The flight to quality continues in the Chicago suburban office market, according to the latest research from JLL.
JLL reported that the Chicago suburban office market saw negative 114,714 square feet of net absorption during the first quarter of the year. But not all classes performed equally.
JLL reported that Class-A suburban office properties saw 50,961 square feet of positive net absorption during the first quarter. This positive absorption, though, was more than offset by the performance of Class-B and Class-C suburban office properties.
According to JLL, Class-B Chicago suburban office properties saw negative 153,397 square feet of net absorption during the first quarter. Class-C suburban Chicago office spaces notched negative 12,278 square feet of absorption during the same period.
This isn’t surprising. Across the country, companies are seeking higher-quality space in modern Class-A office buildings with top amenities. The goal is to encourage workers to return to the office, at least on a part-time basis, through the lure of these higher-quality work spaces.
Companies are frequently renting less office space. Because they need fewer square feet, they are able to lease space in costlier higher-quality buildings. This is leaving older, often outdated Class-B and Class-C office properties behind.
The office market, then, remains in a state of flux, in Chicago and across the country. JLL reported that the total office vacancy rate for the Chicago suburbs stood at 32.2% in the first quarter. That is up 0.76% on a quarter-over-quarter basis.
The direct vacancy rate for suburban Class-A office properties stood at 30.2%, while it stood at 32.6% for Class-B suburban buildings. This number was a lower 27.3% for Class-C suburban office buildings in the first quarter.
The largest lease signed in the Chicago suburban office market in the first quarter came from Fortune Brands, which announced a 360,000-square-foot headquarters relocation to the former Horizon Therapeutics campus in Deerfield, Illinois.
Relocations accounted for more than half of the first quarter leasing volume in the Chicago suburban office market, with deals signed this quarter by Comcast, Ryerson and Matson Logistics.
