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    THE 2016 CHICAGO OFFICE MARKET CONTINUED TO IMPROVE IN THE SECOND QUARTER.

    The Chicago Central Business District (CBD) saw direct vacancy decrease by 32 basis points from 11.97 percent at the end of the first quarter of 2016 to 11.65 percent, the lowest it has been since 2008. There was 570,485 square feet of total absorption in the second quarter, increasing the absorption for 2016 to 918,854 square feet. Positive absorption was seen in all submarkets.
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    CHICAGO SUBURBAN OFFICE MARKET SEES TEMPORARY DOWNTURN IN THE 2Q OF 2016

    In the second quarter, the Chicago suburban office market saw 533,305 square feet of negative absorption and an overall direct vacancy rate of 20.1 percent. However, these figures do not reflect a true downturn in the suburban market. Kraft-Heinz vacated 679,000 square feet in Northfield this quarter that should be occupied by Medline Industries by the end of the year, which will cause the market statistics to rebound.
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    GROWING CONCERN OVER OFFICE MARKET SHADOW SPACE

    Vacancy rates may increase for the first time since 2009, due to the shadow space created by office towers under construction in Chicago’s Central Business District. These new towers will have the most impact on Class A properties in the West Loop submarket.
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    DIRECT VACANCY DOWN TO 9.1 PERCENT.

    Direct vacancy in the MB Real Estate (MBRE) Index has decreased to 9.1 percent, the lowest it has been since 2009. Leasing activity at the index buildings is minimal due to the low amount of available space.
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CHICAGO MARKET OVERVIEW

The Chicago Market Overview is a comprehensive quarterly report on the CBD and the Suburban office market conditions. The MB Real Estate Research team combines detailed data with timely insight to guide clients on the market’s outlook.

2016 2nd Quarter Chicago Market Overview & Snapshots

2016 2nd Quarter Chicago Suburban Market Overview

CORE NATIONAL MARKET OVERVIEW

Additionally, MB Real Estate Research contributes to and com- piles the CORE National Market Overview, a detailed summary of national and network city office market conditions.

MARKET BEAT / MARKET INDEX

On months between quarter-end, the Research team publishes MB Real Estate's Market Beat and Market Index. It alternates between analysis of a developing trend in the market and updating of MBRE's proprietary vacancy index, based on the last thirty buildings constructed in Chicago’s CBD.

2016 Third Quarter - Market Beat
- Growing concern over office market shadow space

2016 Second Quarter - Market Index
- Direct vacancy down to 9.1 percent

ADDITIONAL INFORMATION

Please contact Caitlin Ritter at CRitter@mbres.com for past issues of the MBRE Chicago Market Overview, MarketBeat, or the CORE National Market Overview, as well as for additional MBRE Research Information.