Growing Confidence in Class A Assets Despite High Vacancy
The current market downturn has not followed the typical recovery trends of previous downturns where recovery happened within four quarters of their onset. Six quarters into the pandemic, vacancy increases and additional negative absorption will continue to the end of 2021. The office market is beginning to show signs of life with new deals and expansion signings, but those deals will not reverse the downward trend until mid-2022. Most positive activity is focused primarily on Class A assets.
- Chicago CBD vacancy increased to 17.7% total CBD vacancy – a new record high in Chicago office history, but increased activity, especially in Class A assets, points to a rebound in 2022.
- This remains a tenant favored market as landlords continue to offer creative lease deal incentives to quality tenants in the market.
- Outlook is optimistic looking forward to 2022 as an uptick in return to physical offices seems likely.