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CBD, Suburban Office Absorption Rates Remain Torrid

A view of the downtown Chicago office district

How much longer can the metro Chicago office real estate market ride this wave before it crests? It's still a bull market for office leasing in the CBD and the suburbs, according to NGKF's Q3 office report.

The metro office market continues to expand, with 542k SF of positive net absorption in Q3. Year-to-date, almost 1.7M SF has been absorbed, outpacing 2015's 1.4M SF for the same time frame. Most of the absorption is in the CBD (1.4M SF) but the burbs are heating up despite the widely reported moves of ConAgra and Beam Suntory to Merchandise Mart.

All this activity means vacancy rates dropped 10 bps to 15.6%, a number not seen in a decade and 540 bps below the 2010 high-water mark of 21%. The overall market is so strong that NGKF doesn't see a reversal anytime soon.