REAL ESTATE OUTLOOK

CHICAGO OFFICE MARKET SECOND QUARTER 2016

Chicagoland office remains stable Vacancy steady

Overall vacancy in 2Q16 remained at 15.4% quarter over quarter: CBD at 12.1% and Suburban at 19.3%. Vacancy overall still remains the lowest in eight years and is expected to decrease in the coming months. Confidence in the market is showing as asking rental rates rise across Chicagoland to an overall average of $28.98 Gross PSF (from $28.45 in 1Q16). CBD has reached $34.76 on average while suburban rates are still much lower at $22.35 on average gross. Average CBD rental rates are higher than pre-recession levels while suburban rates still lag by $1.00 or more per square foot from pre-recession asking prices.

CBD T RENDS 5- YE A R TR E ND

C U R R E NT Q UART E R

VAC A N C Y

12.1% ABSORPTION

(60,239) SF R E N TA L R AT E

$34.76 PSF

ECONOM Y

Unemployment volatile in Chicago Chicago Metro has added approximately 70,540 jobs to the local economy year over year (as of May 2016). Current Chicago Metro unemployment rate is 5.5%, higher than the national average of 4.7% but a significant improvement year over year from 5.9%. Leisure and Hospitality industries (3.5% increase) have enjoyed the highest increases year over year and Construction (3.1% increase) follows closely behind. Major office users in Chicago such as Professional/Business Services and Government, only had a 1.6% and 1.3% increase year over year respectively. Information and Financial sectors reported decreases in jobs over the period.

UNDER CONSTRUC TION

3.95 million SF S U BU RBA N T RENDS 5- YE A R TR E ND

C U R R E NT Q UART E R

VAC A N C Y

15.4% ABSORPTION

78,600 SF

S U P P LY A N D D E V E L O P M E N T

Two new additions to downtown developments 625 W Adams St in the West Loop and 1053 W Lake St in River West were added to the list of new constructions in CBD this quarter. That brings the total to four Class A buildings in the West Loop and two in River West under construction. Of the total 3.95 million SF being built, 1.61 million SF (40%) is still available. Similarly, less than 20% of the two major high rises in the West Loop, (444 W Lake St & 150 N Riverside) remain currently available.

R E N TA L R AT E

$22.35 PSF UNDER CONSTRUC TION

22,144 SF CHICA GOL A ND 5- YE A R TR E ND

C U R R E NT Q UART E R

AV E R AG E S A L E P R I C E

$168.68 PSF

CHICAGO OFFICE MARKET SECOND QUARTER 2016

DEMAND

UNEMPLOYMENT RATE

Overall net absorption dipped in 2Q16

METRO CHICAGO

UNITED STATES

12% 10% 8% 6% 4% 11

12

13

14

15

16

CAP RATES METRO CHICAGO

UNITED STATES

8.0%

Chicagoland net absorption for 2Q16 was 18,361 SF. CBD took a negative absorption hit of (60,239) SF. Class A in the Central Loop and Class A and B in the West Loop had the most negative absorption downtown. This is largely due to reshuffling and consolidation of space in the area which put many smaller suites under 10,000 SF back into vacant inventory. Absorption is expected to be positive in the coming months as tenants such as Conagra, Beam, and Ulta occupy their new spaces. In the suburbs, the North Suburban submarket had the most negative absorption across all classes at (136,634) SF. This suburban submarket has struggled this year as CDW Corporation moved out of the area, followed by a host of smaller tenants (under 5,000 SF) relocating as well. VAC A N C Y

Vacancy rates steady The Chicago Metro vacancy rate remained at 15.4% quarter over quarter. Although absorption dipped, it did not make a major impact on overall vacancy. CBD remained at 12.1% while suburban vacancy increased 20 basis points to 19.3%. Overall inventory count increased slightly in CBD causing vacancy to remain the same as well.

7.5% 7.0% 6.5% 6.0% 11

12

13

14

15

16 R E N TA L R AT E S

YEAR-OVER-YEAR EMPLOYMENT CHANGE U.S.

