CRE N Illinois

BOMA/Chicago mid-year review: Office activity in Chicago is increasing .. but not as quickly as everyone wants

Here's the good news from the BOMA/Chicago Mid-Year Market Review: Office real estate activity in Chicago is on the rise. The not-so-good news? The city still has a long way to go before deal activity reaches 2006 and 2007 levels.

[caption id="attachment_23735" align="alignleft" width="300" caption="Speakers share their thoughts on the Chicago office market during BOMA/Chicago's mid-year review."] Here's the good news from the BOMA/Chicago Mid-Year Market Review: Office real estate activity in Chicago is on the rise. The not-so-good news? The city still has a long way to go before deal activity reaches 2006 and 2007 levels.

In other words, Chicago is not unlike most cities across the country.

This is the takeaway from the BOMA mid-year review held June 11 at the Mid-America Club at the AON Center in downtown Chicago. The event featured a list of big-name Chicago real estate pros: Bob Chodos, principal at Colliers International; Maureen Ehrenberg, executive managing director of global facilities with CBRE; Bruce Miller, international director of Jones Lang LaSalle; and George Kohl, senior managing director of CBRE Asset Services and 2013 president of BOMA Chicago. It also featured an overview of the Chicago commercial market from Michael Cornicelli, executive vice president of BOMA/Chicago.

All of these speakers agreed that Chicago building owners and managers should be happy to see the increased deal activity in the city. They agreed, too, that everyone would like to see this activity increase, and soon.

Chodos, for instance, shared some positive news with the more than 160 attendees: He's seen overall positive signs in Class-A, -B and -C office buildings in the city, something that shows that the market is trending in the right direction. He said, too, that rents in the city have increased by 2 percent in the first quarter of 2013 when compared to the same quarter one year earlier.

At the same time, 12 major corporations have moved their offices to the city's downtown in recent months.

But there are challenges here, too. Chodos said that the number of large deals in the city is on the decline. Tenants aren't looking for long-term expansion commitments, and these tenants are also demanding more services and amenities for lower rents.

Miller from Jones Lang LaSalle shared some of his own good news. He pointed out that Chicago has added more jobs since the economic downturn than has any other major metro market in the United States. He also said that companies today are moving downtown as a way to attract and retain young talent. He credited Chicago Mayor Rahm Emanuel with taking the steps necessary to attract businesses to the city, making Chicago more visible to the global business community.

As far as the numbers go, Miller said that office sales downtown hit their heights in 2006 and 2007 before tailing off in 2008 and taking a nosedive in 2009. The recovery in this sector began in 2010. He predicted $3 billion in Chicago office real estate sales in 2013.

Again, that's good news. But attendees at the BOMA event can't be blamed for wishing that number was even higher.