West Loop 2Q 2011 Snapshot: Tenants continue their "flight to quality"; Willis Tower hits the block

The West Loop continues to recover as the CBD’s largest submarket saw 213,000 square feet of positive absorption, dropping its direct vacancy rate to 14.8 percent. Leading the recovery are Class A buildings, which continue to be the most active and highest demanded assets in the CBD.

During the second quarter, Wells Fargo signed the largest lease year-to-date: a 17-year, 293,000 square foot lease at the Chicago Mercantile Exchange Center at 10 and 30 South Wacker. The firm will consolidate five offices in the West Loop and expand upon its current requirement by 43,000 square feet. Marsh will relocate its offices at 500 West Monroe and cut its space requirement by 56,000 square feet as it will occupy 120,000 square feet at 540 West Madison in November.

The investment sales market continues to be robust. Billionaire investor Sam Zell made his first office purchase since 2007 as he partnered with Transwestern to acquire a 90 percent stake in 200 South Wacker for an estimated $156 per square foot. Three Wacker Drive skyscrapers hit the market during the second quarter. Most notably, the 3.8 million square foot Willis Tower (233 South Wacker) is being marketed for sale. Neighbor 311 South Wacker is also on the market. In addition, Hines is seeking a buyer to purchase up to a 50 percent stake in 1 North Wacker.

Due to the amount of leasing activity the submarket has experienced, MB Real Estate expects further positive absorption in the West Loop next quarter. Also, the investment sales market will continue to heat up as institutional investors and high-net-worth individuals bid for the some of the largest and most iconic buildings in the CBD.

The West Loop’s borders are defined as the Chicago River (North), I-94/I-90 (West), Wells Street (East), and Van Buren Street (South).

For more information regarding the Chicago office market, please reference MB Real Estate's 2nd Quarter 2011 Chicago Market Overview and Submarket Snapshots.

MB Real Estate Represents Guerrero Howe in Headquarters Relocation

MB Real Estate’s Corporate Services & Tenant Advisory group represented Guerrero Howe, LLC in its relocation to 22,125 square feet at 205 North Michigan Avenue, part of the 1.9 million square foot Michigan Plaza office complex in Chicago. The business-to-business publishing company, who is relocating from 28 East Jackson, is subleasing the space from consumer product conglomerate Unilever.

“We were able to take advantage of fantastic existing conditions and office furniture in a great property,” said David Kimball, Assistant Vice President of MB Real Estate’s Corporate Services & Tenant Advisory group, who along with Senior Vice President, Jay Beadle represented Guerrero Howe.

Steven Holmberg and Ned Franke of Cushman & Wakefield represented Unilever in the transaction.

MB Real Estate 2nd Quarter 2011 Chicago Market Overview

MB Real Estate has released our 2nd Quarter 2011 Chicago Market Overview, a quarterly report that tracks trends, analyzes data, and provides you with our forecast for the Chicago CBD and Suburban office markets.

For just the second quarter since the economic downturn, vacancy declined in the CBD. The increase in demand was modest however, driven by a few large lease transactions. Conversely, vacancy rates continue their climb in Suburban Chicago due to firms relocating or shedding unneeded space. Although several firms have recently announced plans to create jobs, Chicago’s office markets are still working through the recessionary job losses and an uneven recovery is expected. 

In addition to the Chicago Market Overview, please reference our in-depth 2nd Quarter 2011 Submarket Snapshots, which include highlights and analysis of each of the Chicago submarkets that MB Real Estate tracks.