CHICAGO

4% 3% 2% 1% 0%

CBD at all time high while Suburban continues to climb Gross asking rates in all of Chicagoland is approaching the $30 mark, currently at $28.98. This is the highest gross for all of Chicagoland in more than 10 years. The CBD average gross asking rate reached a new pinnacle at $34.76 PSF this quarter, surpassing all pre-recession watermarks. Suburban asking averages, now at $22.35 PSF, still has room to grow in order to reach a pre-recession normalization of the market. It is expected to continue to increase over the next few months.

Other Services

Manufacturing

Financial Activities

Information

Mining & Logging

Construction

Leisure & hospitality

Government

Education and Health Services

Professional & Business Services

Total Nonfarm

-2%

Trade, transportation and utilities

-1%

Metro Chicago Office Market Indicators INVENTORY

UNDER CONSTRUCTION

Q2 NET ABSORPTION

YTD NET ABSORPTION

DIRECT VACANCY

SUBLET VACANCY

TOTAL VACANCY

Class A

147,719,485

Class B

107,842,861

3,168,634

67,895

382,508

13.6%

1.0%

14.6%

$33.55

310,072

-165,426

-77,117

16.1%

1.4%

17.5%

$24.25

Class C

24,492,006

0

115,892

117,557

10.9%

0.3%

11.2%

$22.31

Metro Chicago Total 280,054,352

3,478,706

18,361

422,948

14.3%

1.1%

15.4%

$28.98

PROPERTY CLASS

R E AL E STATE OUTLOOK CHIC AGO O FFIC E MARKET Q2 2016

AVERAGE RATE PSF

2

CHICAGO OFFICE MARKET SECOND QUARTER 2016

INVESTMENT MARKET

Chicago remains on investors’ radar As growth and productivity have slowed nationally, it was expected that investors would be more cautious in acquiring or building new assets. However, positive fundamentals in Chicago, including continued rent growth coupled with rock-bottom borrowing costs, has supported continued investment in Chicago and the suburbs albeit at a slower rate. A few properties did sell with a significant return on their investment. 1000 W Fulton St, or 1K Fulton, Google’s Midwest headquarters, sold for $257.0 million ($484 PSF) a profit to Sterling Bay, who originally purchased the cold storage building for $12 Million in 2012. Even considering the significant amount of capital to convert the building to its current office use (estimated at $129 million), the yield in such a short period is significant. Fewer properties have changed hands in Chicago so far in 2Q16 than last year. This trend has resulted more from the bid-ask spread being too large than waning interest. Amongst growing sentiment that the office market may have reached its peak this year, some sellers are anxious to regain some profit on assets they may have purchased during the peak of the last real estate cycle in 2006 and 2007. As yields on core assets in the CBD have remained historically low, there has been some shift in investor interest to more core plus and value add investments as well as increased interest in Class A suburban assets.

METRO CHICAGO NET ABSORPTION AND VACANCY NET ABSORPTION MILLION SF

VACANCY

2.0

20%

1.5

18%

1.0

16%

0.5

14%

0

12%

-0.5

10%

-1.0

11

13

12

14

15

8%

16

METRO CHICAGO AVERAGE ASKING RENTAL RATES CLASS A

CLASS B

CLASS C

$35

$30

$25

$20

OUTLOOK

Market will remain steady and cautiously optimistic It is expected that vacancy will continue to decline in the next few months, however at a much slower pace than in 2015. Landlords are still pushing the envelope with effective rates and asking rates will continue to increase as well, especially in CBD Class A assets. New development in Chicago will continue in a disciplined manner. Even as new projects come on line by end of the year, it will not add significant vacancy to the market as many have been preleased and vacancies created by relocating tenants are already slated for new occupancy. Considering recent disruptions in global markets, US property markets have retained a reputation for long-term stability; Chicago’s steady fundamentals support investors’ cautious view.

