Chicago Office Market
After a slow start to the year, leasing volume this quarter aligned with levels seen in Q3 of last year. There were signs of optimism, but the growth is still outpaced by the smaller, contraction-focused deals tenants are signing. Even with an uptick in leasing, smaller lease sizes will keep total activity below pre-pandemic levels. Vacancy rates held steady this quarter, with only one building under construction, set for delivery next year. Tenant activity will be the primary driver of vacancy trends for the remainder of 2024. Meanwhile, competition for Trophy Towers and premium view spaces on the top floors has tightened. Demand for top-tier space in the Central Business District is expected to absorb the limited supply, driving trophy rates higher.
Download Chicago CBD Office Market Report 3Q24Chicago Suburban Office Market
Leasing volume increased compared to last quarter but remained below typical third-quarter levels, despite several significant suburban deals, including the largest metro lease by Medline at 2375 Waterview Drive in the North submarket. Suburban vacancy rates rose this quarter. With no buildings currently under construction, vacancy rates for the rest of 2024 will largely depend on tenant activity.
Download Chicago Suburban Office Market 3Q24
Chicago Industrial Market
After increasing to 11.3 million SF in the second quarter of 2024, total industrial leasing volume slowed to 6.1 million SF in the third quarter, the lowest quarterly volume in 19 years. Total sublease availability continues to increase quarter over quarter, this time by 6.1% to 10.3 million SF. Although the increase in volume is significant, the sublease market share of total inventory remains constant at a not-so-significant 0.8% of the market’s inventory, a small portion of the 7.5% total availability in Chicago’s industrial market. Quarterly Class A industrial leasing volume slowed significantly from the second quarter, but Class A leasing share rising past the all-time high set in 2023 with 58.7% year to date in 2024. As many of the new Class A deliveries are sitting vacant, this share is expected to rise when availability in non-Class A space shrinks.