Vacancy Rises Once Again

Research & Forecast Report SUBURBAN CHICAGO | OFFICE Third Quarter 2016 Vacancy Rises Once Again Ronna Larsen Research Manager | Suburban Chicago A...
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Research & Forecast Report

SUBURBAN CHICAGO | OFFICE Third Quarter 2016

Vacancy Rises Once Again Ronna Larsen Research Manager | Suburban Chicago

After showing improvement in the second quarter, the suburban Chicago office market witnessed a setback in the third quarter of 2016. The suburban Chicago office market took a hit in the third quarter of 2016. Only 236,000 square feet of notable new lease transactions (50,000 square feet or greater) were signed in the third quarter compared to 592,000 square feet in the second quarter of 2016.

Trends While the velocity of large tenants in the market continues to dissipate heading into the fourth quarter of 2016, there are numerous mid-sized tenants out in the market. Currently 75 tenants ranging from 10,000 to 50,000 square feet are actively seeking space, with a large representation coming from the East-West portion of the market. Well-capitalized buildings in the suburbs continue to focus on tenant improvements and increased amenities such as structured parking, power to accommodate the modern tenant, employee wellness / fitness centers, delis, tenant lounges and conference centers. These amenities cater to the younger generation, making higher-end Class A space a hot commodity. Investment and user sales throughout the suburban office market continues to rise as 11 assets traded in the third quarter, including Zeller Realty Group’s two-building, 647,216-square-foot portfolio purchase of Woodfield Preserve in Schaumburg which sold for $73.5 million and Sperry Commercial’s $32.0 million purchase of Woodfield Corporate Center, a two-building, 532,973-square-foot asset also in Schaumburg. In addition, several assets were added to the market in the third quarter and six properties are under contract.

Vacancy

Market Indicators Relative to prior periods

Q3-15

Q2-16

Q3-16

Vacancy rate

20.4%

19.7%

20.3%

684,267

180,918

(552,143)

$20.14

$20.41

$20.37

113,127,081

113,251,081

113,251,081

Absorption (YTD) Rents Inventory

Class A Large Blocks of Space 20,000 SF+

50,000 SF+

100,000 SF+

200,000 SF+

300,000 SF+

O'Hare

12

7

3

0

0

Northwest

39

21

11

4

1

North

40

19

12

4

4

Lisle-Naperville

25

13

6

4

2

Oak Brook

23

9

3

1

0

Total

139

69

35

13

7

market to witness a decrease in vacancy, the Lisle-Naperville market reported the most significant change, rising in vacancy by 3.1 percent. Class A vacancy in the suburban office market rose to 20.2 percent, up from 18.7 percent in the previous quarter as larger tenants- including Redbox, Banco Popular and ConAgrareturned space to the market. The overall sublease vacancy rate also remained flat in the third quarter of 2016 at 1.3 percent.

Absorption The third quarter of 2016 ended with 552,143 square feet of negative year-to-date net absorption, compared to positive 180,918 square feet reported at the end of second quarter.

Class A assets were effected the most the third quarter of 2016 Leasing volume in the suburban office market decreased in the third with 905,412 square feet of negative net absorption, compared quarter of 2016, as vacancy rose to 20.3 percent from 19.7 percent in to positive 104,755 square feet at mid-year 2016. the second quarter. While the North market was the only suburban

Large Blocks of Availability There are currently 45 properties in the suburban office market that can accommodate large (100,000 square feet and above) users, with 35 of them being Class A. While there are few available large blocks of space in the O’Hare and Oak Brook markets, the Northwest market continues to offer the majority of large block options. AT&T Corporate Campus, a 1.6 million square foot asset in Hoffman Estates has been removed from our statistics as it is currently in receivership. Once the situation with this asset has been determined and it is recapitalized we will place it back into the inventory.

Net Absorption and Vacancy | Suburban Office Market Net Absorption & Vacancy Overall Suburban Office

21.8%

2,000,000

21.6%

21.6%

1,500,000

1,448,085

21.4% 21.2%

21.2%

1,000,000

21.0% 450,104

500,000

21.0% 20.8%

20.8% 396,142

20.6% 20.4%

20.3%

0

20.2%

(213,655)

(500,000)

20.0%

(246,242)

(1,000,000)

2011

2012

Source: Costar; Colliers International Research

2013

19.9%

2014

Absorption

2015

(552,143)

19.8% 19.6%

2016

Vacancy

Rents

The average gross asking rent for all classes in suburban Chicago decreased slightly to $20.37 per square foot gross compared to $20.41 at the end of the second quarter.

