The walls keep coming down

While the legal profession seems to be holding on to ideas about private offices and square feet per employee, the tech world keeps going smaller and smarter.  The standard of 225 sq ft in 2010 is now 176 sq ft in 2012—and even this is projected to drop below 100 sq ft within five years.  See the article for more details:

http://www.usatoday.com/money/workplace/story/2012-06-05/tech-creates-workplace-everywhere/55405518/1

Medical Office Demand

Demand for medical office space continues in the Streeterville neighborhood. In advance of the opening of their new— and already full facility—Children’s Memorial signed a lease to pick up 98,000 sq ft of space. See the accompanying article for more details

http://www.chicagorealestatedaily.com/article/20120328/CRED03/120329776?template=mobile

Market Trends in Chicago

With the national unemployment edging towards 8%, commercial real estate executives are hoping that this points towards better times ahead.  According to CoStar, the Chicago office vacancy rate fell to 14.8% in the fourth quarter 2011, down from 15% in the third  quarter.  Respondents to a Real Estate Roundtable Economic Survey found that, “industry executives’ expectations for growth this year are improved, but hindered by concerns about underlying macroeconomic and political risks”. 

What does this mean for office tenants? Building owners are starting to pull back on concessions such as free rent and tenant improvement allowances while being more conservative with increases in asking rent.  If the unemployment rate keeps on dropping ( Bureau of Labor expects the rate to be mid 7% by November) we could see asking rents going north quickly.  In other words, if’ you’re considering a move or lease renewal in the next twelve months, now may be the time to act.

Free Chicago Office Market Report

At BYOBroker we know that information is power, and our mission is to provide our clients with the same information that professional commercial real estate brokers use.  In the same spirit, another brokerage house, Jones Lang LaSalle, recently published a free report that gives commercial office tenants a chance to see behind the curtain of the Chicago office market.  The report features information on average rental rates and vacancies for 54 downtown buildings and shows vacancy on a floor by floor basis.  It also provides an analysis of occupancy trends by building class (A,B and C) as well as their take on where the market is and where it’s headed.  For a free copy, send an e-mail request to: Chicago.Skyline@am.jll.com

JLL Graphic

For more information see David Roeder’s article in today’s Sun-Times: http://www.suntimes.com/business/roeder/10943558-452/take-a-peek-at-where-chicago-office-space-rentals-are.html

More Businesses Moving Back To City

Motorola Solutions CEO Greg Brown is ditching the suburbs and is lobbying other companies to do the same.  In an interview with Crain’s Chicago Business recently he detailed plans to create as many as 400 new jobs by the end of 2012.  While the newly spun off company has existing space in Illinois Center, there’s not nearly enough space to accommodate everyone there.  He said that the new location would likely be downtown or in the O’Hare area, which follows a trend we covered lasts month: https://byobroker.wordpress.com/2011/08/02/new-trend-of-businesses-moving-back-to-the-city/

While he says he was influenced by Mayor Emanuel to move back to the city, he follows the lead of other tech firms like Groupon and Google that recognize that talented younger workers prefer to live and work in the city, avoiding suburban commutes.  Mayor Emanuel recently named Brown to the board of World Business Chicago, the economic development agency for the city, and he has been out proselytizing other CEOs to follow his lead.   See the full article here: http://www.chicagobusiness.com/article/20110920/NEWS08/110919878/motorola-hunting-for-office-space-in-chicago

Office Market Improving?

Jones Lang LaSalle is reporting that the national office market is showing signs of a rebound in demand for office space.  Well, at least it was before the last round of economic news.  Forget what we know about the latest bit of job news that we got today–that the US added NO new jobs in August–this report says that things had been trending in the other direction.  According to the report, nationwide office vacancy dropped from 18.4% down to 18.1%, with most markets showing a decline in available space.  With 11 million square feet of positive absorption in the second quarter, the trend was almost triple the 4.3 million of absorption in the first quarter.  This all pointed to an improving office market which, as a lagging indicator of the economy, meant that businesses were feeling positive about the economy and picking up space to hire additional employees.  The question now is will this trend continue?

Read the full article here: http://www.globest.com/news/1991_1991/chicago/313616-1.html?ET=globest:e27124:483812a:&st=email

New trend of businesses moving back to the city?

Bucking a trend that started in the 70’s and peaked in the 80’s and 90’s, businesses are starting to abandon the suburbs and move back to Chicago.  Long viewed as an opportunity to reduce operating costs and get more space, companies like Sears Holdings and Sara Lee moved their headquarters out of the city and into massive suburban complexes.  In a surprising about-face, Sara Lee is now considering moving back.  If it happens, they would join other big names like BP, United Airlines, Willis Group, and possibly Barilla and Acco Brands.  Growing firms like Groupon and Google have decided to stay in the city in order to draw from the large engineering and advertising talent pool.   

This shift is partly a result of changing demographics, with people waiting longer to get married and move to the suburbs, and also increased vacancy in buildings downtown, which currently stands at 18%, or 24 million square feet.  Read more about this here.