JLL: Don't count out suburban office markets
The U.S. office market added 11.7 million square feet of office space in the second quarter, mostly in central business districts but with a strong showing in suburban markets as well, according to JLL's Q2 2017 office market report.
Suburban office properties with urban characteristics — such as high density and access to transportation — performed best in the 25 markets the company studied, Building Design + Construction reported.
Half of the most active suburban markets have higher rents than their nearest downtowns, contradicting the common thought that suburban markets aren't as profitable as their urban equivalents.
There's no doubt that major companies are increasing their presence and office footprint in urban centers, but there are still suburban holdouts, especially those that offer proximity to city-style amenities like plenty of retail, services and entertainment, with housing and transportation nearby.
Chicago one city that has seen a major boost in downtown office projects, with big employers like McDonald's and Kraft Heinz relocating there for its highly educated workforce that wants to live in that city's relativity inexpensive urban environment.
Other companies prefer more distance between their offices and a metro's busy downtown. When Caterpillar announced that it would relocate its headquarters to the Chicago area, the company had industry onlookers wondering how close to the city's core the company would end up. Caterpillar ultimately selected an existing office in the suburb of Deerfield, IL, where it will take over the office of Beam Suntory, the maker of Jim Beam.
In July, Illinois developers said they were mulling a $1 billion technology park in the Chicago suburb of Elk Grove Village, IL, located near O'Hare International Airport. The 85-acre project would take the place of undeveloped farm land, and it would feature space for companies involved in robotics, digital and automated manufacturing technology and data storage. The first phase of the project would include $150 million for four spec buildings, as well as two commercial sites for hotel, retail or restaurant projects.
- Building Design + Construction Some suburban office markets are holding their own against corporate exodus to cities
- JLL United States Office Outlook | Q2 2017
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