F I R S T Q U A R T E R
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2 012 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 ONE
CHICAGO CENTRAL BUSINESS DISTRICT
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
T h e C h ic a g o M a r ke t O v e r v i e w i s p ubl i s h e d q u a r t e r l y by M B R e a l E s ta te. To o b t a in ad d i ti o n a 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:
JAC K GAV IN Senior 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 FIRST QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS
1
Spread in occupancy between Class B and C buildings grows
Occupancy in the Central Loop was reduced by 128,000 square feet during the first quarter. Class A and C buildings drove this negative absorption, as newly-delivered spec suites hit the market in multiple Class A buildings and tenants in Class C buildings continued to upgrade space. The Class B direct vacancy rate fell to 15.9 percent while it increased to 18.0 percent in Class C.
Size (sf)
Building Class
222 N LaSalle St *
278,040
B
11 S LaSalle St
150,166
C
10 S Dearborn St *
139,165
A
161 N Clark St *
116,964
A
200 N LaSalle St
97 833 97,833
B
111 W Jackson Blvd
97,426
C
1 N Dearborn St
97,261
B
120 S LaSalle St
94,995
B
175 W Jackson Blvd **
68,539
B
175 W Jackson Blvd **
67,725
B
*Indicates future available space ** Indicates space available in current quarter
Sublease availability increased by 27 percent due to Citadel adding 129,000 square feet to sublease availability at 131 South Dearborn. The Central Loop has four contiguous blocks of available sublease space greater than 50,000 square feet, the most of any submarket. Only one sales transaction closed as Hearn Company acquired 55 West Monroe from LaSalle Investment Management for $136 million, or $169 per square foot. Vancouver-based Onni Group is under contract to purchase 200 North LaSalle from Younan Properties for $147 per square foot. An undisclosed Canadian pension fund is reportedly under contract to acquire the North and South buildings at 141 West Jackson (Chicago Board of Trade Building) for $125 per square foot.
SUBMARKET SNAPSHOTS
Chicago Title & Trust signed the largest lease and will relocate from 90,000 square feet at 161 North Clark and into 83,000 square feet at 10 South LaSalle. GrubHub signed a 60,000 square foot lease at 111 West Washington, backfilling space to be vacated by OWP&P as they move to the East Loop. Quantitative Risk Management continued to expand by renewing and leasing an additional 21,000 square feet at 181 West Madison.
LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address
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
13,566,827
14,147,852
8,624,259
36,338,937
(70,476)
35,064
(92,394)
(127,805)
Direct Vacancy Rate
10.2%
15.9%
18.0%
14.2%
Total Vacancy Rate (Direct + Sublease)
13.5%
18.2%
19.2%
16.7%
Inventory (square feet) Year to Date Absorption (square feet)
Numbers in parentheses are negative
CENTRAL LOOP SUBMARKET HISTORICAL DIRECT VACANCY
FIRST QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS
2
Demand continues to stabilize
The East Loop, which has been burdened by high vacancy compared to the overall market, experienced relatively flat demand. The “flight-toquality” trend was evident this quarter as occupancy increased Class A and B buildings, but decreased by 100,000 square feet in Class C buildings. The largest new lease was signed by Johnson Publishing, as they will occupy 40,000 square feet at 200 South Michigan. The transaction results in new demand for the Class B segment as the firm will relocate from the South Loop. Two large subleases were signed at 130 East Randolph, leading to a 24 percent reduction in available sublease space. McGraw Hill sublet 50,000 square feet to McDermott, Will & Emory and 23,000 square feet to University of Chicago.
LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address
Size (sf)
Building Class
200 E Randolph St
340,959
A
303 E Wacker Dr *
241,206
B
130 E Randolph St *
188,777
B
55 E Monroe St
175,263
B
333 S Wabash Ave
147 500 147,500
B
303 E Wacker Dr *
143,960
B
205|225 N Michigan Ave
120,446
B
401 S State St
110,898
C
1 & 2 Prudential Pl
73,644
B
33 S State St
70,107
C
Investment activity increased, and several buildings are now on the market. CommonWealth REIT closed on its purchase of 111 East Wacker for $150 per square foot. Bentley Forbes is seeking a buyer for a partial stake at Prudential Plaza, the 2.2 million square foot, two building complex located at 130 East Randolph and 180 North Stetson. SEB Asset Management is now seeking a buyer for 150 North Michigan. 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 Inventory (square feet)
A
B
C
Total
4,040,431
10,370,547
8,479,720
22,890,698
Year to Date Absorption (square feet)
85,634
81,540
(100,173)
67,001
Direct Vacancy Rate
18.5%
23.3%
15.0%
19.4%
Total Vacancy Rate (Direct + Sublease)
21.7%
24.6%
15.7%
20.8%
SUBMARKET SNAPSHOTS
Large users evaluating the market continue to have multiple options. * Indicates future available space Currently, there are eight contiguous, direct blocks of at least 110,000 square feet available for lease, including a 341,000 square foot block at 200 East Randolph.
