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Next year is going to be a confusing one for anyone in the office market. The coronavirus pandemic emptied out most offices throughout much of the past year, and everyone from entry-level workers to CEOs found Zoom calls and other technologies made it possible to work from home. But the possibility of vaccinations and increased safety won’t end uncertainty and leaves both landlords and tenants with a dilemma: How do you negotiate leases when it’s impossible to know how many employees will return to the office, how many will stay home and how much space will be needed?
New leases for significant amounts of space were rare throughout summer and fall as most tenants took a wait-and-see attitude. Q3 activity in Chicago was mostly confined to sublease deals and renewals, according to a Colliers International report. Year-to-date absorption was negative 146K SF, and about 2M SF became available for sublease. The average rental rate was essentially unchanged in the past year, standing at $42.13 per SF in Q3, just 2 cents below where it was in Q3 2019.
But behind the scenes, some negotiations are taking place, and big changes could be afoot.
“Truth be told, rental rates are dropping. It’s just not been published,” Savills Vice Chairman Lisa Davidson said.After years of record-breaking new construction and leasing activity, especially in a burgeoning downtown market where rental rates kept increasing, landlords are…
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