Slight Downturn In Suburban Chicago Office Market In Q2

McDonald's Oak Brook, IL HQ, which it's vacating to move to Chicago's West Loop
Photo credit: Courtesy of CoStar

MB Real Estate's Q2 suburban Chicago office market report has some good news and some bad news. Let's start with the bad news, which, put into context, isn't even that bad.

There was 533k SF of negative absorption between April and June. Most of that came from the north suburbs, which saw 602k SF in negative absorption, led by Aon Corp's vacant 238k space in Glenview. The East-West corridor continues to be the strongest suburban office submarket, with 186k SF of positive absorption, but even that was mitigated by McDonald's announcement that it was leaving its longtime Oak Brook HQ for the West Loop. MBRE calls the negative absorption a blip on the radar.

Other than that, the report mirrors growing investor confidence in suburban office real estate. There were 12 sales of suburban office assets larger than 50k SF in Q2, totaling 2.1M SF and $252M in transaction volume (an average of $118/SF). There are 70 direct available blocks larger than 50k SF, up from 65 in Q2 2015. The overall direct vacancy rate was 20.1% and, in the strongest indicator, direct gross asking rents increased 6.1% to $21.85/SF.

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