Vacancy continues to fall; 600 West Chicago sale closes
Albeit slight, occupancy increased for the sixth consecutive quarter. The submarket has been the fastest to recover from the recession and currently boasts the lowest vacancy rate in the CBD due to its inventory of creative, loft-style buildings, as well as two of the market’s newest skyscrapers. Two long-term leases signed by tenants currently outside of River North will increase future occupancy and counter those tenants who are reducing their space. In January 2012, Ventas will relocate from 111 South Wacker into 29,000 square feet at 353 North Clark. The American Bar Association signed the largest lease in the submarket by renewing 201,000 square feet at 321 North Clark but will cut space by one floor.
LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address
Size (sf)
Building Class
111 W Illinois St
141,503
A
350 W Mart Ctr
106,168
C
321 N Clark St
61,431
A
222 Merchandise Mart Plz
50,000
B
One obstacle facing River North is that 5.4 percent of inventory is available for sublease, compared to 2.4 percent for the entire CBD. Once the underlying leases expire, these spaces will convert to direct vacancy. The submarket will need to continue to attract tenants from other submarkets or cities in order to keep vacancy below the rest of the CBD. The borders of the River North submarket are defined as Division Street (North), Racine Avenue (West), State Street (East), and Fulton Street and the Chicago River (South). It has historically been home to small, older buildings catering to art galleries, furniture studios, and small businesses, but has seen new development which has brought law firms and financial institutions to the submarket. RIVER NORTH SUMMARY
A
B
C
Total
4,003,546
3,538,948
5,764,476
13,306,970
(41,288)
151,168
67,972
177,852
Direct Vacancy Rate
16.4%
7.0%
11.9%
12.0%
Total Vacancy Rate (Direct + Sublease)
19.7%
17.5%
15.8%
17.4%
Inventory (square feet) Year to Date Absorption (square feet)
SUBMARKET SNAPSHOTS
CommonWealth REIT, the most active buyer this year in the CBD, closed on its purchase of 600 West Chicago for roughly $390 million ($249 per square foot). The sellers paid $290 million for the building at the height of the real estate bubble in 2007 when the building was 78 percent leased. Another prominent property is back on the market as Vornado Realty Trust looks to sell the 1.2 million square foot 350 North Orleans.
CENTRAL BUSINESS DISTRICT
RIVER NORTH
Numbers in parentheses are negative
RIVER NORTH SUBMARKET HISTORICAL DIRECT VACANCY
THIRD QUARTER 2011 | CHICAGO SUBMARKET SNAPSHOTS
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