Office N Illinois

JLL: Construction in Chicago’s CBD might be too late in the cycle

  
Sterling Bay’s 210 N. Carpenter interior rendering

Cranes are rising in the CBD with multifamily and office development are squeezing in wherever there’s room, according to office research from JLL.

Downtown development is heating up, especially in Fulton Market and Riverwest. One of the last buildable riverfront sites along Wacker Drive landed Bank of America as its anchor tenant and will break ground on a 50-story trophy office tower later this year. Two more Class A office towers are under construction in the West Loop and just a bit more south, 601W Companies is leading a massive redevelopment of the Old Post Office. Blackstone’s iconic Willis Tower is undergoing a $500-million dollar renovation which has attracted a lot of tenant interest. New leases in the building come from ESD and National Restaurant Association.

Fulton Market is the most coveted submarket with McDonald’s 600,000-square-foot build-to-suit and offices with Glassdoor, Dyson and Climate Corporation are nearby as well. Sterling Bay’s latest project at 210 N Carpenter will add more than 200,000-square-feet of Class A space by the end of 2018.

The supply and demand is important to watch in the Chicago market. Developers are confident even though leasing activity has slowed and a number of buildings underway have no committed tenants. Pre-leasing is at 31.2 percent for developments under construction--a stark difference from 2015’s 60 percent at year-end. This has caused landlords to act less aggressive on term and more flexible when it comes to multi-tenant floors versus holding them for a single user.