Vacancies: city up, suburbs down
Not really a big surprise, as the 'burbs have sprawl and more inventory coming on line all the time. That is less so in the central business district of Chicago, at least until new buildings come on line in 2009.
Normally, scarcity brings vacancy rates down, and low vacancy rates mean higher rents, and, of course, vice versa. But I find it interesting that rents, except in the O'Hare area, still went up in the 3Q compared to 2Q. Maybe landlords are holding out in spite of 20% vacancies, or maybe more A space (that commands higher rent) is on line right now. Also, the numbers may be a little skewed given that subprime tankings probably caused at least 600,000 sf of space to come to market. Take that space out of the equation, and that may be why landlords are not dropping rents just yet.
Normally, scarcity brings vacancy rates down, and low vacancy rates mean higher rents, and, of course, vice versa. But I find it interesting that rents, except in the O'Hare area, still went up in the 3Q compared to 2Q. Maybe landlords are holding out in spite of 20% vacancies, or maybe more A space (that commands higher rent) is on line right now. Also, the numbers may be a little skewed given that subprime tankings probably caused at least 600,000 sf of space to come to market. Take that space out of the equation, and that may be why landlords are not dropping rents just yet.
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