Northwest Submarket: Occupancy losses continue as glut of large blocks remain

The Northwest was the worst-performing submarket in Suburban Chicago as the direct vacancy climbed nearly an entire percentage point since the end of last year. Once again, the direct vacancy rate has risen to its highest level in MB Real Estate’s tracked history.

Distress was evident this quarter through a number of building transactions. The two-building, 712,000 square foot Woodfield Corporate center was foreclosed on, while the three-building, 168,000 square foot Parkway Corporate Center was acquired by Normura Credit & Capital in a deed in-lieu-of foreclosure transaction. Another distressed, but conventional, transaction occurred when Marc Realty purchased 5105 Tollview Drive in Rolling Meadows for $26 per square foot.

Adding to the submarket’s weakness is the glut of large blocks. The Northwest has 16 contiguous blocks of at least 100,000 square feet available for direct lease; more than any other submarket in Suburban Chicago. The 504,000 square foot, former Allstate Insurance campus at 51 West Higgins Road is the largest block available for lease in the Chicago MSA. With numerous options available, large tenants evaluating the Northwest submarket will continue to have the upper hand in lease negotiations for quite some time.

The Northwest submarket is located within the portions of Cook, Kane, Lake, and McHenry Counties, with major cities including Arlington Heights, Itasca, Rolling Meadows, and Schaumburg.

For our complete outlook on the Chicago Office market, please reference the MB Real Estate 1st Quarter 2011 Chicago Market Overview and Submarket Snapshots.