CENTRAL BUSINESS DISTRICT
EAST LOOP
Numbers in parentheses are negative
EAST LOOP SUBMARKET HISTORICAL DIRECT VACANCY
FIRST QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS
3
330 North Wabash signs third large tenant, but vacancy rises across all classes again
For the seventh consecutive quarter, occupancy declined across all building classes. At 26.7 percent, Class B buildings in the North Michigan Avenue submarket have the highest direct vacancy rate of any segment in the CBD. Despite the continued negativity, 330 North Wabash signed its third new, large tenant in the past six months. Latham & Watkins signed a 137,000 square feet lease at the newly renamed AMA Building. Since they are relocating from the West Loop, the move will result in positive absorption.
Size (sf)
Building Class
515 N State St *
373,608
A
401-465 E Illinois St
210,000
C
435-445 N Michigan Ave
129,947
C
410 N Michigan Ave *
125,817
B
401 N Michigan Ave *
104 726 104,726
B
98,489
B
330 N Wabash Ave 455 N Cityfront Plaza Dr
87,700
A
360 N Michigan Ave
76,855
C
980 N Michigan Ave
62,384
A
401 N Michigan Ave
51,870
B
* Indicates future available space
The AMA’s 374,000 square foot block at 515 North State is now available Italicized addresses indicate new blocks this quarter for future occupancy as they will relocate to 330 North Wabash. Also, a 210,000 square foot block at 401-465 East Illinois was placed on the market after the building sold in an auction. Macerich Company purchased 500 North Michigan from Zeller Realty Group for $220 per square foot. Macerich owns the Shops at North Bridge next door and hopes to connect the lower floors of the two properties and expand the retail components. 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
4,661,752
4,382,679
12,997,101
(36,161)
(117,249)
(84,606)
(238,016)
Direct Vacancy Rate
22.1%
26.7%
14.9%
21.3%
Total Vacancy Rate (Direct + Sublease)
25.2%
27.7%
15.6%
22.9%
Inventory (square feet) Year to Date Absorption (square feet)
SUBMARKET SNAPSHOTS
Available sublease space was reduced by 30 percent. This was due to Children’s Memorial Hospital subleasing the 96,000 square foot former Playboy Enterprises headquarters at 680 North Lakeshore Drive.
LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address
CENTRAL BUSINESS DISTRICT
NORTH MICHIGAN AVENUE
Numbers in parentheses are negative
NORTH MICHIGAN AVENUE SUBMARKET HISTORICAL DIRECT VACANCY
FIRST QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS
4
Occupancy continues to rise as the Merchandise Mart experiences robust activity
After experiencing 206,000 square feet of positive absorption in 2011, occupancy rose by an additional 86,000 square feet during the first quarter. At 11.1 percent, the submarket’s direct vacancy rate is by far the lowest in the CBD. In turn, landlords in River North have comparatively more pricing leverage than those in other submarkets. Foley & Lardner signed the largest lease in the CBD this quarter as they extended 169,000 square feet at 321 North Clark. However, the restructured lease results in a 42,000 square foot contraction.
LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address
Size (sf)
Building Class
111 W Illinois St
141,503
A
350 W Mart Ctr *
106,168
B
350 W Mart Ctr
85,000
B
222 Merchandise Mart Plz
63,193
B
321 N Clark St
61,431
A
222 Merchandise Mart Plz
50,000
B
Investment activity was highlighted by Shorenstein Properties’ purchase of the 1.2 million square foot building at 350 West Mart Center from Vornado Realty Trust. The $228 million ($183/sf) purchase price for the 88 percent leased building translated into a 7 percent capitalization rate for the new owners. 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
A
B
C
Total
4,004,961
3,626,997
5,666,059
13,298,017
118,716
(52,267)
19,518
85,967
Direct Vacancy Rate
12.7%
9.8%
10.6%
11.1%
Total Vacancy Rate (Direct + Sublease)
14.6%
20.6%
15.0%
16.4%
Inventory (square feet) Year to Date Absorption (square feet)
SUBMARKET SNAPSHOTS
The iconic Merchandise Mart located at 222 Merchandise Mart Plaza * Indicates future available space completed three large deals. Digital media agency Razorfish moved into Italicized addresses indicate new blocks this quarter 65,000 square feet, roughly doubling its previous footrprint at 600 West Fulton in the West Loop. The Chicagoland Entrepreneurial Center leased 50,000 square feet for its “1871” tech incubator. These transactions highlight Chicago’s ability to attract technology firms with strong growth potential. Also signing a lease at the building was Medicus International, who renewed 70,000 square feet.
CENTRAL BUSINESS DISTRICT
RIVER NORTH
Numbers in parentheses are negative
RIVER NORTH SUBMARKET HISTORICAL DIRECT VACANCY
FIRST QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS
5
MF Global’s bankruptcy foreshadows trouble for smallest submarket
Occupancy remained essentially unchanged during the first quarter, which was a welcome sight for a submarket which saw 7.2 percent of its occupied stock vacated in 2011. Comprised of just over 2.2 million square feet, the South Loop is subject to large swings in vacancy rates if a large tenant enters or exits the subject.
LARGEST BLOCK OF DIRECT AVAILABILITY Building Address
Size (sf)
Building Class
619 S LaSalle St
89,000
C
The South Loop, while farther from the major commuter train stations than the West Loop and Central Loop, has direct access to the CTA trains. It is also closest to the residential area of the South Loop, an up and coming location for young professionals. Its location is benefit, but with only one Class A building, it will trail the recovery. As tenants have been upgrading their office space to take advantage of attractive rents, the South Loop will continue to lag because of its limited options. 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 Inventory (square feet)
A
C
Total
1,019,325
1,232,239
2,251,564
Year to Date Absorption (square feet)
2,681
(11,552)
(8,871)
Direct Vacancy Rate
20.4%
24.7%
22.8%
Total Vacancy Rate (Direct + Sublease)
22.7%
25.2%
24.1%
SUBMARKET SNAPSHOTS
With that said, a quiet first quarter may be the calm before the storm. An MF Global trustee is reportedly seeking to break a 77,000 square foot lease at 440 South LaSalle (One Financial Place) after the company filed for bankruptcy last year. A judge previously allowed MF Global to break a 94,000 square foot lease at the Board of Trade building, so it is likely that space will be officially vacated this year. If so, an additional 3.4 percent of occupied stock will be vacated, putting the submarket in further distress.
CENTRAL BUSINESS DISTRICT
SOUTH LOOP
Numbers in parentheses are negative
SOUTH LOOP SUBMARKET HISTORICAL DIRECT VACANCY
FIRST QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS
6
Demand in the best performing submarket of 2011 cools
After gaining 732,000 square feet of occupancy in 2011, West Loop occupancy fell by 55,000 square feet during the first quarter. Class A properties, which had been consistently outperforming the broader market, dragged down West Loop occupancy as the direct vacancy rate of this segment rose by 90 basis points. On the other hand, Class B assets realized 108,000 square feet of positive absorption, lowering its direct vacancy rate to 12.7 percent.
Size (sf)
Building Class
500 W Monroe St
392,063
A
233 S Wacker Dr
291,440
A
309-311 W Monroe St *
214,484
C
300 S Riverside Plz *
161,708
B
500 W Madison St
92 924 92,924
A
233 S Wacker Dr
91,216
A
1 S Wacker Dr
86,658
A
30 S Wacker Dr
85,831
A
333 W Wacker Dr
80,736
A
227 W Monroe St *
75,850
A
* Indicates future available space Italicized addresses indicate new blocks this quarter
Investors continued to be active in the West Loop. The Irvine Company purchased a 50 percent stake in the trophy building at 1 North Wacker for $444 per square foot. Vintage buildings also traded as Berkley Properties purchased 20 North Wacker (The Civic Opera Building) for $137 per square foot. The Farbman Group made another CBD purchase by acquiring 209 West Jackson for $83 per square foot. Investment activity should continue to be steady. GE Pension Trust is marketing 200 and 230 West Monroe and is expected to fetch $210 million, or $188 per square foot.
