Local job boom
The Chicago Metro unemployment rate decreased from 5.3% (February 2018) to 4.0% (December 2018). This, in part, is not only due to job additions but a recalculating of the population of the metro area as there are reported population losses for three consecutive years. In year over year comparisons, the Finan-cial Activities sector had a 2.3% increase in jobs, while the Professional Services sector had a 0.5% increase. Construction jobs also increased by 2.3% year over year.
Vacancy moved down but mainly in the suburbs
The Chicagoland office market vacancy ticked down to 15.5% ; its lowest vacancy since mid-2016. In a flip of the market that has been trending for three quarters, the lion’s share of absorp-tion came from the suburban outliers.
Recording lowest vacancy in over two years, the suburban markets currently have 19.4% vacancy rate, down from 21.3% year over year. CBD vacancy increased in the final quarter of 2018 to 12.4%.
The major tipping points for CBD vacancy increases were due in part to a new construction delivered preleased but not yet occupied (210 N. Carpenter Street) as well as a few national companies shuttering / consolidating and quickly divesting its leases.
Investment in office assets showing potential for major returns
Investment in Chicago CBD and suburban markets will contin-ue to remain strong in 2019. During 2018, 37% of Chicago office investments were composed of private company buyers less affected by any rise in interest rates.
National office investment sales have yet to reach the pre-recession record of $150 billion in 2007, but national office sales have been very strong according to RCA Analytics, ex-ceeding $100 billion collectively in the past four years.
Chicago has seen the same strong trend in office sales sector as Chicagoland recorded $6.1 billion in office deals in 2018. There remains many opportunities especially for Chicago sub-urban office building investors to build equity.