As downtown Chicago sees a steady growth of massive new office buildings, Chicago landlords risk potentially damaging vacancies in their existing buildings. Many current downtown tenants are making the move to state-of-the-art office buildings that are currently under construction or have recently come online. For example, Bank of America will vacate more than 800,000 square feet on LaSalle Street as it moves to its new building on N. Wacker Drive.
These vacancies are known as “shadow space,” or unoccupied office space in the city. The CBRE estimates that there will be more than 7.3 million square feet of shadow space in the downtown market in 2019 and 2020 – a 1.2 million increase from 2017 and 2018.
Shadow space and vacancy hikes could result in significantly lower rental pricing, and is currently forcing certain landlords to make efforts to secure tenants now. Some building owners plan to spend millions of dollars to improve general amenities in office buildings, like fitness centers, in order to attract new tenants. Other building owners may curb supply growth by converting old buildings into buildings for other uses, such as student housing, which is a common trend in the Loop.
For prospective tenants, now may be an optimal time to sign a new lease in the downtown market, as negotiating abilities are at an all-time high. For building owners, now is an ideal time to consider the future of your building and securing future tenants. For assistance in navigating this area of real estate law, contact the attorneys at Rock Fusco and Connelly, LLC.