Sublease Tidal Wave Now Hitting The Suburbs
The Chicago Central Business District was hit in 2020 by a flood of office space going up for sublease, but this year, it’s the suburban submarkets getting hit.
Suburban tenants now have more than 3.4M SF up for sublease, an increase of more than 440K SF this year, according to a new report from MBRE. The latest suburban additions to the sublease market are Amita Health’s 222K SF headquarters at 2601 Navistar Lane in Lisle, Experian’s 177K SF at 955 American Lane in Schaumburg and Follet Corp.’s 150K SF at 3 Westbrook Corporate Center in Westchester.
Suburban office users are going through the same decision-making process that downtown users did, it just took a bit longer to pull the trigger, MBRE Senior Vice President Boris Yelyashov said.
It was more obvious to downtown companies that their employees, many of whom had commuted on packed trains, would not be returning to their offices anytime soon, making it an easy decision to put their space on the market just in case some other firm wanted it, he said. Suburbanites had largely commuted by car, and so many of these firms at first adopted a wait-and-see attitude. That's beginning to change.
"Now, some are thinking, this work-from-home thing may work, so we're going to start shedding space and make long-term decisions about what our footprint will look like going forward," Yelyashov said.
The suburbs now have 19 available subleases larger than 50K SF, up from six when the coronavirus pandemic began last year, and up from 10 at the end of 2020, MBRE found.
New subleases in the Chicago CBD haven’t stopped opening up, but the pace has slowed. Downtown tenants now have more than 5.6M SF for sublease, an all-time high, and up from 5.5M SF one month ago, according to MBRE. The previous record was 4.2M SF during 2009’s Great Recession.
There are now 23 downtown sublease blocks available that are greater than 50K SF, up from five one year ago and 19 last month. The newest subleases are Groupon’s 293K SF at 600 West Chicago Ave. in River North and Hyatt Hotels Corp.’s 53K SF at 150 North Riverside Plaza in the West Loop.
The West Loop leads all other CBD markets with 2.4M SF up for sublease, and 15 of the downtown subleases greater than 50K SF.