CBRE’s Drew Nieman spoke recently at The Illinois Real Estate Journal’s 15th Annual Commercial Real Estate Forecast in Chicago.
Nieman addressed the crowd of 700 on the State of the Chicago Market panel. He specifically highlighted the strength of the Class A office market in the CBD.
According to Nieman, Class A+ space has a vacancy of 3.5 percent, which could trigger another new tower to launch in Chicago this year.
“People say why build another one?” Nieman said. “I say, ‘why not?’ People obviously want this.”
He pointed out that one of the driving trends for these new towers is the densification of space. Firms want to shrink their square-footage and the floorplates and design of the newest towers allow them to do this in the most efficient manner.
“Some firms are looking to get down to 110 square feet per person,” said Nieman. “You need new product to do this.”
Nieman did note that 2017 will be “interesting” in that a lot of tenants will be moving into newly-built towers, such as 150 N. Riverside, which opens in February.
“As this happens, current shadow space will become direct vacancy in most cases and could have an effect on the market, which has been very strong,” he said.
Overall, Nieman and his fellow panelists were bullish on the Chicago market in 2017, as several large firms are active and there is still a lot of capital available.