The Chicago commercial real estate market is currently in a state of flux. New construction projects are popping up all over the place, while old buildings are being adapted for new uses. The downtown area, in particular, has seen a lot of changes in recent years.
This real estate development in Chicago, combined with the work-from-home movement during the pandemic, means commercial tenants have plenty of opportunities to find the perfect space for their needs. However, with more companies returning to office work and more businesses coming online, the market is experiencing fierce competition. Commercial rents are rising again, and vacancy rates are falling, so businesses must be prepared to pay top dollar for the best locations.
One of the most talked-about changes in the downtown Chicago commercial real estate market is Google’s decision to move into the James R. Thompson Center. The search engine giant purchased the state-owned building for $105 million. The company plans to invest an additional $200 million to redevelop it to add to the city’s 1,800 employees in the bustling downtown area.
The move is a sign of Google’s commitment to the city of Chicago and will bring even more attention to the downtown area. It also signals a shift in the businesses interested in downtown Chicago real estate. In the past, the area was mainly home to traditional corporate office buildings and retail stores. But now, more and more tech companies are setting up shop in the city center.
Several apartment towers and other developments have been built over the past year, and more are currently in the works. This addition is also good news for luxury retail and hospitality businesses. As more and more people continue to move into the city, there is a growing demand for high-end goods and services. Companies like upscale restaurants, hotels, and retail stores are well-positioned to take advantage of the current market conditions.
Of course, with increased demand comes increased competition. Businesses must ensure they offer the best possible product or service if they want to afford higher commercial rents and succeed in today’s market.
Another trend changing the downtown Chicago landscape is the rise of mixed-use developments. These buildings combine office space, retail space, and residential units all in one place. This allows businesses to be in the heart of the action while also providing employees with the convenience of being close to home.
Mixed-use developments are becoming increasingly popular for young professionals who want to live, work, and play in the same area. DAC Developments has several mixed-use developments in the works, including one at 630 S. Wabash Ave. that will include coworking space, residential units, a fitness center, lounge, outdoor terrace, and a rooftop pool and hot tub. To keep in line with transportation, it will have 64 car parking spaces and 100 spots for bicycles.
We’re committed to developing many residential housing options for Chicago’s residents. Our team is familiar with various real estate markets and can help you navigate the city’s ever-changing landscape. While we handle many luxury projects, DAC Developments also works with affordable housing initiatives. Learn more about our mixed-use developments here.
Reyes Coca-Cola Bottling is building a new distribution center in West Dundee. The new 40-acre, $90m facility will allow the company to distribute its products more efficiently to stores throughout the Chicago area. The move shows Coca-Cola’s confidence in the Chicago market and will bring jobs and investment to the city.
Kellogg’s, one of the world’s largest cereal manufacturers, is also expanding its presence in the Chicago area. The company plans to move part of its main headquarters from Battle Creek, Michigan, to the city.
Kellogg’s recently announced they were splitting the megacorporation into three separate companies. The cereal and plant-based foods portion stay in Michigan, and the snack division is heading to Chicago.
This is a significant investment in the future of Chicago, and it shows that businesses are confident in the city’s economy. It also comes after two major companies, Boeing and Caterpillar, announced plans to move out of the town.
In the past year, industrial developments have completed 44 buildings and 23.7 million square feet to meet the market’s growing demands, which hit a record-low vacancy rate of 2.6% in 2022 for big box buildings of 200,000 square feet or more. The industrial rate is 4.9%, the lowest ever recorded in the Chicago real estate market.
These are just a few examples of the many businesses re-investing in Chicago. As the city’s economy grows, we expect to see more companies moving to or expanding in the Windy City. DAC Developments is proud to be a part of this growing community.
The current state of the Chicago commercial real estate market is strong. DAC Developments specializes in developing multi-family housing and ground-up mixed-use projects in Chicago, and we continue to see great success and opportunity in the current market. We’re currently working on a few new projects scheduled to come online in the next year and are confident that these projects will successfully add to Chicago’s growing economy. Our team has over 125 collective years of real estate development experience and has completed over $2 billion worth of real estate developments in the Chicago area.
Contact us today to learn more about our current and upcoming projects.