JLL just released the Q1 Chicago Suburbs Office Outlook. The report has some great insight into recent market activity and provides a forecast for the year ahead.

1. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Q1 2017
Chicago Suburbs
Office Insight
While at first glance a hefty negative absorption number can cause investors
and users some concern, it is important to see that the drivers behind this
number have been anticipated for some time. As Westell, Walgreens, Grainger,
and Abbott Laboratories all officially vacated large blocks throughout the
suburbs, none of these moves were surprising and each had been well known
before this quarter. The underlying activity in midsized leasing is the true story
of the first quarter. 20,000-50,000-square-foot leasing and move-ins were
prevalent, contributing to many of the suburbs’ strongest, most consistent
themes. Midsized tenants continue to grow and thrive, capitalizing on
favorable leasing economics and even tenants moving downtown largely
retain a presence in the suburbs, as well.
Sales activity took a slow start to the year. We expect that this is a result of
caution surrounding the Federal Reserve’s recent interest rate hikes.
Expectations are that activity will pick up in the reset of 2017, as investors seek
greater return outside of compressing cap rates in major markets.
Outlook
Our forecast for 2017 still remains positive on all fronts. High-activity
submarkets such as O’Hare, Eastern East/West, and North (Cook County) will
continue to drive suburban activity and see increasing rental rates and
decreasing vacancy. Investors and developers will consider new suburban
office development as Class A space becomes harder to find. Tenants moving
downtown will continue to maintain a suburban presence as young families
again target those markets for affordability. Investors will consider the
suburbs more frequently as cap rate compression in major markets forces
large pockets of sidelined capital to broaden their horizons. All together, the
economic landscape is favorable and prepared from a strong year.
Fundamentals Forecast
YTD net absorption -717,619 s.f. ▲
Under construction 368,000 s.f. ▲
Total vacancy 20.4% ▼
Average asking rent (gross) $24.91 p.s.f. ▲
Concessions Steady ▶
-1,000,000
0
1,000,000
2013 2014 2015 2016 YTD
2017
Supply and demand (s.f.) Net absorption
Deliveries
A handful of anticipated move-outs should not dampen
suburban outlook for 2017
24.3%
22.6%
18.5% 19.1%
20.4%
10.0%
15.0%
20.0%
25.0%
30.0%
2013 2014 2015 2016 2017
Total vacancy
$0.00
$20.00
2013 2014 2015 2016 2017
Average asking rents ($/s.f.) Class A
Class B
For more information, contact: Jack M. Trager| jack.trager@am.jll.com
• Negative absorption was largely expected in the first quarter, as several
large, expected move-outs finally reflected in the market.
• Minor rent increases were seen in most of the suburban submarkets and
spread across building classes.
• Investors took a cautious approach to the recent interest rate hikes, as
capital markets activity was relatively tame.

2. Chicago
Q1 2017
Office Statistics
Class Inventory (s.f.)
Total net
absorption
(s.f.)
YTD total net
absorption
(s.f.)
