Demand for office space in Chicago has increased by 150% since the beginning of the year, but demand is still 20% below its 2018-2019 average. One in four are back to working at the office in Chicagoland; one in three are now working from the office nationally.
Office space available for sublease has roughly doubled during the pandemic, and now accounts for 2.4% of total office inventory. As a percentage of total invenotry, the current sublease supply is larger than the sublease supply during the Great Financial Crisis (1.8%) and smaller than the sublease supply during the Dot Com Recession (2.9%).
Commercial real estate investors are buying smaller, safer and more expensive properties. In the office market, the average first quarter deal was 30% smaller in dollar value and 35% smaller in average building size compared with the previous year. But the per-square-foot cost was 8% higher than a year ago, as investors favor fully leased properties with long term leases and medical office properties.
Credit conditions have recovered much quicker than expected, and commercial real estate sales could come roaring back this year. The Urban Land Institute predicts that total US commercial real estate deal volume in 2021 will exceed the annual prepandemic average by $100 billion.