NAI Hiffman REmark: Suburban Office Renovations Creating Increased Occupancy

Overview

We recently examined 120 office buildings across the Chicago suburban market greater than 50,000 SF that were renovated between the year 2000 and today. Over half of those buildings (56%) saw a dip in vacancy post-renovations—experiencing an average drop of 34% in overall vacancy. In this installment of REmark, we take a deeper dive into these results by building class and submarket, then visually highlight some of the buildings that saw the largest vacancy decrease following building improvements. Scroll down for the full story.

Results by Class

67% of Class A properties experienced a drop in vacancy post-renovations - those properties experienced an average 31% drop in overall vacancy

45% of Class B properties experienced a drop in vacancy post-renovations - those properties experienced an average 39% drop in overall vacancy

Results by Submarket

  • 55% of properties in the North Suburban submarket experienced a drop in vacancy
  • 67% of properties in the Northwest Suburban submarket experienced a drop in vacancy
  • 52% of properties in the O’Hare submarket experienced a drop in vacancy
  • 55% of properties in the East-West Corridor submarket experienced a drop in vacancy

Notable Changes

Naperville Woods Office Center

Naperville Woods was completely vacant in 2007 when the building underwent renovations. Ownership continues to add improvements; the property has remained less than 30% vacant for the past 9 years.

BEFORE - Naperville Woods deli, corridor, & fitness center (click to enlarge)
AFTER - Naperville Woods deli, corridor, & fitness center (click to enlarge)

Edens

Edens prior owner, The Davis Companies, made significant upgrades to the building's deli, patio, and common areas in 2012. KBS acquired the property in 2015 and has added a yoga studio and made additional updates to the fitness center, lobbies, and common areas. The property has jumped from 64% occupied in 2012 to 97% occupied today.

BEFORE | Edens fitness center, patio, lobbies, & common areas (click to enlarge)
AFTER | Edens deli, fitness center & yoga studio, patio, lobbies, conference room, & common areas (click to enlarge)

Washington Pointe

Washington Pointe, at 535 E Diehl Road in Naperville, went from 52% occupied in 2007 to 100% leased in 2016 after renovations to the lobby, addition of a Micro Market & tenant lounge, fitness center, and improved common areas.

BEFORE | Washington Pointe deli and lobby (click to enlarge)
AFTER | Washington Pointe deli, lobby, & fitness center (click to enlarge)

Other Notable Changes

  • Cantera Meadows West, at 28100 Torch Parkway in Warrenville, was completely vacant when it was renovated in 2011. Since then, the property has steadily increased occupancy to its current point of 97.4% occupied, a swing of 194,751 SF of positive absorption.
  • 701 E 22nd Street in Lombard was 100% vacant when it was renovated in 2001. Since then, the property has increased occupancy and is currently 100% occupied.
  • Presidents Plaza II, at 8700 W Bryn Mawr Avenue in Chicago, was 50% vacant when it was renovated in 2011. Since then, the property has experienced 139,000 SF of positive absorption, bringing the vacancy to 15%.

Vacancy Percentage Change

More than half of the properties included in the survey experienced a drop in vacancy post-renovations. The average change in vacancy, for the entire data set, was a drop of 11%.

Percentage of Increased Occupancy

Properties above 150,000 SF performed better post-renovations compared to properties less than 150,000 SF. Noticeably, properties in the 50,000-75,000 SF size range performed the worst with only 38% experiencing an increase in occupancy post-renovations.

Contact

For more creative ideas on how to increase occupancy, please reach out to us. Contact Amanda Ortiz, Director of Research, at aortiz@hiffman.com or 630-693-0645 or Michael Flynn, Executive Vice President, at mflynn@hiffman.com or 630-691-0600.

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