Chicago’s downtown office vacancy rate continued its descent in third-quarter 2016, dropping to an eight-year low of 11.4 percent, according to Transwestern. And while asking rents rose to $35.48, up from $32.98 a year earlier, the completion of the city’s first high-rise office towers to deliver since the recession – 150 North Riverside and River Point – will likely tip the scales in favor of tenants in 2017. “Together, these developments will add a total of 2.3 million square feet of space to the market,” said Transwestern Midwest President Mike Watts. “While the majority of that space is pre-leased, much of it is being filled by tenants relocating from older buildings, so we’ll begin to see recently vacated space flood the market over the next 12 to 24 months.”
Among those bullish on downtown’s new-construction office market is CA Ventures, whose office division, CA Office, is part of a partnership developing a speculative 432,000-square-foot office tower at 625 W. Adams in Chicago’s bustling West Loop. “If you are a large user looking for a contiguous block of 150,000 to 300,000 square feet in a newly developed building, you’ll have very few options in the downtown area over the next two years,” said John Dempsey, principal of CA Office.
As new towers prepare to open their doors, existing buildings are undergoing renovations to stay competitive. At 500 West Madison, Transwestern transformed unused mezzanine space into a multistory fitness center with a half-court basketball court. Nearby at 200 West Madison, a $5 million capital improvement program included an updated lobby, new clubroom and expanded fitness center.
Similarly, FitzGerald Associates Architects was recently tapped to reimagine the ground floor of 300 South Riverside Plaza, a 1.1 million-square-foot office tower built in 1983. The renovation included converting ground-level office and storage space into a new lobby accented by floor-to-ceiling views of the Chicago River. A new restaurant and riverside patio were also added. “Many of today’s office amenities are inspired by those traditionally found in residential buildings,” said Kristen Larkin, associate principal at FitzGerald.