While the Central Loop’s Class A segment continues to have a direct vacancy rate under 10 percent, its Class B market has been struggling. However, Class B buildings improved with 177,000 square feet of additional occupancy during the third quarter. The demand increase translated into the Central Loop’s strongest performance since early 2009.
Large lease transactions were highlighted by Accretive Health’s 28,000 square foot expansion at 231 South LaSalle, and The Administrative Office of the Illinois Court’s renewal at 222 North LaSalle. McCorkle Court Reporters extended and expanded at 180 North LaSalle.
With respect to investment sales, one major transaction closed and two other buildings were placed under contract. A joint venture led by GAW Capital Partners and the Korea Teachers Credit Union purchased 70 West Madison for $349 million, or $243 per square foot, from Hines Real Estate Investment Trust. In addition, an unidentified buyer is under contract to purchase the 440,000 square office portion of 22 West Washington for $187 million. Chicago-based Hearn Co. agreed to purchase 55 West Monroe from LaSalle Investment Management for $140 million.
The Central Loop, which has historically been home to financial organizations and law firms, will see uneven demand in office space for the near-term. However, constrained supply and convenient location will keep the Central Loop’s vacancy rate below most of the CBD’s submarkets.
The Central Loop’s boundaries are the Chicago River (North), Wells Street (West), State Street (East), and Van Buren Street (South).