Upbeat Office Outlook

I had the opportunity to listen to a webinar conducted by CoStar reviewing the outlook for the office segment in commercial real estate.  It was good to note that in general it was very upbeat. Vacancies dropping in all major markets over the 2014 year end numbers.  Chicago was a bit above the national vacancy rate of 10.8% coming in around the 13% range but still improving from 2014.  The panel brought up an interesting point in their analysis.  Businesses will lease quality space in a great location over merely a less expensive rent.  In other words, just because an asking rent is low doesn't automatically mean the building will lease up.  Newer buildings have lower vacancy rates and higher rents than their older counterparts.  It makes sense, since the average office footprint is shrinking companies can seek out better but smaller square footage and still keep their rental budget the same.  The CoStar panel went on to say that 2016 is positioned to be another good year for the office segment and rent growth will continue but here in Chicago at a moderate pace.