET HISTORICAL DIRECT VACANCY
SECOND QUARTER 2011 | CHICAGO SUBMARKET SNAPSHOTS
7
SUBURBAN CHICAGO
SUBURBAN MAP
SUBMARKET SNAPSHOTS SECOND QUARTER 2011 | CHICAGO SUBMARKET SNAPSHOTS
8
Demand remains flat in the suburbs’ largest submarket
The East-West Corridor experienced modest absorption as its direct vacancy rate currently sits at 22.2 percent. Occupancy levels are rebounding slightly but are still near the record lows reached in 2003.
City
Size (sf)
Building Class
700 Oakmont Ln
Westmont
256,767
A
1200 Warrenville Rd **
Naperville
245,514
B
3075 Highland Pky *
Downers Grove
228,764
A
28100 Torch Pky
Warrenville
203,842
B
2400 Cabot Dr *
Lisle
194 052 194,052
B
1415 W Diehl Rd
Naperville
168,000
A
1333 Butterfield Rd
Downers Grove
102,096
A
1011 Warrenville Rd
Lisle
101,172
A
3333 Warrenville Rd
Lisle
89,334
A
800 Jorie Blvd
Oak Brook
88,886
B
* Indicates future available space ** indicates space available during the upcoming quarter
Investment sales activity was highlighted by RR Donnelly and Sons purchase of 4101 Winfield Road in Warrenville. The publishing and communications company purchased the 167,000 square foot building from M&J Wilkow for $14.7 million. The owners of 1333 Burr Ridge Parkway are marketing the Class A, 151,000 square foot building for sale. The property is 87 percent leased and is expected to attract bids upward of $200 per square foot. MB Real Estate expects vacancy to increase slightly over the next few quarters. Job growth has not reached the levels necessary to sustain significant absorption as companies reevaluate their space requirements and consider alternative locations.
SUBMARKET SNAPSHOTS
Sickich signed the largest new lease in the suburban market during the second quarter. The accounting firm will occupy 80,000 square feet at 1415 West Diehl Road in Naperville and will vacate approximately 40,000 square feet at 998 Corporate Boulevard in Aurora. SHC Direct is also relocating and expanding its space at 1815 South Meyers Road in Oakbrook Terrace. The Healthcare Financial Management Association renewed its lease of 23,000 square feet at 2 Westbrook Corporate Center in Westchester.
LARGEST BLOCKS Building Address
SUBURBAN CHICAGO
EAST-WEST
The East-West submarket encompasses Cook, DuPage, Kane, Kendall, and Will Counties, with major cities including Downers Grove, Lisle, Naperville, and Oak Brook. EAST-WEST SUMMARY Inventory (square feet)
A
B
C
Total
20,620,544
14,533,702
4,914,973
40,069,218
Year to Date Absorption (square feet)
19,118
(104,885)
36,156
(49,611)
Direct Vacancy Rate
20.8%
23.8%
23.0%
22.2%
Total Vacancy Rate (Direct + Sublease)
24.8%
27.5%
23.9%
25.6%
Numbers in parentheses are negative
EAST-WEST SUBMARKET HISTORICAL DIRECT VACANCY
SECOND QUARTER 2011 | CHICAGO SUBMARKET SNAPSHOTS
9
Vacancy reaches record high, but submarket retains key tenant
While the North submarket continues to be the bestperforming and most-desired submarket in Suburban Chicago, the direct vacancy rate has climbed above 20 percent for the first time in MB Real Estate’s tracked history. The submarket experienced 111,000 square feet of negative absorption as all building classes saw decreased occupancy.
LARGEST BLOCKS Building Address
City
Size (sf)
Building Class A
1200 Lakeside Dr **
Bannockburn
257,190
1 Corporate Dr
Long Grove
201,509
A
1 Overlook Pt
Lincolnshire
148,686
A
544 Lakeview Pky
Vernon Hills
144,999
B
4 Corporate Dr
Long Grove
141 079 141,079
B
American Real Estate Capital has listed 909 Davis Street in Evanston for sale. The 195,000 square foot, nearly fully leased building has an estimated value of $205 per square foot. The submarket’s outlook for the rest of 2011 appears bleak. A 257,000 square foot block at 1200 Lakeside Drive in Bannockburn will be vacated next quarter. Sustained job growth and the retention of large tenants are necessary for occupancy to grow towards levels seen just a couple of years ago.