Construction While there hasn’t been any speculative construction delivered since 2010 and none is expected throughout 2016, build-to-suit activity is thriving within the suburban market. Most notably, Zurich North America’s 735,000-squarefoot headquarters at Meacham Road and Interstate 90 in Schaumburg was recently completed, while American Academy of Pediatrics is building a 193,000-square-foot development at Park Boulevard and Pierce Road in Itasca with completion expected in the fall of 2017. Chamberlain Group, a division of Duchossois Group, is building a 228,600-square-foot office development on the land it acquired from Follett Corporation on Windsor Drive in Oak Brook with completion expected in early 2017. In addition, McShane Development Company and MetLife Real Estate Investors recently announced Huntington 90, a build-to-suit business park in Hoffman Estates which can accommodate up to 500,000-square-foot facilities.

Submarket Vacancy Submarket Vacancy Rates Rates | 2014 - 2016 2014 - 2016

30.0% 25.0% 20.0%

22.1% 22.5% 22.3% 19.3%

18.0%

19.1%

22.5%

21.5% 18.0%

18.6%

21.8%

19.7%

19.9%

Lisle/Naperville

Oak Brook

18.7%

15.0% 10.0% 5.0% 0.0% -5.0%

O'Hare 2014

2015

Northwest

North

2016

Source: Costar; Colliers International Research

Asking Gross Rental Rates Asking Gross Rental Rates Overall Suburban Office $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00

2011

2012

2013

2014

Source: Costar; Colliers International Research

2

19.1%

Vacancy (%)

The average Class A gross asking rent ended the third quarter at $28.66 per square foot gross, compared to $28.60 in the second quarter of 2016.

Research & Forecast Report | Third Quarter 2016 | Suburban Chicago / Office | Colliers International

2015

2016

PLEASANT PRAIRIE

Tenants In The Market | Active Requirements

WISCONSIN ILLINOIS

HARVARD

NORTH

GURNEE WAUKEGAN

North 1,363,000 SF

MCHENRY

Northwest 1,511,000 SF 12

45 LIBERTYVILLE

WAUCONDA

83

MARENGO

LAKE FOREST

60

LAKE ZURICH

94

83 22

BARRINGTON

LAKE CO.

BUFFALO GROVE

COOK CO.

Lake Cook Rd.

KANE CO.

HUNTLEY

68

62

DEERFIELD

PALWAUKEE FIELD 21

12 ROLLING MEADOWS

14

72

HIGHLAND PARK

LINCOLNSHIRE

45

SLEEPY HOLLOW

Lake Michigan

NORTHBROOK

41

WINNETKA 94

ARLINGTON 53 HEIGHTS

59

GLENVIEW

90

COOK CO. DuPAGE CO.

20

41 190

ITASCA

290

KANE CO.

ADDISON

WEST CHICAGO

83

OAK PARK

CHICAGO

290

LOMBARD

BROADVIEW 43

90

34

McCOOK

294

LISLE

NAPERVILLE

CICERO

45

88

ay East-West Tollw

88

DOWNERS GROVE

HINSDALE

BEDFORD PARK

34

50

43 53

355

WILL CO.

94

MIDWAY AIRPORT

55

BURR RIDGE

KANE CO. KENDALL CO.

90

MELROSE PARK

OAKBROOK

AURORA

94

64

ELMHURST

59

DuPAGE CO.

East-West 1,953,000 SF

53 355

O’Hare 688,000 SF

FRANKLIN PARK

290

CAROL STREAM

64

90

ROSEMONT

O'HARE INTERNATIONAL AIRPORT

HANOVER PARK

ST. CHARLES

EVANSTON

COOK CO.

31

SKOKIE

58

ELK GROVE VILLAGE

O'Hare Expy. inElg

20

MOUNT PROSPECT

SCHAUMBURG

WILMETTE

294

DuPAGE CO.

HOFFMAN ESTATES

ELGIN

BATAVIA

10 miles

VERNON HILLS

McHENRY CO.

