Illinois Real Estate Journal August 2011 : Page 1

VOLUME 14, NUMBER 4 ©2011 Law Bulletin Publishing Co. August 2011 ***DEBUT SUPPLEMENT IREJ OFFICE CENTRE INSIDE *** Chicago CBD posts impressive second quarter numbers Directories Inside : Architects, Property Management Firms, Multifamily Finance P.27 986,000 square feet in the second quarter, bring-ing the total to 1.3 million square-feet for the year-to-date, reports Transwestern. This is quite a jump for the market, recording more positive absorption in six months than any full year since 2007. The surge in activity brought the overall vacancy rate in Chicago’s CBD down to 12.5 percent in the 2nd quarter of 2011, from 13.3 percent in the 1st quarter and a cyclical high of 14.1 percent a year ago. Transwestern’s reports typically show vacancy rates 2-3 percent lower than most other industry reports, because the firm includes data from buildings less than 15,000 square feet, single ten-ant, and owner occupied facilities. All told, the report includes 50 million square-feet more than if it tracked multi-tenant alone. This is done in efforts to show correlation be-tween job growth and occupancy of inventory, and, because owner occupied space often does become competitive space. The addition of Blue Cross Blue Shield’s space at 300 E. Randolph is a prime example. It added 800,000 square feet to its facility that was supposed to be all owner-oc-cupied. It eventually offered half of it for sub-lease. If an owner does not offer up space for sub-lease, the facility is recorded as 100 percent oc-cupied. The downtown market activity is being driven by a number of reasons; chief among them is the desire for firms to locate nearer to talent. Within the last year, companies like United Airlines have announced large-scale moves to the CBD. Mo-torola and GE Capital have announced major ex-pansions and hot start-ups like Groupon have grown to take on several large blocks of space. As a result, employment growth in Chicago has picked up. The metro Chicago economy recorded a 12-month job growth of 37,100 during the 12 months ending April 2011. The unemployment rate declined to 8.7 percent in April 2011, from 9.5 per-cent in January, and 10.7 percent a year ago. While this activity may be positive, it is still below the average annual gains of 47,000 from 2005-2007. OFFICE continued on Page 21 Apartment market heats up By Mark Thomton dearth of commercial construction in Chicago has been the norm for the past several years, but as the multifamily mar-ket stands to post strong gains for the foreseeable future, big name developers are once again lining up to alter the city’s skyline. While the housing market may still be searching for its nadir, the apartment market is demonstrat-ing strong fundamentals, as rents are rising and de-mand is increasing. It has been enough to spark the interest of MULTIFAMILY continued on Page 11 A By Mark Thomton he downtown office market continues to re-cover at an impressive rate, with the first half of 2011 reporting the strongest numbers since 2007. Unfortunately, the dynamics working in its favor seem to be working against the subur-ban market as its office supply continues to strug-gle, according to Transwestern’s second quarter outlook. Net absorption of office space in the CBD hit T PRSRT STD U.S. Postage PAID TWIN CITIES, MN PERMIT NO. 31515

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