East-West Submarket Snapshot: Rebound continues, but direct vacancy is still more than 20 percent of inventory

The East-West submarket led demand within Suburban Chicago through 2011. As the most central of the submarkets, with executive housing stretching from Hinsdale to Naperville and direct interstate access to the entire MSA, the submarket has mounted a rebound.

The “flight-to-quality” trend is most apparent in the East-West submarket. This has created an increase in occupancy of nearly 300,000 square feet in Class A, while Class B lost more than 150,000 square feet of occupancy. Class A direct gross asking rates rose by 4 percent this year, indicative of landlords’ increased pricing power with improved conditions.

Arboretum Lakes West, located at 1011 Warrenville Road in Lisle, has been particularly active. Last quarter, Sun Coke Energy occupied 40,000 square feet. This quarter, three lease transactions increased occupancy by nearly 64,000 square feet.

Only two large transactions occurred during the quarter. While one company contracted, another expanded. CA Technologies will be downsizing by 17,000 square feet and relocating within Lisle, moving from 2400 Cabot Drive to 83,000 square feet at the Central Park of Lisle II at 3333 Warrenville Road. On the other hand, Comcast renewed for eight years and expanded by 39,000 square feet at 2001 York Road. The building, which was hit with a foreclosure suit in October 2011, will be 90 percent leased. However, Comcast’s likely reduced rents under the new lease may still force owner John Buck to give the building back to its lender.

The East-West submarket encompasses Cook, DuPage, Kane, Kendall, and Will Counties, with major cities including Downers Grove, Lisle, Naperville, and Oak Brook.

For more information on the Chicago office market, please reference our 4th Quarter 2011 Chicago Market Overview and Submarket Snapshots.