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Market Research - Chicago

United States: Chicago office market - H1 2019

In the Chicagoland area, over $421 million in office buildings traded in the second quarter of 2019.

Chicago economy staying positive

The Chicago metro area unemployment rate decreased to 3.5% at May 2019 from the last reported number of 4% (February 2019). Quarter over quarter 7,000 jobs were added to the metro area. Year-over-year, job growth in office using industries increased 2.7% in education and health sectors, 1.6% in professional and business services, and 1.3% in the financial activities sector. The largest decrease was in the information sector (largely publishing), showing a 5.7% decrease year over year. Economic growth in 2019 will remain positive but is likely to lag 2018’s pace. A case in point is overall job creation in the first four months of this year, which lagged year-ago results.


Vacancy continues to drop down

The overall Chicagoland (CBD & Suburban) vacancy rate dropped to 15.3% from 15.7% quarter over quarter. CBD total vacancy decreased 50 basis points to 11.6% while suburban vacancy decreased to 19.9% from 20.0% quarter over quarter. Despite the lack of new construction this quarter, demand in the area remains robust. However, over the next few quarters, there is no expectation that vacancy will continue to drop down dramatically as new constructions with some vacancy will flood the market beginning as soon as next quarter.


Steady investments continue with higher volume in the Suburbs

In the Chicagoland area, over $421 million in office buildings traded in the second quarter of 2019. This brings the total volume of sales to just over $1 billion in assets trading hands so far in 2019. There were seven notable CBD investment sale transactions that closed in the second quarter, bringing the mid year’s total sales volume over $370.9 million within the city of Chicago. Suburban mid-year trade volume was higher at over $661 million. Overall, investors remain confident moving into mid-year 2019. Buyers were more thoughtful about their purchases in this never-ending strong local economy. The low cost of capital is expected to further inspire investors to the area where value add opportunities is prevalent in CBD as well as suburban assets.


AAG Chicago office market H1 2019
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