CARY

5

NORTH CHICAGO

GRAYSLAKE

CRYSTAL LAKE

0 1

94

90

55

12

20

WILL CO.

ROMEOVILLE

57

Despite the increase in vacancy in the Suburban Office Market, the velocity of small and mid-size tenants in the market is on the rise.

WILL CO.

ORLAND PARK 45

50

SOUTH HOLLAND 294

TINLEY PARK 80

JOLIET

CHICAGO MATTESON HEIGHTS PARK FOREST

NEW LENOX UNIVERSITY PARK

80

MONEE

GRUNDY CO. WILL CO.

ELWOOD

55

3

HAMMOND

ILLINOIS

7

MINOOKA

94

Research & Forecast Report | Third Quarter 2016 | Suburban Chicago / Office | Colliers International

LANSING

INDIANA

171

WILL CO.

53

KENDALL CO. GRUNDY CO.

GARY

ALSIP COOK CO.

COOK CO.

PLAINFIELD

COOK CO.

WILL CO.

KENDALL CO.

WOODRIDGE BOLINGBROOK

Significant Lease and Sale Activity Top Suburban Office Leasing Activity 3Q 2016 TENANT

BUILDING

TOWN

SUBMARKET

CLASS

SIZE (SF)

DEAL TYPE

Wilton

Washington Pointe

Naperville

LN

A

86,000

New

Abercrombie & Kent

Executive Towers West

Downers Grove

OB

A

45,500

New

Fresenius USA Manufacturing*

Carriage Point

Lake Bluff

N

B

45,250

New

Plante Moran

Woodfield Corporate Center

Schaumburg

NW

A

40,000

New

Land of Nod*

North Grove Corporate Park

Morton Grove

N

C

37,750

Renewal

Sagent Pharmaceuticals, Inc.*

Chatham Centre

Schaumburg

NW

A

34,000

Renewal/Expansion

Wistron Mobile Solutions Corporation*

953 American Lane

Schaumburg

NW

A

30,500

New

Robert Morris University*

ITECH @ Amerhurst

Waukegan

N

B

24,000

Renewal

Thomson Reuter*

1111 W 22nd Street

Oak Brook

OB

A

22,500

Renewal

Citadel Investments

Esplanade V

Downers Grove

OB

A

22,000

Renewal

Paychex North America*

27545 Diehl Road

Warrenville

LN

B

22,000

New

Rush Medical

Mid America Plaza

Oakbrook Terrace

OB

A

20,000

New

Dealer E-Process

Arboretum Lakes IV

Lisle

LN

A

18,500

New

Vision Solutions, Inc.*

Oakbrook Terrace Corp Ctr II

Oakbrook Terrace

OB

B

18,000

Renewal

Northwestern University*

Church Street Office Center

Evanston

N

A

18,000

Renewal

BDO Seidman

O'Hare Gateway

Rosemont

O

A

17,000

New

Genex*

Embassy Plaza

Schaumburg

NW

A

16,500

Renewal

Daugherty Systems, Inc.*

Oakbrook Terrace Tower

Oakbrook Terrace

OB

A

15,000

New

Sapa Extrusions, Inc.*

One O'Hare Centre

Rosemont

O

A

15,500

New

*Colliers International Transaction

Recent Suburban Office Investment Sales Activity 3Q 2016 STATUS

PROPERTY

TOWN

SUBMKT CLASS

SIZE (SF)