SUBMARKET SNAPSHOTS
Despite negative absorption, leasing activity remained strong. Dotomi signed a new lease for 80,000 square feet at 101 North Wacker; a 56,000 square foot expansion from their current footprint at 168 North Clinton. Two current tenants at 101 North Wacker also committed to longterm leases. TTX extended its lease of 103,000 square feet, while Segal company renewed for 50,000 square feet. Prophet will relocate to 22,000 square feet at 564 West Randolph and vacate approximately 17,000 square feet at 180 North Stetson in the East Loop.
LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address
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
27,066,432
9,726,080
6,423,179
43,215,691
(129,167)
108,231
(33,839)
(54,775)
Direct Vacancy Rate
14.7%
12.7%
16.8%
14.6%
Total Vacancy Rate (Direct + Sublease)
17.1%
13.6%
18.8%
16.6%
Inventory (square feet) Year to Date Absorption (square feet)
Numbers in parentheses are negative
WEST LOOP SUBMARKET HISTORICAL DIRECT VACANCY
FIRST QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS
7
SUBURBAN CHICAGO
SUBURBAN MAP
SUBMARKET SNAPSHOTS FIRST QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS
8
Demand subsides as Central Park of Lisle hits the market
The East-West submarket experienced 202,000 square feet of positive absorption in 2011. Although demand cooled during the fourth quarter as direct vacancy stayed steady. As the most central of the submarkets, with executive housing stretching from Hinsdale to Naperville and direct interstate access to the entire MSA, the submarket began a recovery last year while other submarkets continued to lose tenants.
LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address
City
Size (sf)
Building Class
700 Oakmont Ln
Westmont
256,767
A
3075 Highland Pky *
Downers Grove
228,764
A
2400 Cabot Dr
Lisle
217,718
B
747 E 22nd St
Lombard
209,557
B
28100 Torch Pky
Warrenville
203,842
B
3500 Lacey Rd *
Downers Grove
132,045
A
Investment activity was largely quiet as only one property over 150,000 square feet was sold. Hub Group purchased 2000 Clearwater Drive in Oak Brook for $50 per square foot with plans to redevelop and occupy the building. Activity may increase in the coming quarters as White Oak Realty Partners is marketing the Class A, two building Central Park of Lisle complex for sale. The two buildings are a combined 622,000 square feet and 87 percent leased. 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
A
B
C
Total
20,601,484
14,567,002
4,906,704
40,075,189
(61,311)
35,868
(5,935)
(31,378)
Direct Vacancy Rate
19.7%
24.1%
22.6%
21.6%
Total Vacancy Rate (Direct + Sublease)
24.6%
27.7%
22.6%
25.5%
Inventory (square feet) Year to Date Absorption (square feet)
SUBMARKET SNAPSHOTS
1333 Butterfield Rd Downers Grove 98,520 A Last quarter it was announced that Sara Lee was vacating 500 Joliet Rd * Willowbrook 78,400 B 441,000 square feet at 3500 Lacey Road in Downers 2000 S Finley Rd * Lombard 78,300 B Grove to relocate to the redeveloped 400 South Jefferson 2655 Warrenville Rd Downers Grove 76,691 A in Chicago. A tenant of this size can significantly affect its submarket’s vacancy rate. Fortunately, HAVI Global * Indicates future available space Italicized addresses indicate new blocks this quarter Solutions signed a long-term lease to backfill 140,000 square feet. However, they are relocating from the nearby building at 3075 Highland Parkway, resulting in little benefit in occupancy for the submarket. Thus, the submarket will need to attract large users from outside its boundaries over the next two years to prevent a large vacancy increase.
SUBURBAN CHICAGO
EAST-WEST
Numbers in parentheses are negative
EAST-WEST SUBMARKET HISTORICAL DIRECT VACANCY
FIRST QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS
9
Class A buildings post recovery as three buildings trade
Historically, the North submarket has had the highest occupancy rate of the four Suburban submarkets. However, the submarket lost nearly 1 million square feet in occupancy between 2010 and 2011. This quarter, demand in Class A properties increased as vacancy fell by 90 basis points. Driving the occupancy increase was Northwestern Memorial Hospital’s absorption of 53,000 square feet at 2701 Patriot Boulevard in Glenview.
LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address
City
Size (sf)
Building Class
75 N Fairway Dr
Vernon Hills
200,344
A
1 Overlook Pt
Lincolnshire
148,686
A
544 Lakeview Pky
Vernon Hills
144,999
B
2355 Waukegan Rd
Bannockburn
106,495
A
1 Corporate Dr
Long Grove
104,637
A
6 Parkway Blvd N *
Deerfield
95,854
A
Acco Brands signed the largest new transaction of the suburban market and will lease 189,000 square feet at 4 Corporate Drive in Long Grove. The move will boost its footprint by 19,000 square feet when they relocate from 300 Tower Parkway in Lincolnshire. Barilla signed the largest renewal of the quarter by extending its lease of 70,000 square feet at 1200 Lakeside Drive in Bannockburn. After selling Caremark Towers II last quarter, Fulcrum Asset Advisors sold Caremark Tower I at 2215 Sanders Road in Northbrook to White Oak Realty Partners and Syndicated Equities Group for $128 per square foot. 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
16,857,227
7,447,365
2,539,366
26,843,958
122,762
16,657
(21,657)
117,761
Direct Vacancy Rate
19.7%
20.2%
23.3%
20.1%
Total Vacancy Rate (Direct + Sublease)
26.5%
21.4%
23.6%
24.8%
Inventory (square feet) Year to Date Absorption (square feet)
SUBMARKET SNAPSHOTS
75 Tri State International * Lincolnshire 82,344 A In light of elevated vacancy rates, asking rents declined 850-860 Technology Way Libertyville 78,000 A 3.9 percent over the year led by a 5.0 percent decrease 1 Corporate Dr Long Grove 77,628 A in Class A rents. This may also explain why occupancy 2-4-6 Genesee St Waukegan 75,996 C increased in Class A buildings, as tenants took advantage of reduced rental rates. The other submarkets, where * Indicates future available space asking rents were essentially flat, may need to reduce Italicized addresses indicate new blocks this quarter rates further in order to generate the demand experienced by the North submarket this quarter.
SUBURBAN CHICAGO
NORTH
Numbers in parentheses are negative
NORTH SUBMARKET HISTORICAL DIRECT VACANCY
FIRST QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS
10
Minor absorption among all classes, vacancy still the highest among Suburban submarkets
After losing over 1 million square feet of occupancy in 2011 alone, vacancy dropped slightly across all building classes. However, at 27.5 percent, the Northwest has the highest vacancy rate of the four Suburban submarkets. Class A fundamentals are much stronger than Class B and C, with asking rents leveling over the year. The submarket has been impacted by the retrenching of retailers and the dissolution of mortgage companies stemming from the recession.
LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address
City
Size (sf)
Building Class
21440 Lake Cook Rd 1600 McConnor Pky
Deer Park
351,425
A
Schaumburg
300,686
A
1701 Golf Rd
Rolling Meadows
234,164
A
200 N Martingale Rd *
Schaumburg
228,568
A
3501 Algonquin Rd
Rolling Meadows
206,770
C
1299 Algonquin Rd
Schaumburg
195,393
C
5550 Prairie Stone Pky *
Hoffman Estates
193,601
A
150 NW Point Blvd
Elk Grove Village
176,844
A
Investment sales were highlighted by Adventus Realty Partners purchase of the four building, 515,000 square foot complex at 24502500 Westfield Drive in Elgin. The Class A buildings are 86 percent leased, however the purchase price of $51 per square foot demonstrates the submarket’s distress. A surplus of large blocks exists as 17 contiguous blocks of 100,000 square feet or more are available for direct lease. 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 Inventory (square feet)
A
B
C
Total
18,509,014
9,728,090
2,325,516
30,562,620
Year to Date Absorption (square feet)
15,759
44,931
4,725
65,415
Direct Vacancy Rate
23.3%
34.6%
31.3%
27.5%
Total Vacancy Rate (Direct + Sublease)
25.1%
36.5%
32.2%
29.3%
SUBMARKET SNAPSHOTS
Three new transactions over 20,000 square feet 425 N Martingale Rd Schaumburg 156,560 A occurred. The largest was a new requirement of 40,000 3800 Golf Rd Rolling Meadows 154,595 B square feet for U.S. Cellular at 100 Mittel Road in Wood * Indicates future available space Dale. Also, Cambium Networks leased 34,000 square feet at 3800 Golf Road in Rolling Meadows, and Interactive Health Solutions took 27,000 square feet at 1700 East Golf Road in Schaumburg.
