Older properties, Internet play key roles in high vacancy rate in Schaumburg, elsewhere
The Schaumburg area office market has a higher than average vacancy rate in the area, mostly due to the internet and departure of Motorola Solutions, real estate experts said Wednesday.
Schaumburg's office vacancy rate is 20 percent, compared to 13 percent for the rest of the Chicago and suburban marketplace. But experts remain optimistic that those vacancies in Schaumburg will be filled.
"This (Schaumburg) is the only submarket in the area that has been affected so much," said Brandon Frankel, market analyst for CoStar Group in Washington, D.C. "Schaumburg has a lot of large tenants in very old buildings and those buildings need to be refurbished before they can easily be sold. It's nothing that Schaumburg itself is doing wrong. It's the market."
Frankel was among the various speakers featured at a real estate forum hosted by Inland Real Estate Brokerage & Consulting Inc. in Oak Brook Wednesday. About 125 real estate professionals gathered to talk about industry trends that led to the proliferation of older buildings on the market and a more mobile workforce.
Motorola Solutions, which had its longtime campus near Meacham and Algonquin Road in Schaumburg, moved its headquarters downtown Chicago last year, kept about 1,600 employees in Schaumburg and sold the rest of the campus for other development.
Motorola Solutions followed several other companies around the region that moved operations to Chicago.
Besides the departure of Motorola Solutions, A.C. Nielsen also will be moving out of Schaumburg by next year, leaving another hole in the market.
But other factors are at play that have kept many office buildings vacant.
Older buildings, constructed in the 1970s and 1980s, are sitting longer on the market because they have not been adequately refurbished to quickly attract new buyers or lessees, Frankel said.
"A lot of other areas are doing well, such as Oak Brook, Naperville and Lisle," Frankel said. "But Schaumburg cannot catch a break."
While relocating companies say they are seeking younger talent in the city, financial reasons also could be behind the decision.
The price to refurbish those older office buildings is often more than the move to Chicago is worth, experts said.
In addition, the internet has played a major role in the vacancy rate, said Paul L. Rogers, president and managing broker at Inland Real Estate Brokerage & Consulting Inc.
"More people are working from home now and companies have less need for regular office space than they used to have," Rogers said.