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Monday, April 28, 2008
Good Enough Equals Great in Commercial Real Estate
Sometimes average isn't so bad, especially amid economic uncertainty.
Several commercial real estate industry observers have issued reports in recent days, examining how the Chicago market is faring. What they found in general: Chicago real estate markets and Chicago Loop apartments may not be outperforming, but neither are they in distress.
Studley, which specializes in representing tenants in commercial real estate transactions, found the overall Chicago market for office space to be healthy for landlords but, in recent months, beginning to tilt in favor of tenants.
For Class A office properties, "total rent, $42.11 [per square foot], posted its fourth consecutive year of increase," Studley said, adding that owners asked for higher rates in 2007 during the peak of the investment sales market.
But that could change.
"As vacancies and rental rates flattened toward the end of 2007, the market could see a turn toward a tenant-favored environment as rental rates fall and concessions rise, especially in non-trophy buildings," Studley said. Concessions include anything from office improvements to free rent.
Moody's Investor Services had its own take on various types of Chicago commercial real estate. Moody's described the city's central business district as having a moderate number of vacancies, weaker than New York or San Francisco but stronger than Dallas or Philadelphia.
Chicago's suburban office markets improved, according to Moody's, but supply still remained on the high side. For industrial properties, Chicago was graded as having a moderate amount of vacant space.
Cushman & Wakefield recently noted a nationwide slowdown in office demand.
"The combination of three straight months of employment declines and broad economic uncertainty caused a mild slowdown in leasing activity in the first quarter," said Maria Sicola, executive managing director and head of research for Cushman & Wakefield.
But the Chicago central business district vacancy rate wasn't much changed, the company said.
"The vacancy rate remained relatively flat during the quarter at 12 percent, up from 11.9 percent at the end of the year," it said.
Nationally, office vacancies rose from 9.7 percent at the end of last year to 9.9 percent in the first quarter.
Ellis chosen as marketer: CB Richard Ellis has been chosen to handle marketing and leasing for Northwest Village, a mixed-use project at the northwest corner of Interstate Highway 90 and Illinois Highway 53 in Rolling Meadows. The real estate giant cited the project's close proximity to Woodfield mall.
When complete, Northwest Village is expected to offer 500,000 square feet of retail space, 1,000 resident units, two hotels and office space.
Amcol's move: Amcol International Corp. will be occupying a 72,000-square-foot international headquarters and lab at the southwest corner of Forbs Avenue and Higgins Road in Hoffman Estates. Amcol will move in during the third quarter of the year.
Amcol, which is publicly traded, offers a wide range of specialty mineral products.