Demand for space in River North increased again as the direct vacancy rate fell to 13.4 percent. The submarket has been the fastest to recover from the recession and currently boasts the lowest vacancy rate in the CBD.
The submarket was home to only one deal larger than 20,000 square feet during the first quarter. Law firm Rakoczy, Molino, Mazzochi & Siwik renewed its lease and expanded to take a total of 24,000 square feet at 6 West Hubbard. Groupon moved into the 57,000 square feet it leased during the fourth quarter at 600 West Chicago. Its expansion was muted by a 61,000 square foot block that became available at 321 North Clark in which Howrey LLP vacated after the firm dissolved in March.
600 West Chicago is under contract to CommonWealth REIT for $390 million, or $249 per square foot. The sellers, a joint venture of David Werner, Jacob Gerstein & Victor Gerstein, paid just $290 million for the building at the height of the real estate bubble in 2007 when the building was 78 percent leased. Today, the building is more than 98 percent leased and has benefitted by attracting rapidly growing technology firms such as Groupon.
Once sustainable job growth spreads among all sectors, MB Real Estate expects continual increases in occupancy. The ability to attract some of Chicago’s fastest-growing tenants due to its new, attractive inventory has elevated the submarket to a more favorable position than its peers.
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.
For our complete outlook on the Chicago Office market, please reference the MB Real Estate 1st Quarter 2011 Chicago Market Overview and Submarket Snapshots.
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