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hicago's suburbs saw a significant rebound in office demand during the third quarter, despite recording its 15th consecutive quarter of increased vacancies. The vacancy rate rose to 31.4%, up from 29.7% last year and 22.1% at the start of the pandemic. However, net absorption increased by 144,000 square feet, indicating a return in demand.
The market has lost 4 million square feet of tenants since early 2020, surpassing the contraction during the 2008 financial crisis. However, there are signs of stabilization, with borrowing costs declining and prominent deals being made. Medline Industries leased 214,000 square feet in Northbrook, while ADP is negotiating a sublease for 150,000 square feet in Schaumburg.
The influx of sublease space has contributed to the high vacancy rate, but investors are starting to view suburban office properties as potential bargains. A Minnesota-based firm is buying the Presidents Plaza complex near O'Hare Airport for less than half its original price six years ago. Landlords remain cautious, with one expert predicting it will be a while before they can be "super picky" about tenants.