SALE PRICE

PRICE/SF

BUYER

SELLER

Sold

Woodfield Preserve

Schaumburg

NW

A

647,216

$73,500,000.00

113.33

Zeller Realty Group

KBS Real Estate Investment

Sold

Woodfield Corporate Center

Schaumburg

NW

A

532,972

$32,000,000.00

$61.38

Sperry Commercial

MassMutual Life Insurance

Sold

Commerce Plaza

Oak Brook

OB

A

515,005

$10,192,500.00

187.00

Equus Partners

The Blackstone Group

Sold

1 & 2 Mid America Plaza

Oakbrook Terrace

OB

A

409,260

$78,000,000.00

190.59

Equus Partners

Lincoln Property

Sold

Three Overlook Point

Lincolnshire

N

A

283,257

$60,150,000.00

212.35

Griffin Capital

Northwestern Mutual

Sold

3000 Lakeside Drive

Bannockburn

N

A

209,421

$29,250,000.00

139.67

Dougherty Real Estate Equity Advisors

C-III Asset Management

Sold

Woodlake Corporate Center

Lombard

OB

B

158,454

$28,300,000.00

107.73

Brennan Investment Group

UBS Realty Investors

Sold

Northwest Plaza

Rosemont

O

B

155,649

$8,600,000.00

$55.25

Wintrust Financial Corporation

Fulcrum Asset Advisors

Sold

Citibank Office Plaza

Oak Brook

OB

A

107,780

$17,489,500.00 $162.24

Franklin Partners

American Realty Advisors

Sold

Kensington Corp Ctr I

Mount Prospect

NW

A

87,453

Undisclosed

Nanta Buranakanchana

Younan Properties

Sold

1501 Mittel Boulevard

Wood Dale

NW

B

72,260

$14,000,000.00

193.74

Broadstone Real Estate, LLC

Lend Lease RE Investments

UC

Riverway

Rosemont

O

A

699,120

TBD

TBD

TBD

The Blackstone Group

UC

Olympian Office Centre

Lisle

LN

A

167,756

TBD

TBD

TBD

Riverview Realty Partners

UC

Church Street Office Center

Evanston

N

A

155,652

TBD

TBD

TBD

Farbman Group

UC

300 N Field Dr

Lake Forest

N

A

137,300

TBD

TBD

TBD

Pfizer

UC

Woodfield Green Executive Centre

Hoffman Estates

NW

B

109,392

TBD

TBD

TBD

JHO Mutual

UC

One Conway Park

Lake Forest

N

A

105,000

TBD

TBD

TBD

Fulcrum/Zell

LN=Lisle/Naperville

4

N=North

NW=Northwest

OB=Oak Brook Area

O=O’Hare

FS=For Sale

NEW=New to Market

UC=Under Contract

Research & Forecast Report | Third Quarter 2016 | Suburban Chicago / Office | Colliers International

Significant Lease and Sale Activity Recent Suburban Office Investment Sales Activity 3Q 2016 STATUS

PROPERTY

TOWN

SUBMKT CLASS

SIZE (SF)

SALE PRICE

PRICE/SF

BUYER

SELLER

New

Lucent Technologies

Naperville

LN

A

516,120

TBD

TBD

TBD

Nokia

New

Schaumburg Corporate Center

Schaumburg

NW

A

965,986

TBD

TBD

TBD

John Hancock

New

Balmoral Business Campus

Rosemont

O

A

233,845

TBD

TBD

TBD

TA Realty

New

The Pointe at Itasca

Itasca

NW

A

159,966

TBD

TBD

TBD

Northwestern Mutual

New

6300 N River Road

Rosemont

O

B

137,942

TBD

TBD

TBD

Village of Rosemont

New

155 N Pfingsten Road

Deerfield

N

A

117,036

TBD

TBD

TBD

Colony Realty Partners

LN=Lisle/Naperville

5

N=North

NW=Northwest

OB=Oak Brook Area

O=O’Hare

FS=For Sale

NEW=New to Market

UC=Under Contract

Research & Forecast Report | Third Quarter 2016 | Suburban Chicago / Office | Colliers International

O’Hare While the O’Hare market is traditionally Market Indicators Relative to prior periods Q3-15 known for attracting corporate users 18.6% Vacancy rate with its convenient highway access, 82,956 Absorption (YTD) public transportation and proximity $20.84 Rents to O’Hare International Airport, it 13,307,477 Inventory experienced an increase in vacancy for the second consecutive quarter as Vacant Space by Property Type Vacant Space By Property Type tenants such as Banco Popular reduced size in the market. Class C 274,430 SF 12.9% Vacant

Vacancy Overall vacancy in the O’Hare market rose to 19.1 percent, up from 18.2 in the second quarter of 2016. Class B properties remained relatively unchanged, rising to 26.2 percent from 26.1 percent in the second quarter of 2016. However, Class A properties witnessed an increase in vacancy, rising to 14.9 percent from 13.6 percent in the second quarter of 2016. Despite the increase in vacancy, O’Hare Class A vacancy is the lowest of all the suburban submarkets.

