By: Ryan Ori, Crain’s Chicago Business Suburban office vacancy fell to an eight-year low in the second quarter, as expanding companies continued to boost demand for office space. Overall vacancy fell to 20.3 percent in the quarter, down from 21.3 percent in the first quarter and 23.7 percent a year earlier, according to Chicago-based Jones Lang LaSalle. It was the fifth consecutive quarterly decrease in unused space. “All the doom and gloom is gone,” said Eric Kunkel, a JLL executive vice president who represents tenants. Vacancy has plunged well below the recession peak of 25.4 percent five years ago, though it remains higher than pre-recession levels of sub-20 percent. Owners of older buildings or those in less-desirable locations still continue to struggle, but there are signs of an overall recovery in the suburbs, which were hit harder by the recession than downtown, Kunkel said. “Almost a year ago, I felt that things were flipping,” Kunkel said. “Landlords are pushing rents and there’s more competition for spaces. Before, we had the pick of the buildings. Now it’s more competitive and you need to be aware of which space could be taken out from under you by another tenant.” Asking rents rose to $23.91 per square foot, an 8.4 percent increase from a year earlier. The second-quarter decrease in vacancy was a combination of updates to JLL’s inventory research, as well as continued strong leasing activity, according to JLL. Demand—as measured by net absorption, the change in the amount of leased and occupied space—increased by 160,498 square feet during the quarter. Although many large blocks of space remain on the market, the largest tenants in some submarkets have found few options in Class A buildings, where overall vacancy was 16.3 percent, Kunkel said. That has led some tenants to opt for new office built-to-suit developments, including a 753,300-square-foot headquarters for Zurich North America under construction in Schaumburg. That project will test the strength of the suburbs’ recovery because the insurer will create a nearly 900,000-square-foot hole in its current Schaumburg headquarters when it moves next year. “The Zurich building is going to be a big challenge when that empties out,” Kunkel said. Lake County’s vacancy remained the highest at 24.9 percent, although it is down from 30.3 percent a year earlier. The Cook County submarket’s vacancy was the lowest at 12.2 percent, down from 16 percent a year earlier. There was only one new lease of more than 100,000 square feet in the quarter: Verizon’s move to 160,000 square feet at 1701 W. Golf Road in Rolling Meadows, from 127,000 square feet at 777 Big Timber Road in Elgin, according to JLL. Investment sales were lively in the second quarter, including New York-based Blackstone Group buying most of GE Capital Real Estate’s suburban properties as part of a larger portfolio deal. Chicago-based Equity Commonwealth sold three buildings—in Deerfield, Aurora and Lake Forest—to Dallas-based Lone Star Funds, also as part of a large portfolio. In another sale by GE Capital, Hartford, Conn.-based Cornerstone Real Estate Advisers paid almost $154 million for a four-building complex in Deerfield.