YTD total net
absorption
(% of stock)
Direct
vacancy (%)
Total
vacancy (%)
Average
direct asking
rent ($ p.s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
West Loop Totals 48,606,523 512,399 512,399 1.1% 12.8% 13.8% $43.11 3,127,164 1,257,500
Central Loop Totals 37,160,358 -294,516 -294,516 -0.8% 10.1% 11.0% $37.27 0 0
East Loop Totals 24,346,395 28,129 28,129 0.1% 11.4% 11.8% $35.61 0 0
South Loop Totals 1,163,943 7,502 7,502 0.6% 2.8% 2.8% $25.92 0 2,450,000
North Michigan Avenue Totals 11,145,481 72,257 72,257 0.6% 10.1% 10.9% $38.08 0 0
River North Totals 16,330,258 5,488 5,488 0.0% 5.2% 6.1% $40.14 0 50,000
Kennedy West Totals 5,304,298 42,971 42,971 0.8% 10.9% 11.0% $32.93 0 1,057,790
Far West Loop Totals 1,709,818 -15,534 -15,534 -0.9% 13.5% 13.7% $31.47 0 0
Fulton Market Totals 2,947,999 63,879 63,879 2.2% 9.4% 9.6% $33.89 0 1,057,790
River West Totals 646,481 -5,374 -5,374 -0.8% 10.4% 10.4% $32.54 0 0
CBD Totals 144,057,256 374,230 374,230 0.3% 10.6% 11.5% $39.38 3,127,164 4,815,290
Eastern East-West Totals 22,831,285 -24,315 -24,315 -0.1% 15.2% 17.3% $25.49 228,000 0
Western East-West Totals 14,611,686 -101,272 -101,272 -0.7% 18.1% 20.3% $24.15 0 0
North (Cook County) Totals 10,217,404 -35,652 -35,652 -0.3% 15.6% 16.0% $28.22 0 0
North (Lake County) Totals 15,931,526 -430,423 -430,423 -2.7% 25.8% 26.8% $25.71 0 0
O'Hare Totals 12,393,927 -1,578 -1,578 0.0% 16.2% 16.8% $24.98 0 0
Northwest Totals 27,167,960 -124,379 -124,379 -0.5% 21.2% 22.5% $23.45 0 368,000
Suburbs Totals 103,153,788 -717,619 -717,619 -0.7% 19.0% 20.4% $24.91 228,000 368,000
Chicago Totals 247,211,044 -343,389 -343,389 -0.1% 14.1% 15.2% $31.26 3,355,164 5,183,290
West Loop A 31,957,041 471,211 471,211 1.5% 13.1% 14.1% $46.87 3,127,164 1,257,500
Central Loop A 10,191,682 -219,395 -219,395 -2.2% 10.0% 12.2% $42.55 0 0
East Loop A 5,511,381 11,050 11,050 0.2% 5.4% 5.4% $43.42 0 0
North Michigan Avenue A 2,871,938 -15,783 -15,783 -0.5% 7.9% 8.2% $38.03 0 0
River North A 8,606,690 6,134 6,134 0.1% 4.0% 4.5% $44.84 0 50,000
Kennedy West A 1,072,473 -16,381 -16,381 -1.5% 5.7% 5.7% $34.48 0 0
Far West Loop A 35,462 -21,959 -21,959 -61.9% 61.9% 61.9% $32.00 0 0
Fulton Market A 852,011 3,359 3,359 0.4% 3.0% 3.0% $38.46 0 1,057,790
River West A 185,000 2,219 2,219 1.2% 7.4% 7.4% $33.00 0 0
CBD A 60,211,205 236,836 236,836 0.4% 10.2% 11.2% $45.14 3,127,164 2,365,290
Eastern East-West A 9,728,397 25,055 25,055 0.3% 12.2% 14.7% $28.63 228,000 0
Western East-West A 5,534,716 40,877 40,877 0.7% 16.9% 19.9% $27.16 0 0
North (Cook County) A 5,446,551 -3,810 -3,810 -0.1% 19.7% 20.1% $29.69 0 0
North (Lake County) A 11,300,485 -320,224 -320,224 -2.8% 26.9% 27.9% $25.50 0 0
O'Hare A 6,732,939 12,784 12,784 0.2% 13.3% 14.2% $29.57 0 0
Northwest A 16,499,980 86,854 86,854 0.5% 14.9% 15.6% $25.62 0 368,000
Suburbs A 55,243,068 -158,464 -158,464 -0.3% 17.4% 18.7% $26.86 228,000 368,000
Chicago A 115,454,273 78,372 78,372 0.1% 13.6% 14.8% $34.00 3,355,164 2,733,290
