For the third straight quarter, O’Hare experienced positive absorption, signaling that the submarket may have reached bottom. However, the direct vacancy rate is still the highest in Suburban Chicago. But without significant job growth, vacancies are expected to remain at elevated levels.
O’Hare was home to two of the largest investment sales of the fourth quarter. The 631,445 square foot Triangle Plaza complex at 8750 and 8770 West Bryn Mawr in Chicago was purchased by CommonWealth REIT for $96.25 million. The Class A complex, which traded for $152 per square foot, was approximately 90 percent leased at the purchase date.
The other large sale in O’Hare occurred when Colony Capital purchased 5100 North River Road in Schiller Park from RREEF for $17.4 million, or $125 per square foot. The sale price for the fully leased building was roughly 27 percent less than what RREEF paid in 2007.
Complementing the 15 available direct large blocks (contiguous space of 50,000 square feet or greater) was the addition of an 118,666 square foot sublease block at 5450 North Cumberland Avenue in Chicago. The sublandlord, Océ-USA Holding, has an existing lease which runs through February 2020. The current supply of large blocks gives tenants considerable options and pressures landlords to lower rental rates and increase concessions to lure new tenants.
The O’Hare submarket is located in northwestern Cook County, with major cities including northwestern Chicago, Elk Grove Village, and Rosemont.
For our complete outlook on the Chicago Office market, please reference the MB Real Estate 4th Quarter 2010 Chicago Market Overview and Submarket Snapshots.