SUBMARKET SNAPSHOTS
2355 Waukegan Rd Bannockburn 106,495 A Leasing activity continues to be modest, but a few 25 Tri State International * Lincolnshire 103,742 A noteworthy deals will help aid the submarket. CVS 850-860 Technology Way Libertyville 78,000 A Caremark renewed its lease of 266,000 square feet at 2-4-6 Genesee St Waukegan 75,996 C 2211-2215 Sanders Road in Northbrook. The transaction 333 Knightsbridge Pky Lincolnshire 74,728 A was the largest in the suburbs on a per square foot basis and prevents another large block and vacant building * Indicates future available space ** indicates space available during the upcoming quarter from hitting the market. The other large lease transaction occurred when Toshiba expanded by 21,000 square feet at 704-708 Deerpath Drive in Vernon Hills.
SUBURBAN CHICAGO
NORTH
The North submarket is located within portions of Cook and Lake Counties, with major cities including Bannockburn, Deerfield, Evanston, Glenview, Highland Park, Lake Forest, Northbrook, and Vernon Hills. NORTH SUMMARY
A
B
C
Total
16,865,410
7,504,352
2,573,647
26,943,409
(48,100)
(49,173)
(44,852)
(142,126)
Direct Vacancy Rate
19.2%
22.1%
21.7%
20.2%
Total Vacancy Rate (Direct + Sublease)
24.9%
22.2%
20.6%
23.7%
Inventory (square feet) Year to Date Absorption (square feet)
Numbers in parentheses are negative
NORTH SUBMARKET HISTORICAL DIRECT VACANCY
SECOND QUARTER 2011 | CHICAGO SUBMARKET SNAPSHOTS
10
Demand remains weak; AT&T marketing campus for sublease
For the second consecutive quarter, the Northwest was the worst-performing submarket in Suburban Chicago as the direct vacancy has reached 26.0 percent. Once again, vacancy has reached its highest level in MB Real Estate’s tracked history.
City
Size (sf)
Building Class
21440 Lake Cook Rd
Deer Park
351,425
A
1600 McConnor Pky **
Schaumburg
300,686
A
1701 Golf Rd
Rolling Meadows
234,287
A
3501 Algonquin Rd
Rolling Meadows
206,770
C C
1299 Algonquin Rd
Schaumburg
195 393 195,393
150 NW Point Blvd
Elk Grove Village
176,844
A
3800 Golf Rd **
Rolling Meadows
156,574
B
425 N Martingale Rd
Schaumburg
155,559
A
1 Salem Lake Dr
Long Grove
140,252
B
3333 Beverly Rd
Hoffman Estates
129,000
A
** indicates space available during the upcoming quarter
Several buildings traded hands throughout the quarter. The largest sale occurred when Nokia Siemens Networks US purchased the 693,000 square foot property at 1421-1501 West Shure Drive in Arlington Heights from Motorola Solutions for $45.5 million. Adding to the submarket’s weakness is the glut of large blocks. The Northwest has 16 contiguous blocks of at least 100,000 square feet available for direct lease, more than any other submarket in Suburban Chicago. In addition, AT&T is marketing its 1.2 million square foot campus in Hoffman Estates for sublease. With numerous options available, large tenants evaluating the Northwest submarket will continue to have the upper hand in lease negotiations for quite some time.
SUBMARKET SNAPSHOTS
The submarket continues to lack the demand necessary to sustain a recovery. On a positive note, several tenants renewed their leases during the quarter. CVS Caremark renewed 117,000 square feet at 800 Biermann Court in Mount Prospect, Bank of America renewed its lease of 93,000 square feet at 1600 Corporate Center in Rolling Meadows, and STMicroelectronics renewed 27,000 square feet at 1375 East Woodfield Road in Schaumburg.
LARGEST BLOCKS Building Address
SUBURBAN CHICAGO
NORTHWEST
The Northwest submarket is located within the portions of Cook, Kane, Lake, and McHenry Counties, with major cities including Arlington Heights, Itasca, Rolling Meadows, and Schaumburg. NORTHWEST SUMMARY
A
B
C
Total
18,526,637
9,765,897
2,305,378
30,597,911
(191,610)
(295,889)
(26,413)
(513,911)
Direct Vacancy Rate
21.0%
34.4%
30.0%
26.0%
Total Vacancy Rate (Direct + Sublease)
23.7%
34.9%
31.4%
27.9%
Inventory (square feet) Year to Date Absorption (square feet)
Numbers in parentheses are negative
NORTHWEST SUBMARKET HISTORICAL DIRECT VACANCY
SECOND QUARTER 2011 | CHICAGO SUBMARKET SNAPSHOTS
11
Occupancy continues to decline in the Suburban market’s most vacant submarket
The O’Hare submarket witnessed slightly negative demand in the second quarter and it continues to have the highest vacancy rate in Suburban Chicago. The direct vacancy rates for Class B and C properties are well over 30 percent.