West Loop B 14,142,482 55,811 55,811 0.4% 13.3% 14.4% $35.91 0 0
Central Loop B 22,670,390 -42,426 -42,426 -0.2% 10.1% 10.5% $35.39 0 0
East Loop B 12,342,590 80,777 80,777 0.7% 13.0% 13.8% $34.87 0 0
North Michigan Avenue B 5,699,740 4,379 4,379 0.1% 12.7% 13.8% $40.08 0 0
River North B 5,896,409 -1,201 -1,201 0.0% 7.3% 8.2% $36.44 0 0
Kennedy West B 3,195,001 59,352 59,352 1.9% 12.1% 12.2% $32.29 0 0
Far West Loop B 1,230,612 6,425 6,425 0.5% 9.9% 9.9% $31.33 0 0
Fulton Market B 1,593,724 60,520 60,520 3.8% 15.6% 15.9% $32.88 0 0
River West B 370,665 -7,593 -7,593 -2.0% 4.6% 4.6% $20.00 0 0
CBD B 63,946,612 156,692 156,692 0.2% 11.5% 12.2% $35.66 0 0
Eastern East-West B 10,609,756 -56,539 -56,539 -0.5% 17.3% 19.3% $21.78 0 0
Western East-West B 8,024,928 -135,599 -135,599 -1.7% 19.4% 21.2% $21.71 0 0
North (Cook County) B 3,956,814 -30,393 -30,393 -0.8% 11.7% 11.8% $24.74 0 0
North (Lake County) B 4,351,794 -108,645 -108,645 -2.5% 24.5% 25.3% $26.38 0 0
O'Hare B 4,218,447 -8,186 -8,186 -0.2% 21.4% 21.8% $21.67 0 0
Northwest B 8,953,234 -156,790 -156,790 -1.8% 31.8% 33.8% $21.84 0 0
Suburbs B 40,114,973 -496,152 -496,152 -1.2% 21.6% 23.1% $22.69 0 0
Chicago B 104,061,585 -339,460 -339,460 -0.3% 15.4% 16.4% $28.63 0 0

3. Chicago | Office Statistics | Q1 2017
Class Inventory (s.f.)
Total net
absorption
(s.f.)
YTD total net
absorption
(s.f.)
YTD total net
absorption
(% of stock)
Direct
vacancy (%)
Total
vacancy (%)
Average
direct asking
rent ($ p.s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
West Loop C 2,507,000 -14,623 -14,623 -0.6% 6.2% 7.4% $32.18 0 0
Central Loop C 4,298,286 -32,695 -32,695 -0.8% 10.1% 11.0% $32.21 0 0
East Loop C 6,492,424 -63,698 -63,698 -1.0% 13.4% 13.5% $30.27 0 0
South Loop C 1,163,943 7,502 7,502 0.6% 2.8% 2.8% $25.92 0 2,450,000
North Michigan Avenue C 2,573,803 83,661 83,661 3.3% 6.8% 7.2% $32.76 0 0
River North C 1,827,159 555 555 0.0% 4.0% 6.8% $31.05 0 0
Kennedy West C 1,036,824 0 0 0.0% 12.5% 12.7% $33.53 0 0
Far West Loop C 443,744 0 0 0.0% 19.9% 20.3% $31.59 0 0
Fulton Market C 502,264 0 0 0.0% 1.0% 1.0% $35.80 0 0
River West C 90,816 0 0 0.0% 39.9% 39.9% $32.33 0 0
CBD C 19,899,439 -26,800 -26,800 -0.1% 9.4% 10.1% $31.20 0 2,450,000
Eastern East-West C 2,493,132 7,169 7,169 0.3% 18.1% 18.7% $15.96 0 0
Western East-West C 1,052,042 -6,550 -6,550 -0.6% 15.0% 15.0% $15.43 0 0
North (Cook County) C 814,039 -1,449 -1,449 -0.2% 7.2% 9.4% $18.50 0 0
North (Lake County) C 279,247 -1,554 -1,554 -0.6% 2.7% 2.7% N/A 0 0
O'Hare C 1,442,541 -6,176 -6,176 -0.4% 14.4% 14.4% $15.28 0 0
Northwest C 1,714,746 -54,443 -54,443 -3.2% 26.2% 29.6% $17.83 0 0
Suburbs C 7,795,747 -63,003 -63,003 -0.8% 17.1% 18.3% $16.81 0 0
Chicago C 27,695,186 -89,803 -89,803 -0.3% 11.6% 12.4% $25.20 0 2,450,000
Hailey Harrington | Research Manager
200 E Randolph Street Chicago, IL 60601 | tel +1 312 228 3189 | hailey.harrington@am.jll.com
2017 Jones Lang LaSalle IP, Inc. All rights reserved.