Chicago's office construction history...where are we now?
Chart of the week: August 17, 2016
Source: JLL Research
Office construction history…where are we now?
• Although 2000 vacancy started low, the tech bubble generated a huge construction boom. The bubble’s
burst and rapid vacancy run-up set the stage for only modest construction in Chicago during 2007-12.
• Chicago’s current office pipeline is ramping-up. Vacancy remains near historic lows, but excludes the 4.5
million square feet of space not yet delivered in this cycle along with the 2.1 million square feet under
redevelopment within the Old Main Post Office.
• Many tenants will be relocating from space elsewhere in 2017-18, ultimately putting pressure on
absorption and vacancy. To keep new supply and demand in balance, the Chicago market will have to
maintain near record absorption levels over the next two years to match the current construction pipeline.
• Construction as a percent of inventory, however, is now at 5 percent – and on an upward trajectory, with
an increasing share that is spec.
length of cycle
length of boom
vacancy – 2008
vacancy – 2012
vacancy – 2013
vacancy – now
2013 – 2016+2008 – 2012
length of boom
vacancy – 2000
vacancy – 2007
2000 – 2007
2000 2002 2004 2006 2008 2010 2012 2014 3Q 2016
Spec + BTS deliveries (s.f.)
Under construction - percent of inventory
Tech bubble bursts
The question has been coming up often these days about where office development stands in this cycle.