Continued growth in metro employment market
Unemployment increased 110 basis points to 6.8 percent in
January, but was still down from 8.8 percent in January 2014. Gains
are being made across many office-using sectors including
information, government, and professional & business services.
Along with this growth the housing market also moved towards full
recovery. The Case-Schiller Chicago Index closed 2014 at 127.0, 1.4
percent higher than December 2013. The Chicago Case-Schiller Condo
Index was also up at the end of 2014 closing at 1.1 percent higher
than December 2013. With employment numbers improving, the real
estate market can expect to see more demand as companies expand
their footprint.
Chicago metro unemployment rate
Source: JLL Research
Class A total vacancy rates hit post-recession lows
Across all submarkets Class A vacancy rates dipped to
post-recession lows, falling as far as 12.9 percent in North Cook
County. The most significant drop was seen in the Northwest market,
which decreased to 14.8 percent as a result of 102,000 square feet
of positive absorption, primarily at Continental Towers, Centennial
Center and Woodfield Corporate Center. Meanwhile, North Lake County
recorded an increase in vacancy with the addition of
1.1-million-square-foot Innovation Park Lake County to the
inventory, which is currently vacant. However, the submarket still
had 51,000 square feet of positive absorption.
Class A total vacancy by submarket
Source: JLL Research
Suburbs outpace CBD in first quarter of leasing activity
This quarter the suburbs had 7.8 percent more square footage
leased than the CBD. Several major transactions contributed to this
surge. The largest transaction was by Baxalta, a biopharmaceutical
spinoff company of Baxter, which signed a lease for 260,000 square
feet at 1200 Lakeside Drive. Pasta giant, Barilla, currently
located at 1200 Lakeside Drive, will be moving to 75,000 square
feet at 885 Sunset Ridge Road in August. Continuing the large lease
trend in the North submarket was CDW which signed for 209,000
square feet, or two buildings, in the Tri State International
office park in Lincolnshire.
Suburban leasing activity
Source: JLL Research
21.3%Total vacancy
110,024Q1 2015 net absorption (s.f.)
-6.2%12-month rent growth
753,000Total under construction (s.f.)
100.0% Total preleased
Office Insight
Chicago Suburban | Q1 2015
First months of 2015 show strength of suburbs
4.5% 4.9%6.1%
10.0%
10.4%
9.9%9.0%
9.2%
5.7%6.8%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
1,550,234 s.f.Square footage leased this quarter in the
suburbs.
16.8%
17.1%
12.9%
29.1%
16.3%
14.8%
10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
Eastern E/W
Westerm E/W
North (Cook County)
North (Lake County)
O'Hare
Northwest
Current conditions market and submarket Historical leasing
activity
Source: JLL Research Source: JLL Research
Total net absorption (s.f.)
Source: JLL Research
Total vacancy rate
Source: JLL Research
Direct average asking rent ($ p.s.f.)
Source: JLL Research
849,773
-242,577
-1,018,749
-2,165,869
-283,123
394,775
-107,998
153,085
1,643,439
125,343
-3,000,000
-2,000,000
-1,000,000
0
1,000,000
2,000,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 2015
$22.46
$22.93
$22.54 $22.54
$21.93 $21.72 $21.71
$21.49
$22.11
$21.08
$20.00
$20.50
$21.00
$21.50
$22.00
$22.50
$23.00
$23.50
2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 2015
20.0%20.7%
22.8%
24.8% 25.0% 24.5% 24.6% 24.3%
22.6%
21.3%
15.0%
17.0%
19.0%
21.0%
23.0%
25.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 2015
CBD
Land
lord
leve
rage
Tenant leverage
Peaking market
Falling market
Bottoming market
Rising market
Suburbs
1,612,037
2,121,349
1,862,378 1,766,2531,550,234
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2011 2012 2013 2014 Q1 2015
2015 Jones Lang LaSalle IP, Inc. All rights reserved. For more
information, contact: Amy Binstein | +1 312 228 3739 |
[email protected] Kramp | +1 312 228 2470 |
[email protected]
Metro
