MARKET TAKEAWAYS

Some large tech companies are still evaluating the market with plans to grow their Chicago footprint and occupy more space in the market – even amongst announcements of more workfrom-anywhere flexibility – as evidenced by Google’s continued search for growth space. Many are incorporating COVID-related amenities into their premises for their employees, like private physician space via companies like One Medical. Additionally, many established and scaled tech occupiers are vetting flight-to-quality space opportunities, including new construction, with emphasis on a new level of health and wellness consciousness.

Smaller technology companies are focused on cutting costs, including real estate costs, which has resulted in many new sublease availabilities throughout 2020.

The amount of sublease space well-suited for technology companies is going to continue to increase as organizations evaluate future space needs, presenting tech tenants with an abundance of lower-cost options. However, forward thinking tech companies are considering a shift in “prepandemic” space design parameters, moving away from the densification trend observed over the last decade. This will reduce the appeal of a portion of the sublease market that tech companies might have previously considered viable. In certain cases, new design layouts may ultimately trigger companies to explore expansion requirements and absorb more space.

Prior to the onset of COVID, Chicago was experiencing a tremendous amount of growth from tech occupiers based on the coasts, and we anticipate this to continue post-COVID as a result of Chicago’s lower-priced real estate costs and access to a high-quality, educated workforce.

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