$15

11

12

13

14

15

16

METRO CHICAGO DEVELOPMENT PIPELINE MILLION SF CONSTRUCTIONS

COMPLETED

PRELEASED

AVAILABLE

5m 4m 3m 2m 1m 0

R E AL E STATE OUTLOOK CHIC AGO O FFIC E MARKET Q2 2016

11

12

13

14

15

16

3

CHICAGO OFFICE MARKET SECOND QUARTER 2016

CBD Market

Tenants are staying but may be consolidating as they renew CBD vacancy stands at 12.1% in 2Q16. The lowest and only single-digit overall vacancy rate remains in the River North submarket with 7.6%. Many River North companies are reconfiguring current office layouts or expanding slightly to avoid having to move from this trendy area. Considering the migration of tech companies to this submarket, office benching is increasing as vacancy gets tight. Where 150-180 SF may have been allocated per employees, it now stands at 110-120 SF per head. However, with the growth in tech tenants, landlords in River North are also seeing shorter term leases as their tenants know they if they expand, River North will not be able to meet their needs in the long run. Credit remains a concern with many of these tenants for landlords. CBD net absorption was negative (60,239) SF. Mostly contributing to this marginal negative absorption were the Central and West Loop submarkets. This is not an indicator of low interest in these areas but rather of high renewal and consolidations in the area. One such example was Publicis giving back two floors at the Leo Burnett building in the Central Loop, yet extending its lease of 642,545 SF through 2026. Valence Health, located at 540 W Madison St, is subleasing two of three floors (more than 80,000 SF). It is widely expected that these vacancies will be absorbed by the end of the year given the tight market for Class A space.

CBD NET ABSORPTION AND VACANCY NET ABSORPTION MILLION SF

VACANCY

2.0

18%

1.5

16%

1.0

14%

0.5

12%

0

10%

-0.5 -1.0

8%

11

12

13

14

15

6%

16

CBD AVERAGE ASKING RENTAL RATES CLASS A

CLASS B

CLASS C

$45 $40 $35 $30 $25 $20 $15

11

12

13

14

15

16

CBD asking gross rental rates reached $34.76 PSF; a $.57 increase quarter over quarter. The Central Loop and West Loop

R E AL E STATE OUTLOOK CHIC AGO O FFIC E MARKET Q2 2016

4

CHICAGO OFFICE MARKET SECOND QUARTER 2016

were highest overall with $35.20 and $38.05 respectively despite their negative absorption this quarter. The rise is benefiting both class A and class B assets. In strictly class A inventory, River North and the West Loop dominate in asking rents at an unthinkable rate of $42.91 PSF and $41.43 respectively.

SECOND QUARTER SELECT LEASE ACTIVITY

TENANT

PROPERTY

Computer Systems Institute

29 E Madison St

30,585 

Publicis

35 W Wacker Dr

642,545

Renewal & Extension

McDonald's

110-134 N Carpenter St

330000

New Construction/Redev.

Chicago Housing Authority

333 S Wabash Ave

155,749

Renewal

Constellation Brands

131 S Dearborn St

130,000

Relocation & Expansion

Suburban headquartered companies continue to move downtown. McDonald’s very publicly announced it is ditching Oakbrook to occupy the soon to be redeveloped 330,000 SF site at 110-134 N Carpenter St/1058 W Washington Blvd (former Harpo studios).

Beam, Inc.

222 Merchandise Mart Plz

70,000

Sublease

Lurie Children's Hospital

211 E Chicago Ave

68,082

New

Korn Ferry Intl

233 S Wacker Dr

55,362

Renewal

InTouch Solutions

205 N Michigan Ave

55,113

Renewal

Winston & Strawn

35 W Wacker Dr

53,821

Renewal & Extension

Glassdoor

1330 W Fulton St

51,500

New

McGraw-Hill Companies

130 E Randolph St

48,452

New

Two new developments, 444 W Lake St and 150 N Riverside, which will add nearly 2.3 million SF to the inventory by end of 2016 and beginning of 2017), will not negatively impact vacancy and overall market conditions as 80% or so has been pre-leased. With $35.00 asking net rent as a starting number, these buildings will certainly raise the bar in office pricing downtown.

Regional Transportation Authority

175 W Jackson Blvd

41,370

Renewal

Press Ganey Assoc Inc

1 N Franklin St

34,000

Renewal & Expansion

Civis Analytics

200 W Monroe St

29,079

New

Horton Group

500 W Monroe St

26,751

Sublease

Textura

130 E Randolph St

23,374

New

Piper Jaffray & Co.