Overall net absorption in the O’Hare market totaled negative 146,951 square feet, compared to negative 36,863 square feet at the end of the second quarter. Class A assets were responsible for a majority of the negative absorption as larger tenants including Banco Popular gave back space in the market.

Q3-16

18.2%

19.1%

(36,863)

(146,951)

$21.19

$21.09

13,307,477

13,307,477

Class A 8,128,694 SF 14.9% Vacant

Class B 4,904,353 SF 27.5% Vacant

The O’Hare market offers the lowest amount of sublease space of all the suburban markets at 0.4 percent.

Absorption

Q2-16

Class A

Class B

Class C

Net Absorption & Vacancy

Net Absorption and Vacancy | O’Hare Office Market

O'Hare Submarket

25.0%

250,000 208,141

22.4%

200,000 150,000

21.4%

173,397

20.8%

131,897

19.3%

19.1%

18.0%

100,000

70,885

15.0%

50,000 0

Large Blocks of Availability Options for large space requirements continued to dwindle in the O’Hare market in the third quarter. There are currently only four properties that can accommodate large users of 100,000 square feet and above, three of which are Class A.

(50,000)

10.0% (43,073)

(100,000)

5.0%

(150,000) (200,000)

20.0%

(146,951) 2011

2012

Source: Costar; Colliers International Research

2013

Absorption

2014

Vacancy

2015

2016

0.0%

Rents

Asking Gross Rental Asking Gross Rental Rates Rates | O’Hare Office Market O'Hare Submarket

Class A average gross asking rent for the O’Hare market increased to $31.15 per square foot gross in the third quarter of 2016, compared to $31.03 in the second quarter of 2016.

$35.00 $30.00 $25.00 $20.00

The average gross asking rate for all classes deceased in the third quarter of 2016, dropping to $21.09 from $21.19 in the second quarter.

$15.00 $10.00

Construction

$5.00 $0.00

No new speculative construction was completed in the O’Hare market during the third quarter and none is expected for the remainder of 2016. However, construction continues on the Elgin O’Hare extension. The improved access to O’Hare will reduce travel times to the airport as well as promote economic development in the O’Hare and surrounding areas.

2011

2012

Source: Costar; Colliers International Research

2013

Class A

2014

2015

Class B

2016

Class C

Average

Top 10 Large Available Blocks by Square Feet 9600 W Bryn Mawr Avenue

Proposed projects include Pointe O’Hare II and O’Hare Corporate Campus, both in Rosemont. If completed, these projects could add 1.4 million square feet to the O’Hare market. In addition, Hosts Hotels & Resorts, Inc. is currently trying to obtain a zoning amendment to develop a 750,000-square-foot office building on the land next to its O’Hare Marriott property.

161,676

5450 N Cumberland Avenue

143,525

8750 W Higgins Road

117,212

1350 Touhy Avenue

98,357

2400 E Devon Avenue

72,975

999 E Touhy Avenue

59,710

9500 W Bryn Mawr Avenue

56,454

10255 W Higgins Road

CLASS A CLASS B

53,773

1700 W Higgins Road

53,645

8725 W Higgins Road

52,259

Significant Lease and Sale Activity Top O’Hare Office Leasing Activity 3Q 2016 TENANT

BUILDING

TOWN

CLASS

SIZE (SF)

DEAL TYPE

BDO Seidman

O'Hare Gateway

Rosemont

A

17,000

New

Sapa Extrusions, Inc.*

One O'Hare Centre

Rosemont

A

15,500

New

*Colliers International Transaction

Recent O’Hare Office Investment Sales Activity 3Q 2016 STATUS

PROPERTY

TOWN

CLASS

SIZE (SF)

SALE PRICE

PRICE/SF

BUYER

SELLER

$55.25

Wintrust Financial Corporation

Fulcrum Asset Advisors

TBD

TBD

TBD

The Blackstone Group

TBD

TBD

TBD

Village of Rosemont

Sold

Northwest Plaza

Rosemont

B

155,649

$8,600,000.00

UC

Riverway

Rosemont

A

699,120

New

6300 N River Rd

Rosemont

B

137,942

FS=For Sale

7

NEW=New to Market

UC=Under Contract

Research & Forecast Report | Third Quarter 2016 | Suburban Chicago / Office | Colliers International

Northwest After showing improvement in the first half of 2016, the Northwest market showed meager activity in the third quarter.

