Northwest Indiana's office market is tightening after the closure of the Twin Towers in Merrillville, which takes 220,000 square feet of space offline.
Commercial In-Sites, a Merrillville-based commercial real estate firm, reports that the office vacancy rate in the Region shrunk to 14 percent last year, down from 15 percent the previous year. The overall office market vacancy rate in suburban Chicago is 20.9 percent, according to Colliers.
Commercial In-Sites' 2018 NWIN Multi-Story Class "A" Office Survey tracks 25 office properties totalling 1.2 million square feet across Northwest Indiana. It no longer includes the Twin Towers, since White Lodging plans to tear down the landmark office towers, previously occupied by 27 different law firms, insurance agencies and other tenants, to make way for a redevelopment project.
"Plans for any future office space there have not been given," Commercial In-Sites President David Lasser said in an email. "With the deletion of the Twin Towers, now 43 percent (74,804 square feet) of the total market available space resides in 8585 Broadway, which is recovering from the downsizing of Chase Bank and the loss of Direct Buy and Everest College. Over a three-year period 2016 to 2018 between $4 million to $5 million is being spent on the renovation of 8585 Broadway so we expect its absorption will accelerate in 2018."
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A dozen of the properties tracked are at 100 percent vacancy, up from 10 offices that were 100 percent least the previous year.
The vacancy rate remained unchanged at 5 percent in Porter County last year, and decreased from 17 percent to 16 percent in the much larger Lake County market last year.
"Based on current active leasing prospects and no additional new multi-story office buildings ready for delivery in 2018, we expect to see vacancy rates reduce this year," Lasser said. "New construction office space has however been announced to break ground in 2018 the communities of Crown Point at 9300 Main Street, in Hammond as a second phase to 2929 Carlson and the Cardinal Campus on Main Street in Highland."
Asking full-service rents rose $0.40 last year to $22.99 per square foot.
"While the market continues to have many tenants either renewing in place, expanding or contracting in place and some relocations within the market, we expect to see a growing trend of more new tenants entering the NWIN market, some relocating from Illinois and other states, more regional offices and some entirely new companies emerging as NWIN is increasingly recognized as a true Chicago suburban sub-market," Lasser said via email. "Market demand for quality space with state of the art amenities is growing and that should help meet the supply of the new construction space that has been announced to be forthcoming this year and next."