West Loop: High-end space retains demand; UBS cuts space

During the first quarter demand for office space continued to fall in the CBD’s largest submarket as the direct vacancy rate reached 17.0 percent, approaching its historical high. Populated primarily with financial service firms, insurance companies, law firms, and corporate headquarters, the West Loop has been the most desirable submarket due to its proximity to public transportation and stock of some of the city’s largest and newest buildings.

The magnitude of negative absorption surpassed all other submarkets, but since the West Loop is the largest, it was not severe on a percentage basis. While Class A buildings were basically stable, the West Loop’s B and C experienced negative demand.

Five tenants took advantage of the soft market by signing new large deals, leases 20,000 square feet or greater, at Class A properties in the West Loop.

In addition, the 1.34 million square foot 1 N. Wacker renewed the lease of its namesake tenant, UBS, to a 10-year lease for 393,000 square feet. However this involves a 59,000 square foot reduction from their current space.

As companies, such as UBS, look to consolidate their office space after job cuts and slowdowns in hiring, demand will continue its decline.

For MB Real Estate's Outlook on the West Loop and the rest of the Chicago Market reference our Submarket Snapshots, our new companion piece to the MB Real Estate Chicago Market Overview.

Up Next: MB Real Estate releases its second quarter Chicago Market Overview and Submarket Snapshots.