City
2350-2360 E Devon Ave
Des Plaines
142,596
B
9525 W Bryn Mawr Ave
Rosemont
113,868
A
Size (sf)
Building Class
9700 W Higgins Rd
Rosemont
107,617
A
8700 W Bryn Mawr Ave
Chicago
97,801
A
4242 N Harlem Ave
Norridge
93 155 93,155
B
8700 W Bryn Mawr Ave *
Chicago
88,409
A A
9500 W Bryn Mawr Ave
Rosemont
72,149
9801 W Higgins Rd
Rosemont
57,994
B
9500 W Bryn Mawr Ave *
Rosemont
56,554
A
9500 W Bryn Mawr Ave *
Rosemont
56,471
A
* Indicates future available space
As foreclosures and non-traditional sales have dominated the investment market, one major traditional sale occurred in the second quarter. Wintrust Financial Corporation acquired 9700 West Higgins Road in Rosemont for $22.5 million or $81 dollars per square foot. The Class A building is only 49 percent leased, however, showing that investors are scouring the market for value-add plays. Tenants with large space requirements have considerable options with 13 direct blocks and one sublease block of space greater than 50,000 square feet available. Given the amount of options, tenants will continue to have the upper hand in lease negotiations.
SUBMARKET SNAPSHOTS
Leasing activity was highlighted by American Board of Radiology, who signed a 10-year lease for 50,000 square feet at 5440 North Cumberland Avenue in Chicago. The U.S. Military Entrance Processing Command signed a 20-year lease for 32,000 square feet at 8700 West Bryn Mawr in Chicago. The GSA division is shrinking from 50,000 square feet at 1700 South Wolf Road in Des Plaines and will occupy their new space in May 2012.
LARGEST BLOCKS Building Address
SUBURBAN CHICAGO
O’HARE
The O’Hare submarket is located in northwestern Cook County, with major cities including northwestern Chicago, Elk Grove Village, and Rosemont. O'HARE SUMMARY Inventory (square feet)
A
B
C
Total
7,824,658
4,348,908
2,546,296
14,719,862
Year to Date Absorption (square feet)
8,322
(69,871)
(11,128)
(72,676)
Direct Vacancy Rate
20.4%
32.4%
36.4%
26.7%
Total Vacancy Rate (Direct + Sublease)
22.4%
36.8%
36.3%
29.0%
Numbers in parentheses are negative
O’HARE SUBMARKET HISTORICAL DIRECT VACANCY
SECOND QUARTER 2011 | CHICAGO SUBMARKET SNAPSHOTS
12
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M B R E A L E S TAT E
ABOUT MB REAL ESTATE
At MB Real Estate, our corporate mission is to maximize the value of our clients’ real estate by creating timely and innovative solutions that meet their unique needs and objectives. We offer the highest level of real estate support with our team of committed, resultsdriven experts in asset and facilities management, leasing, tenant representation, development, project management, and investment services. Supported by dedicated accounting, marketing, human resources, and information technology teams, our unique full-service firm is an industry leader in local and national corporate real estate.
MB REAL ESTATE HEADQUARTERS
DEPARTMENT LEADERSHIP
181 West Madison, Suite 4700 Chicago, Illinois 60602 phone: 312.726.1700 fax: 312.807.3853
MARK A. BUTH
EAST COAST REGIONAL HEADQUARTERS
GARY A. DENENBERG
Senior Vice President & Managing Director of Leasing Services
ANDREW J. DAVIDSON Executive Vice President & Managing Director of Corporate Services & Tenant Advisory
335 Madison Avenue, 14th Floor New York, New York 10017 phone: 212.350.2300 fax: 212.350.2301
Executive Vice President & Managing Director of Leasing Services
DAVID R. GRAFF Senior Vice President of Project Services
MAUREEN G. GROVE Vice President & Managing Director of Accounting Services
COMPANY LEADERSHIP PETER E. RICKER Chairman & CEO
JOHN T. MURPHY
DANIEL J. NIKITAS Executive Vice President of Corporate Services & Tenant Advisory Services
KEVIN M. PURCELL Executive Vice President & Managing Director of Asset Management
President
EVE WEST Chief Administrative Officer & Managing Director, Support Services
SECOND QUARTER 2011 | CHICAGO SUBMARKET SNAPSHOTS
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