Chicago’s commercial real estate market experienced a supernova boom 1980’s. Large numbers of overseas investors and developers from outside Chicago flocked to the area and got to work. According to a survey by the office of Grub & Ellis– a San Francisco-based commercial real estate brokerage– around 67 million square feet of office space was built in Chicagoland during the 1980’s. That’s equal to nearly 25 Empire State Buildings, or to put it in Chicago context, 23 John Hancock Towers.
The total number of commerical square footage, 67 million square feet to be exact, can also be broken down into 38.3 million square feet of suburban office development and 28.5 million square feet erected in the heart of downtown Chicago. This puts Chicago second in line, behind Midtown Manhattan, for the largest concentration of downtown commercial office space in the country. The boom lasted over a decade before slowing to a halt in the 2000’s, and now we look to the 1980’s for one third of the total square footage of commercial spaces in Chicago, around 118 million square feet.
As we bounce back from the Great Recession, brokers and commercial property owners are entering a new, more mature market– one that’s steadier and less drastically changing. Since the recession, brokerage firms have begun to increase in size, commercial property purchasing has increased, and industrial property occupancy is on the rise, but all in single digits. The modern market is also more competitive, catering to tenants who are shifting their expectations by prioritizing property benefits, transferable spaces, and storage:
1) Property Benefits
With so many office space options, tenants are looking for more than a reasonable price tag. Savvy commercial property owners, especially in suburban locations or areas outside of the city, work to include additional benefits along with their available spaces. Amenities like onsite security, free parking, and onsite storage all act as a draw in today’s competitive market. Properties outside the city are also more attractive if they’re in close proximity to public transportation or conveniently located near popular shopping districts.
2) Transferable Spaces
Nowadays, businesses are taking less conventional approaches to broaden the use of their workspaces. Businesses of all shapes and sizes are opting to reconfigure their spaces instead of relocate. Whether they are transitioning into an open-spaced layout with less private offices, or inviting another company to share their space, business are coming up with new, innovative ways to make their spaces transferable.
3) Storage:
To cut back on square footage, many retailers have adopted a showroom-like concept where much of their inventory is stored in an offsite warehouse. This approach frees up storefront space for functional use and customers can order purchases to the store or have items shipped directly to their homes. Crains Chicago Business marks unused warehouse space is at its lowest percentage since the end of 2007.
As the current, more mature market begins to take full form, brokers and commercial property owners are seeing steady improvement across all ends of the industry. Tenant’s priorities have shifted and the industry seems to be answering with additional amenities, available storage, and more transferable spaces. Commercial real estate will continue to experience progress and the future of the industry will be the product of innovation.