Writing with an update on the local office market in Chicagoland.
Social distancing measures have resulted in a dramatic downshift in office leasing, sales, and development activity. Average office vacancy should temporarily increase by 1% due to lower demand and unfortunately timed development projects. That said, average vacancy in 2020 should remain under 13% for the year the seventh year in a row. Average rents in 2020 should decrease by 3% before recovering in 2021 or early 2022.
Even before the Corona virus, office sales were already got off to a sluggish start in 2020. Total sales volume for the last twelve months fell to $3 billion for the first time since 2011, due to a pullback in the Class A downtown submarket. This submarket’s decline is the result of record-high pricing and uncertainty regarding local real estate taxes. The economic downturn will further depress sales volume and prices across all Chicagoland submarkets.
Stay healthy and safe.
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September 10, 2020
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