Savills Studley Releases Q1 2017 Market Report Findings for Chicago CBD

Savills Studley, the leading global commercial real estate services firm specializing in tenant representation, has released its Q1 2017 Chicago CBD edition of the Savills Studley Office Market Report.

The quarterly report is an in-depth compilation of office leasing statistics, major transactions, submarket comparisons, employment results and investment and development trends specific to the Chicago CBD region.

Highlights from the Q1 2017 Chicago CBD Office Market Report findings:

• Following a strong close to 2016, Chicago leasing fell by 19.3 % to 2 msf in the first quarter. At just under $700 million, sales activity at the start of 2017 registered the weakest quarterly volume since the first quarter of 2013. A slowdown in the pace and volume of Chicago office transactions in 2017 corresponded with rising asking rents and operating costs.

• Class A average asking rent jumped by 2.6 % to $43.09 for the first quarter of 2017, as view space in trophy towers is commanding mid-$50 rents (gross). Increased operating costs have followed the recent amenities race between Chicago CBD landlords, as Class A average total rent reached a peak of $50.35 in 2016 according to the Savills Effective Rent Index.

• After rising 2.9 % in 2016, real estate taxes are expected to only continue to grow following the reassessment of buildings sold in the last cycle and to support the state and city’s well-documented budget challenges.

• Chicago CBD Class A and Overall availability rates both ticked down in Q1 2017, but are still slightly above Q1 2016 levels. For prospective tenants seeking Class A space, opportunities are limited in the short term. The most recent wave of trophy towers constructed or delivering within the next year are 74.4 % leased, and the next wave of new trophy space is not expected to deliver until 2019 or later.

• Transactions within Far West/Fulton Market and West Loop submarkets continue to make headlines, accounting for 6 of the 10 largest deals of Q1 2017.

The 2017 Q1 Savills Studley Chicago CBD Office Market Report as well as a national report and reports for each of the 29 major U.S. markets can be found at www.Savills-Studley.com.