444 W Lake St

20,534

New

SPINS, LLC

222 W. Hubbard

20,500

New

West Monroe Partners

227 W Monroe St

20,000

New

The CBD office market has recovered nicely and will continue to enjoy decreases in vacancy and increases in rental rates over the next few quarters. However, CBD is not expected to have any major absorptions from companies outside of Illinois until Cook County gets its financial house in order in regards to budget constraints, increased taxes, and lack of money to lure businesses to Chicago. Companies headquartered in the suburbs may soon be priced out of the market and find it difficult to justify the cost to move downtown. Intramarket expansion is nearing the end of its cycle, so the best way for the Chicago to continue its upward office occupancy trend is to attract businesses outside of Illinois and advance policies that support new and existing businesses.

SECOND QUARTER SELECT SALE ACTIVITY

BUYER

R E AL E STATE OUTLOOK CHIC AGO O FFIC E MARKET Q2 2016

SIZE (SF)

PROPERTY

SIZE (SF)

SALE PRICE

PSF

440 S La Salle St

TYPE

Renewal

1,019,325

$191,000,000

$187

CIM Group

1 S State St

942,330

$250,789,747

$266

ELAD Group

1000 W Fulton St

531,194

$257,000,000

$484

American Realty Advisors

1460 N Halsted St

221,851

$130,000,000

$586

LaSalle Investment JV Universal-Investment OBO BVK

1217-1227 W Washington Blvd

50,000

$4,450,000

$89

420 W Huron St

30,918

$5,210,000

$169

Level Office

401 W Superior St

30,000

$4,960,000

$165

401 West Superior Holdings

Peppercorn Capital, LLC

5

CHICAGO OFFICE MARKET SECOND QUARTER 2016

R E AL E STATE OUTLOOK CHIC AGO O FFIC E MARKET Q2 2016

6

CHICAGO OFFICE MARKET SECOND QUARTER 2016

CBD Office Market Indicators VACANCY SF

VACANCY RATES

INVENTORY

UNDER CONSTRUCTION

Q2 NET ABSORPTION

YTD NET ABSORPTION

DIRECT

SUBLEASE

DIRECT

SUBLEASE

OVERALL

AVERAGE RATE PSF

Class A

22,135,135

0

-230,603

-2,262

2,139,044

215,277

9.7%

1.0%

10.6%

$38.23

Class B

13,202,898

0

-54,899

-50,017

2,218,344

105,831

16.8%

0.8%

17.6%

$31.56

Class C

1,958,766

0

43,441

46,149

121,732

18,776

6.2%

1.0%

7.2%

$25.50

37,296,799

0

-242,061

-6,130

4,479,120

339,884

12.0%

0.9%

12.9%

$35.20

Class A

16,631,127

0

50,066

198,834

2,287,772

95,311

13.8%

0.6%

14.3%

$34.60

Class B

6,182,889

0

-59,308

-96,070

837,555

20,112

13.5%

0.3%

13.9%

$29.07

SUBMARKET

Central Loop

Class C

3,962,000

0

21,020

23,189

317,876

8,385

8.0%

0.2%

8.2%

$26.98

26,776,016

0

11,778

125,953

3,443,203

123,808

12.9%

0.5%

13.3%

$32.19

Class A

7,091,850

0

56,912

4,557

933,469

117,724

13.2%

1.7%

14.8%

$36.93

Class B

4,117,842

0

-6,037

41,954

423,740

65,069

10.3%

1.6%

11.9%

$30.35

Class C

1,526,998

0

25,399

24,599

129,908

3,250

8.5%

0.2%

8.7%

$25.27

East Loop

N. Michigan Ave

12,736,690

0

76,274

71,110

1,487,117

186,043

11.7%

1.5%

13.1%

$33.41

Class A

3,991,073

0

23,400

-83,264

271,261

0

6.8%

0.0%

6.8%

$42.91

Class B

11,048,441

0

169,651

30,461

