The effects of the coronavirus recession are being felt across the Chicago office market, as leasing volume tumbled in April and May during the state’s shelter-in-place order.
Buoyed by one of the strongest February’s for office leasing ever, with nearly 2 million square feet inked, Chicago’s first quarter office leasing volume hit roughly 4.5 million square feet. However, leasing volume has declined considerably since March, with only about 1.2 million square feet of total leasing volume recorded through June 10.
From January 1 to May 31, only 1,479 leases were signed in the Chicago metropolitan area, or approximately 8 million square feet. This is a nearly 29% decrease from the previous year, which observed 2,166 leases signed, or roughly 11.3 million square feet. The average lease size increased minimally year over year, though the majority of leases signed this year were on the smaller side, averaging about 5,400 square feet per deal.
Approximately 3.8 million square feet, or nearly 50% of leasing activity, occurred outside of the central business district, with average lease sizes at approximately 3,500 square feet, while roughly 4.2 million square feet occurred in the CBD, with a larger average lease size of approximately 10,000 square feet. The three largest lease deals signed year-to-date in Chicago office market were:
1. Citadel Enterprise Americas – 131 S Dearborn St., Chicago - 533,889 square feet
2. Aspen Dental – 800 W Fulton St., Chicago – 182,643 square feet
3. Medline – 1910 Innovation Way, Libertyville – 152,312 square feet
While recent social distancing measures and the announcement of a permanent work-from-home structure by some companies, including Twitter, Square, Shopify and Facebook, could continue to weigh on new demand formation over the next few years, certain suburban office markets, with their abundant space and low rents, could see a resurgence in leasing activity over the next year, off setting the migration patterns witnessed over the previous cycle