A recent article in Crain's Chicago Real Estate Daily highlights suburban Chicago office buildings' vacancy at its lowest level in more than seven years. "Overall vacancy fell to 21.3 percent during the period (first quarter 2015), the lowest since the end of 2007...vacancy was down from 22.6 percent int he previous quarter and 24.4 percent a year earlier," notes the article on April 6, 2015.
Our firm has personally seen this vacancy decreasing in the office market. For instance, over 20,000 square feet of space was leased at 1600 Randall Road in Elgin just in the last half of 2014. Costar.com shows that in Elgin vacancy rates dropped from 26 percent in the first quarter of 2014 to slightly over 23 percent in first quarter 2015.
The graph below shows Elgin office vacancy rates for the past 10 years. In 2006 the vacancy rate made a sharp increase and continued on that trend throughout 2009, at which point the rate danced between 26 and 28 percent for almost five years. In 2013 the vacancy rate began to decrease and is on that same trend currently. While we are no where near our 10 year low of 15.5 percent vacancy, we are at least on a trend towards it.
What does this mean? Our firm takes away two key ideas from this vacancy trend:
1. The market is shifting from a buyer's market to a seller's market. Landlords and developers will now be able to set their rates a bit higher, become more competitive in negotiations, and not have to take "loss leader" deals to fill their buildings.
2. On the heels of it becoming a seller's market...BUY OR LEASE YOUR SPACE NOW! As buildings become more occupied and the vacancy rates continue to decrease, the price is only going to increase. Now is the time to lock in your competitive leasing structure or purchase at the best price. Additionally, mortgage and lending rates are on the uprise. Locking in your office space now will not only save you money in the present, but also in the future.
The O'Donnell Commercial team are experts in the suburban office market. Our firm has helped accountants, attorneys, doctors, dentists, chiropractors, call centers, technology firms, sales offices, and so many more office users secure office space for lease or purchase at great prices and convenient locations. Whether you're looking at second generation space or a build to suit project, we can help. Call us today! 630.444.0444