794,363

87,734

7.2%

0.8%

8.0%

$29.83

Class C River North

2,717,278

0

3,262

20,523

164,316

23,915

6.0%

0.9%

6.9%

$27.02

17,756,792

0

196,313

-32,280

1,229,940

111,649

6.9%

0.6%

7.6%

$32.34

Class A

689,067

55,002

32,670

32,670

25,590

6,700

3.7%

1.0%

4.7%

$39.50

Class B

2,381,613

287,928

-24,957

-45,715

401,945

10,738

16.9%

0.5%

17.3%

$28.35

Class C

1,707,787

0

10,739

-10,340

190,305

9,800

11.1%

0.6%

11.7%

$26.49

4,778,467

342,930

18,452

-23,385

617,840

27,238

12.9%

0.6%

13.5%

$29.29

Class B

743,908

0

-2,588

2,933

156,374

2,588

21.0%

0.3%

21.4%

$23.88

Class C

1,066,339

0

-3,431

-3,431

48,864

0

4.6%

0.0%

4.6%

$23.48

1,810,247

0

-6,019

-498

205,238

2,588

11.3%

0.1%

11.5%

$23.64

Class A

33,443,921

3,612,102

-41,497

-113,210

3,320,634

467,621

9.9%

1.4%

11.3%

$41.43

Class B

12,625,577

0

-68,472

-10,272

1,570,735

197,307

12.4%

1.6%

14.0%

$31.47

River West

South Loop

Class C

2,403,550

0

-5,007

-25,074

251,226

0

10.5%

0.0%

10.5%

$25.59

48,473,048

3,612,102

-114,976

-148,556

5,142,595

664,928

10.6%

1.4%

12.0%

$38.05

Class A

83,982,173

3,667,104

-109,052

37,325

8,977,770

902,633

10.7%

1.1%

11.8%

$38.91

Class B

50,303,168

287,928

-46,610

-126,726

6,403,056

489,379

12.7%

1.0%

13.7%

$30.49

Class C

15,342,718

0

95,423

75,615

1,224,227

64,126

8.0%

0.4%

8.4%

$26.11

149,628,059

3,955,032

-60,239

-13,786

16,605,053

1,456,138

11.1%

1.0%

12.1%

$34.76

West Loop

DOWNTOWN

R E AL E STATE OUTLOOK CHIC AGO O FFIC E MARKET Q2 2016

7

CHICAGO OFFICE MARKET SECOND QUARTER 2016

Suburban Market

Tenants are staying but may be consolidating as they renew Overall suburban vacancy rates increased 20 basis points to an average of 19.3% in 2Q16. Suburban absorption although positive at 78,600 SF net occupied, it was significantly less than in 1Q16 (358,134 SF). The majority of the positive absorption in 2Q16 has been in in Class A product particularly in the Northwest, Eastern East West, and even South Suburban submarkets. Confidence in the future for suburban submarkets has increased with positive indicators such as US Cellular renewing and expanding into 331,797 SF at 8410-8430 W Bryn Mawr Ave in the O’Hare submarket. An additional large suburban move is Paylocity Holding’s relocation and expansion into 309,000 SF at 1400 & 1450 American Lane, Schaumburg. Suburban office rental rates increased overall to $22.35 PSF in 2Q16 from $21.98 PSF in 1Q16. Class A product is seeing the majority of the increases especially in the Eastern East West submarket (currently at $28.16 PSF Class A) and in O’Hare where Class A rental rates reached to $30.03 PSF. Existing landlords are seeing the value in improvements to their Class A campuses as existing tenants are remaining in their spaces and paying for the amenities. Suburban landlords are also offering better overall concession packages to existing tenants that would not be offered by landlords of equivalent space downtown.

