JLL Chicago SkylineNavigating the Gulf

Trophy vs. Non-Trophy VacancyWith a first quarter direct vacancy rate of 6.1% for the Chicago Skyline Trophy market compared to a 16% vacancy rate for the Chicago Skyline Non-Trophy market, it’s unlikely that dynamics between these two segments will change in the near term. The widening gap is a result of demand for Trophy space where vacancy has declined 240 basis points since 2009. As economic momentum shifts into full gear this year, resulting in tightened office market conditions,

From a competition standpoint, Trophy vacancy levels in Chicago are lower than levels in New York, San Francisco, Seattle, Washington DC and Boston, among other cities.

the gap between Trophy and Non-Trophy rents will widen even further over the near term.

16%direct

vacancy rate

NON-TROPHY

6.1%direct

vacancy rate

TROPHY

9.4%Seattle

VACANCY

8.4%Washington DC

VACANCY

8.6%Boston

VACANCY10.3%New York

VACANCY

7.7%San Francisco

VACANCY

6.1%Chicago

VACANCY

Chi SF DC

VACANCY %

Bos Sea NYC

0 2 4 6 8 10

New Trophy SupplyDespite nearly 2.25 million square feet currently under construction across the Skyline, of which both buildings are considered Trophy, the majority of that supply relief (60 percent) is preleased and the availability that does exist will not offer supply relief to tenants until 2017.

As a result, tenants in the Trophy market will face diminished negotiating leverage over the next 18 months.

20152016

2017900Ksquare feet

ONLY

of new Trophy space will be available

in 2017

2.25 million square feet of new Trophy space

Know Your Tenants

The widening gulf between Trophy and Non-Trophy rents may change tenant demand moving forward as the city sees an increasingly diverse tenant base focused around technology develop and spread — a consideration for owners and developers of existing and future Trophy product, but one they may not be able to entertain due to elevated construction costs and sales pricing.

jll.com/chicago2015 JLL Skyline Review

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