Market Indicators Relative to prior periods

Q3-15

Q2-16

Q3-16

Vacancy rate

22.6%

22.0%

22.3%

(165,424)

176,440

81,414

$18.17

$18.55

$18.66

30,565,814

30,565,814

30,565,814

Absorption (YTD) Rents

Vacancy

Inventory

The Northwest market retains the highest vacancy level of all the suburban markets, reporting 22.3 percent versus 22.0 percent in Space by Property Type Vacanct Vacant Space By Property Type the second quarter. While vacancy in Class B assets remained relatively flat, Class A properties witnessed the most substantial increase in vacancy, rising to 19.5 percent, compared to 18.9 percent in the second quarter 2016.

Class C 1,440,427 SF 12.9% Vacant

Sublease options in the Northwest market remain low at 0.9 percent, compared to 0.8 percent during the second quarter of 2016.

Class A 18,623,928 SF 19.5% Vacant

Class B 10,501,459 SF 28.6% Vacant

Absorption While quarterly net absorption in the Northwest market ended the third quarter at negative 98,887 square feet, year-to-date absorption remained positive at 81,414 square feet. The bulk of third quarter negative absorption came from larger tenants such as Motorola giving space back to the market.

Class A

Class B

Net Absorption & Vacancy Net Absorption and Northwest Submarket

Class C

Vacancy | Northwest Office Market

400,000

Large Blocks of Availability The Northwest market continues to offer the most options for large space requirements with 16 properties that can accommodate large (100,000 square feet and above) users, 11 of them being Class A. AT&T Corporate Campus, a 1.6 million square foot asset in Hoffman Estates has been removed from our statistics as it is currently in receivership. Once the situation with this asset has been determined and it is recapitalized we will place it back into the inventory.

25.0%

335,187 258,427

200,000

24.4%

24.5%

125,405

81,414

24.0%

24.0%

0

23.5% (200,000)

(149,543)

23.0%

22.9%

(400,000)

22.5%

22.5% 22.3%

(600,000)

22.1%

(620,162)

(800,000)

2011

2012

Source: Costar; Colliers International Research

2013

Absorption

2014

Vacancy

22.0%

2015

2016

21.5%

Rents

Asking Gross Rental Asking Gross Rental Rates

Rates | Northwest Office Market

Northwest Submarket

The Northwest suburban Class A average gross asking rate increased to $24.73 per square foot gross, compared to $24.52 in the second quarter of 2016.

$35.00 $30.00 $25.00

The average gross asking rate for all classes also improved, rising to $18.66 per square foot gross, compared to $18.55 the second quarter of 2016.

$20.00 $15.00 $10.00

Construction

$5.00

No new speculative construction was completed in the Northwest market during the second quarter and none is expected for the remainder of 2016. However, Zurich North America’s 735,000-square-foot headquarters at Meacham Road and Interstate 90 in Schaumburg was recently completed. Additionally, American Academy of Pediatrics is building a 193,000-square-foot build-to-suit development at Park Boulevard and Pierce Road in Itasca with completion expected in the fall of 2017. Finally, McShane Development Company and MetLife Real Estate Investors recently announced Huntington 90, a build-to-suit business park in Hoffman Estates which can accommodate up to 500,000 square foot facilities.

$0.00

2011

2012

Source: Costar; Colliers International Research

2013

2014

2015

Class B

Class A

Class C

2016

Average

Top 10 Large Available Blocks by Square Feet 572,509

1400 & 1450 American Lane 2 Pierce Place

308,232

2550 W Golf Road

216,592

1707 N Randall Road

202,463

1000 E Woodfield Road

184,481

21440 Lake Cook Road

145,020

5201 Tollview Road

126,284

700 N Wood Dale Road

125,323

777 Big Timber Road

CLASS A CLASS B

125,000

1500 W Shure Drive

107,161

Significant Lease and Sale Activity Top Northwest Office Leasing Activity 3Q 2016 TENANT

BUILDING

TOWN

CLASS

SIZE (SF)