R E AL E STATE OUTLOOK CHIC AGO O FFIC E MARKET Q2 2016

SUBURBAN NET ABSORPTION AND VACANCY NET ABSORPTION SF

VACANCY

750k

24%

500k

22%

250k

20%

0

18%

-250k

16%

-500k

14%

-750k

11

12

13

14

15

12%

16

SUBURBAN AVERAGE ASKING RENTAL RATES CLASS A

CLASS B

CLASS C

$30

$25

$20

$15

$10

11

12

13

14

15

16

8

CHICAGO OFFICE MARKET SECOND QUARTER 2016

As was in the case with CBD submarket, less office product changed hands with investors in suburban outliers as well. The trend in the suburbs remains Class A product that are highly occupied are what is currently being sold. However, well-located groups of buildings or office campuses are also popular: as was the case this quarter with both 3,6,9 Pkwy N. Deerfield and 2301-2311 W 22nd St, Oak Brook. Investors are cautiously optimistic in the suburbs as they are in the CBD but are tempering risk with well-known assets. No new major developments are on the horizon in the suburban landscape that will change the landscape or increase vacancy in suburban submarkets. The occasional exception are smaller, welllocated property such as 301 S Main St in Naperville (currently under construction) that is built for immediate need and will be occupied by smaller tenants. All other construction in suburban office are owner/ user spec development fully pre-leased or major medical buildings which do affect the competitive office inventory. Demand has moderately increased in the suburban submarkets over the past few years since 2010 and it is expected to continue through 2016.

R E AL E STATE OUTLOOK CHIC AGO O FFIC E MARKET Q2 2016

SECOND QUARTER SELECT LEASE ACTIVITY

TENANT

PROPERTY

SIZE (SF)

US Cellular

8410-8420 W. Bryn Mawr Ave, Chicago

331,797

Renewal & Expansion

Paylocity Holding

1400 & 1450 American Lane, Schaumburg

309,000

Relocation & Expansion

183,000

New Construction

American Academy of Pediatrics Hamilton Lakes Business Park, Elk Grove Village

TYPE

Combined Insurance

8750 W Bryn Mawr Ave, Chicago

92,166

New

Valent BioSciences

600 N US Highway 45, Libertyville

85,000

Relocation

The School Association for Special Education in DuPage

2900 Ogden Ave, Lisle

30,000

Consolidation

Turtle Wax

2250 W Pinehurst Blvd, Addison

25115

New

JMG Financial Group

2001 Butterfield Rd, Downers Grove

23000

Expansion

Keyence

500 Park Blvd, Itasca

70,395

New

Arthur J. Gallagher

2900 Golf Rd, Rolling Meadows

48,000

New

SASED

2900 Ogden Ave, Lisle

30,039

New

TreeHouse Foods

2001 Spring Rd, Oak Brook

24000

New

JMG Financial Group

2001 Butterfield Rd, Downers Grove

23,029

New

Fresenius Kadi

1475 E Woodfield Rd, Schaumburg

22,578

New

Paychex

27545 Diehl Rd, Warrenville

22,218

New

SECOND QUARTER SELECT SALE ACTIVITY

PROPERTY

SIZE (SF)

