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Attn: Downtown tenants and landlords, Mind the skew

  • ​Direct gross asking rental rates in Downtown Chicago exhibit a right-skewed distribution and a median of $36.00.
  • By considering the rent skew here, an investor can estimate that a given future asking rent will be more than the mean. This is good news for landlords.
  • Also, occupancy rates display a unique trend. On the one hand, buildings in the $34.00-$36.00 gross range experience lower occupancy. Tenants demand less “average” space because supply is ample. On the other, developers and owners of Class A and Trophy buildings outperformed the general market by leasing more space.
  • The hypothesis? Anchoring or leasing many floors in brand new supply like 150 N Riverside and 444 W Lake signals a firm’s exclusivity and status.​

Source: JLL Research, average gross asking rents of 114 buildings as of Q3 2017​

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