Most Suburban Office Markets Recorded Positive Net Absorption In Q1
The Chicago suburban office market ended Q1 with a modest decline in the vacancy rate, while greater investor interest boosted sales over the same period last year, according to NAI Hiffman's Q1 suburban office market report. The big numbers reflect the steady rebound in the suburban office market over the past year.
Sales volume for the first three months of 2017 topped $230M, headed by GlenStar Properties' $80M deal for Schaumburg Corporate Center and American Landmark Properties' $77M acquisition of the Illinois Science & Technology Park in Skokie. The transaction volume is a 25% increase over Q1 2016.
Notable buildings on the market include 1 Pierce Place and 500 Park Blvd. in Itasca. The seller, Hamilton Partners, is seeking bids as high as $98M for those assets.
Asking rents for suburban trophy properties rose to $29.04/SF, a 2.4% increase. The vacancy rate is at 19.1%, reflecting a drop of seven basis points from Q4 2016. It is a welcome reversal for the overall market, which saw negative net absorption in three of the four quarters last year, the foreclosure of AT&T's Hoffman Estates campus and Zurich North America moving to its new Schaumburg HQ.
The strongest submarket remains O'Hare, which posted the lowest vacancy rates and asking rents. Asking rents in the submarket rose nearly 5% to $34.08/SF, while the vacancy rate plummeted 178 bps to 14.9%. There was positive net absorption in all the suburban submarkets except the north suburbs, where Walgreens vacated over 300K SF in Lincolnshire.