Vacancy rate in Chicago CBD drops to 11.7%
The direct vacancy rate in Chicago’s central business district has fallen to 11.7 percent in the third quarter, according to MB Real Estate, and the direct vacancy rate in the 30 newest class A buildings (tracked by the MB Real Estate Index) has fallen to 8.1 percent.
However, construction activity in the Windy City is increasing the supply of office space, and some tenants could trade up to new buildings when their leases roll over, which could put pressure on vacancy rates. MB Real Estate’s third quarter 2016 Market Beat report notes more than 3.6 million square feet of office space is under construction in CBD Chicago, with 2.2 million square feet pre-leased.
Another concern: when tenants take new space, they do so in more efficient configurations, reducing their overall square footage. MB Real Estate predicts Chicago has 2.4 million square feet of shadow space, described as “currently leased office inventory that is known to have