The West Loop continues to recover as the CBD’s largest submarket saw 213,000 square feet of positive absorption, dropping its direct vacancy rate to 14.8 percent. Leading the recovery are Class A buildings, which continue to be the most active and highest demanded assets in the CBD.
During the second quarter, Wells Fargo signed the largest lease year-to-date: a 17-year, 293,000 square foot lease at the Chicago Mercantile Exchange Center at 10 and 30 South Wacker. The firm will consolidate five offices in the West Loop and expand upon its current requirement by 43,000 square feet. Marsh will relocate its offices at 500 West Monroe and cut its space requirement by 56,000 square feet as it will occupy 120,000 square feet at 540 West Madison in November.
The investment sales market continues to be robust. Billionaire investor Sam Zell made his first office purchase since 2007 as he partnered with Transwestern to acquire a 90 percent stake in 200 South Wacker for an estimated $156 per square foot. Three Wacker Drive skyscrapers hit the market during the second quarter. Most notably, the 3.8 million square foot Willis Tower (233 South Wacker) is being marketed for sale. Neighbor 311 South Wacker is also on the market. In addition, Hines is seeking a buyer to purchase up to a 50 percent stake in 1 North Wacker.
Due to the amount of leasing activity within this submarket, MB Real Estate expects further positive absorption in the West Loop next quarter. Also, the investment sales market will continue to heat up as institutional investors and high-net-worth individuals bid for the some of the largest and most iconic buildings in the CBD.
The West Loop’s borders are defined as the Chicago River (North), I-94/I-90 (West), Wells Street (East), and Van Buren Street (South).