SALE PRICE

PSF

BUYER

1301 W Central Rd, Schaumburg

517,000

$80,000,000 $155

Oak Street RE Capital

3,6,9 Pkwy N. Deerfield

473,328

$80,000,000 $169

Fulcrum Asset Advisors JV True North Mgmt Group

4709 Golf Rd, Skokie (Concourse Plaza)

293,280

$29,750,000 $101

Klairmont Enterprises

2301-2311 W 22nd St, Oak Brook

180,000

$24,000,000 $133

American Landmark Properties

500 Davis St, Evanston

127,000

$18,000,000 $142

Steelbridge Capital JV The Family Office

9

CHICAGO OFFICE MARKET SECOND QUARTER 2016

R E AL E STATE OUTLOOK CHIC AGO O FFIC E MARKET Q2 2016

10

CHICAGO OFFICE MARKET SECOND QUARTER 2016

Suburban Office Market Indicators VACANCY SF

VACANCY RATES

INVENTORY

UNDER CONSTRUCTION

Q2 NET ABSORPTION

YTD NET ABSORPTION

DIRECT

SUBLEASE

DIRECT

SUBLEASE

OVERALL

AVERAGE RATE PSF

Class A

10,397,691

0

64,647

69,562

1,623,340

63,261

15.6%

0.6%

16.2%

$28.16

Class B

12,733,249

0

-29,019

44,365

2,281,599

326,211

17.9%

2.6%

20.5%

$19.06

Class C

1,419,730

0

29,690

31,271

190,844

7,011

13.4%

0.5%

13.9%

$15.54

24,550,670

0

65,318

145,198

4,095,783

396,483

16.7%

1.6%

18.3%

$22.71

SUBMARKET

Eastern East West Class A

6,089,974

0

-2,360

11,761

748,940

10,020

12.3%

0.2%

12.5%

$26.24

Class B

12,014,745

22,144

3,598

137,964

2,025,632

521,441

16.9%

4.3%

21.2%

$19.57

Class C

1,555,048

0

3,816

9,887

140,893

0

9.1%

0.0%

9.1%

$17.09

Western East West

19,659,767

22,144

5,054

159,612

2,915,465

531,461

14.8%

2.7%

17.5%

$21.44

Class A

18,814,406

0

-61,796

-138,101

3,972,079

220,978

21.1%

1.2%

22.3%

$27.80

Class B

9,623,310

0

-50,664

-87,646

1,406,015

50,742

14.6%

0.5%

15.1%

$20.23

Class C

2,341,936

0

-24,174

-31,384

252,799

0

10.8%

0.0%

10.8%

$16.83

North Suburban

30,779,652

0

-136,634

-257,131

5,630,893

271,720

18.3%

0.9%

19.2%

$24.60

Class A

19,872,798

0

163,815

356,580

3,547,260

236,705

17.8%

1.2%

19.0%

$23.41

Class B

12,680,087

0

-11,979

-27,759

2,956,185

67,437

23.3%

0.5%

23.8%

$17.18

Class C

1,481,453

0

1,919

14,032

259,321

14,500

17.5%

1.0%

18.5%

$15.12

34,034,338

0

153,755

342,853

6,762,766

318,642

19.9%

0.9%

20.8%

$20.73

Class A

7,461,413

0

-24,853

5,968

919,014

46,550

12.3%

0.6%

12.9%

$30.03

Class B

5,361,801

0

-41,829

-17,622

1,419,392

4,426

26.5%

0.1%

26.6%

$18.91

Class C

791,476

0

-3,130

3,606

339,399

0

42.9%

0.0%

42.9%

$14.76

Northwest

O’Hare

13,614,690

0

-69,812

-8,048

2,677,805

50,976

19.7%

0.4%

20.0%

$24.76

Class A

1,101,030

0

37,494

39,413

272,322

9,247

24.7%

0.8%

25.6%

$20.97

Class B

5,126,501

0

11,077

307

912,885

4,500

17.8%

0.1%

17.9%

$17.51

Class C

1,559,645

0

12,348

14,530

259,287

0

16.6%

0.0%

16.6%

$15.16

7,787,176

0

60,919

54,250

1,444,494

13,747

18.5%

0.2%

18.7%

$17.53

South Suburban Class A

63,737,312

0

176,947

345,183

11,082,955

586,761

17.4%

0.9%

18.3%

$26.48

Class B

57,539,693

22,144

-118,816

49,609

11,001,708

974,757

19.1%

1.7%

20.8%

$18.80

Class C SUBURBAN

9,149,288

0

20,469

41,942

1,442,543

21,511

15.8%

0.2%

16.0%

$15.93

130,426,293

22,144

78,600

436,734

23,527,206

1,583,029

18.0%

1.2%

19.3%

$22.35

CONTACT

METHODOLOGY

Sandy McDonald Director of Market Research 312.881.7047 [email protected]

Inventory defined as existing Class A, B and C office properties, 20,000 square foot minimum rentable base area. Overall vacancy inclusive of direct and sublease space. Net absorption defined as the change in physical occupancy from one period to the next. Average asking rents are direct gross per square foot, per year and are overall averages are weighted against total inventory.

200 West Madison Street, Suite 1200 Chicago, Illinois 60606

T 312.881.7000 F 312.881.7085 www.transwestern.com/chicago

Copyright © 2016 Transwestern. All rights reserved. No part of this work may be reproduced or distributed to third parties without written permission of the copyright owner. The information contained in this report was gathered by Transwestern from CoStar and other primary and secondary sources believed to be reliable. Transwestern, however, makes no representation concerning the accuracy or completeness of such information and expressly disclaims any responsibility for any inaccuracy contained herein.