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Suburban Office Market Finally Has A Not-So-Bad Quarter

Presidents Plaza near O'Hare International Airport

Aside from trophy properties in top submarkets like O’Hare and Oak Brook, much of the suburban office market stayed in the doldrums last year while Chicago’s central business district soared. But Chicago’s market put up poor numbers in Q2, and the suburbs recorded nearly 193K SF in positive absorption, according to a new report from Colliers International.

The region saw 405K SF of negative absorption in Q1, which compounded a losing streak that lasted throughout 2019.

It’s too early to say if the region will benefit from any worry tenants may have about sending their workers back downtown and possibly exposing them to the coronavirus, whether on public transit or on densely packed city streets, Colliers added. Much of the Q2 boost for the suburbs came from leases signed late in 2019, mostly for Class-A spaces, the firm said.

But leasing does continue. Five tenants throughout the suburbs signed new leases or expansions of 15K SF or more during Q2, Colliers found.

Overall suburban vacancy stayed relatively flat, dropping 10 basis points to 22.2%, and Class-A vacancy declined 20 basis points to 22.2%.

Concerns about the direction of the economy are having a chilling impact in the suburbs as well. An already-slow investment market, which saw just one suburban asset change hands in Q1, stalled even further, Colliers said, with no significant transactions in Q2.