SUBURBAN CHICAGO
NORTHWEST
NORTHWEST SUBMARKET HISTORICAL DIRECT VACANCY
FIRST QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS
11
Asking rates rise in Class A as Class B and C suffer from record high vacancies
O’Hare is the smallest submarket in Suburban Chicago in terms of inventory. The Class A direct vacancy rate fell below the critical 20 percent threshold to 19.7 percent. However, older product is far less occupied. The Class B direct vacancy rose to 31.3 percent, while Class C direct vacancy rose to a staggering 37.2 percent. Given this, tenants of Class B and C buildings will have the upperhand in lease negotiations for years to come.
City
Size (sf)
Building Class
2350-2360 E Devon Ave
Des Plaines
142,596
B
9525 W Bryn Mawr Ave
Rosemont
123,668
A
8420 W Bryn Mawr Ave
Chicago
99,395
A
4242 N Harlem Ave
Norridge
93,155
B
8700 W Bryn Mawr Ave
Chicago
86,825
A
8700 W Bryn Mawr Ave
Chicago
76,469
A
9500 W Bryn Mawr Ave
Rosemont
69,701
A
10255 W Higgins Rd
Rosemont
69,695
A
999 E Touhy Ave
Des Plaines
59,710
B
2400 E Devon Ave
Des Plaines
51,000
B
Italicized addresses indicate new blocks this quarter
Bimbo Bakeries signed a new five-year, 28,000 square foot lease at 8550 West Bryn Mawr in Chicago. Commerce Center At O’Hare, located at 1111 East Touhy Avenue in Des Plaines, renewed two large tenants; Founders Insurance renewed and expanded by 18,000 square feet for a total of 32,000 square feet, while National Insurance Crime Bureau renewed its 32,000 square foot lease. Only ten contiguous blocks of 50,000 square feet or more are available in the submarket. While in absolute terms, this is considerably lower than other submarkets. It is commensurate with the smaller inventory of the market. The O’Hare submarket is located in northwestern Cook County surrounding O’Hare International Airport, with major cities including northwestern Chicago, Elk Grove Village, and Rosemont.
O'HARE SUMMARY Inventory (square feet)
A
B
C
Total
7,844,652
4,330,547
2,538,608
14,713,807
Year to Date Absorption (square feet)
36,074
(46,689)
(27,807)
(38,422)
Direct Vacancy Rate
19.7%
31.3%
37.3%
26.2%
Total Vacancy Rate (Direct + Sublease)
21.7%
32.6%
37.3%
27.6%
SUBMARKET SNAPSHOTS
Contrary to the overall market, Class A asking rental rates have risen 3.2 percent over the past 12 months. This is coupled with an increase in occupancy, signaling that this particular segment may be in recovery.
LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address
SUBURBAN CHICAGO
O’HARE
Numbers in parentheses are negative
O’HARE SUBMARKET HISTORICAL DIRECT VACANCY
FIRST QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS
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Our mission is to provide clients and investors with extraordinary real estate value and unlimited support
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
PATRICIA ALUISI Senior Vice President & Managing Director of Administration
MARK A. BUTH Executive Vice President & Managing Director of Leasing Services
EAST COAST REGIONAL HEADQUARTERS 335 Madison Avenue, 14th Floor New York, New York 10017 phone: 212.350.2300 fax: 212.350.2301
ANDREW J. DAVIDSON Executive Vice President & Managing Director of Corporate Services & Tenant Advisory
GARY A. DENENBERG Executive Vice President & Managing Director of Leasing Services
DAVID R. GRAFF Senior Vice President of Project Services
COMPANY LEADERSHIP
MAUREEN G. GROVE
PETER E. RICKER
Vice President & Managing Director of Accounting Services
Chairman & CEO
JOHN T. MURPHY
DANIEL J. NIKITAS Executive Vice President of Corporate Services & Tenant Advisory Services
President
KEVIN M. PURCELL Executive Vice President & Managing Director of Asset Management
PETER J. WESTMEYER Senior Vice President & Managing Director of Investment Services
FIRST QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS
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