The question has been coming up often these days about where office development stands in this cycle.

1. Chicago
Chart of the week: August 17, 2016
Source: JLL Research
Office construction history…where are we now?
• Although 2000 vacancy started low, the tech bubble generated a huge construction boom. The bubble’s
burst and rapid vacancy run-up set the stage for only modest construction in Chicago during 2007-12.
• Chicago’s current office pipeline is ramping-up. Vacancy remains near historic lows, but excludes the 4.5
million square feet of space not yet delivered in this cycle along with the 2.1 million square feet under
redevelopment within the Old Main Post Office.
• Many tenants will be relocating from space elsewhere in 2017-18, ultimately putting pressure on
absorption and vacancy. To keep new supply and demand in balance, the Chicago market will have to
maintain near record absorption levels over the next two years to match the current construction pipeline.
• Construction as a percent of inventory, however, is now at 5 percent – and on an upward trajectory, with
an increasing share that is spec.
4.4 million
total deliveries
4 years
length of cycle
1.0 million
total deliveries
underway
length of boom
11.9%
vacancy – 2008
15.8%
vacancy – 2012
15.3%
vacancy – 2013
11.0%
vacancy – now
2013 – 2016+2008 – 2012
11.9 million
total deliveries
7 years
length of boom
10.3%
vacancy – 2000
12.0%
vacancy – 2007
2000 – 2007
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
0.0
1.0
2.0
3.0
4.0
2000 2002 2004 2006 2008 2010 2012 2014 3Q 2016
Spec + BTS deliveries (s.f.)
Under construction - percent of inventory
Deliveries
(m.s.f.)
Inventory
(percent)
Tech bubble bursts
in 2000-01