The CBD is rocking a record low vacancy rate of 11.1%, but the district's sublease market is worth watching in the early moments of 2017.

According to MB Real Estate's Q4 market beat report, the CBD's sublease market grew by 296k SF in Q3, bringing the total sublease availability to 4.1M SF. This is the first time since 2009 that more than 4M SF of sublease space has been on the market.

In past cycles, this would be cause for concern. But the fundamentals of office leasing downtown remain strong. A more detailed look at the report shows the supply isn't as high as in previous cycles. In 2001, the sublease footprint was 6.2M SF. The sublease footprint steadily increased from 2011's low-water mark of 2.9M SF, but demand for sublease space remains strong, indicating that significant portions of this total will eventually be absorbed. A record 1.3M SF of sublease  space was absorbed last year, and 2016 is projected to reach 1.6M SF.

The biggest contribution to the Q3 numbers was four blocks at 131 South Dearborn with leases set to expire next year. Two of those blocks have been removed; the others are expected to follow soon.