DEAL TYPE

Plante Moran

Woodfield Corporate Center

Schaumburg

A

40,000

New

Sagent Pharmaceuticals, Inc.*

Chatham Centre

Schaumburg

A

34,000

Renewal/Expansion

Wistron Mobile Solutions Corporation*

953 American Lane

Schaumburg

A

30,500

New

Genex*

Embassy Plaza

Schaumburg

A

16,500

Renewal

*Colliers International Transaction

Recent Northwest Office Investment Sales Activity 3Q 2016 SALE PRICE

PRICE/SF

Sold

STATUS

Woodfield Preserve

PROPERTY

Schaumburg

A

647,216

73,500,000.00

$113.33

Zeller Realty Group

KBS Real Estate Investment

Sold

Woodfield Corporate Center

Schaumburg

A

532,972

32,000,000.00

$61.38

Sperry Commercial

MassMutual Life Insurance

Sold

Kensington Corp Ctr I

Mount Prospect

A

87,453

Undisclosed

Nanta Buranakanchana

Younan Properties

Sold

1501 Mittel Boulevard

Wood Dale

B

72,260

14,000,000.00

$193.74

Broadstone Real Estate, LLC

Lend Lease RE Investments

UC

Woodfield Green Executive Centre

Hoffman Estates

B

109,392

TBD

TBD

TBD

JHO Mutual

New

Schaumburg Corporate Center

Schaumburg

A

965,986

TBD

TBD

TBD

John Hancock

New

The Pointe at Itasca

Itasca

A

159,966

TBD

TBD

TBD

Northwestern Mutual

FS=For Sale

9

NEW=New to Market

TOWN

CLASS

SIZE (SF)

BUYER

SELLER

UC=Under Contract

Research & Forecast Report | Third Quarter 2016 | Suburban Chicago / Office | Colliers International

North After suffering from tenant downsizing and downtown migration earlier in the year, the North market continued to bounce back in the third quarter as tenants such as Donlen began to occupy space. Vacancy

Market Indicators Relative to prior periods

Q3-15

Q2-16

Q3-16

Vacancy rate

19.6%

18.9%

18.6%

Absorption (YTD)

548,811

(267,517)

(182,997)

Rents

$21.89

$22.05

$22.04

29,032,562

29,032,562

29,032,562

Inventory

Vacant Space byVacant PropertySpace Type

After a hiccup in the first quarter of 2016, the North market continued to rebound, ending the third quarter with 18.6 percent total vacancy, down from 18.9 percent in the second quarter. This is a vast improvement when considering the 19.2 percent vacancy that was reported in the first quarter.

Class C 1,147,720 SF 19.0% Vacant

Class A vacancy in the third quarter of 2016 was down to 21.1 percent, compared to 21.5 in the second quarter. When considering high quality, true Class A properties in the North market, vacancy is even lower at was 13.7 percent at the end of the third quarter, compared to 14.9 percent in the second quarter.

While year-to-date net absorption in the North market remained negative at 182,997 square feet due to tenants that moved out earlier in the year, the North was the only market able to achieve positive net absorption in the third quarter of 2016, ending with positive 84,520 square feet.

Class A 18,439,512 SF 21.1% Vacant

Class B 9,445,330 SF 13.7% Vacant

Sublease options in the Northwest market remain low at 0.7 percent, compared to 0.8 percent during the second quarter of 2016.

Absorption

By Property Type

Class A

Class B

Class C

Net Absorption & Vacancy Net Absorption and Vacancy | North Office Market North Submarket

1,500,000

25.0% 21.5%

1,000,000 19.3%

20.0%

18.6% 191,438

204,042

15.0%

401

(182,997)

(500,000)

Class A properties were responsible for the bulk of the positive net absorption, ending the quarter with 74,027 square feet.

18.6%

18.0%

17.9%

500,000 0

1,028,056

10.0%

5.0%

(1,000,000) (1,042,724)

(1,500,000)

2011

2012

Source: Costar; Colliers International Research

2013

Absorption

2014

Vacancy

2015

2016

0.0%

Large Blocks of Availability

Asking Gross Rental Asking Gross Rental Rates Rates | North Office Market North Submarket

There are 13 blocks of space available for large-sized tenants (100,000 square feet and above) in the North market, with 12 of them being Class A. However, when considering high quality, true Class A properties, options are limited.

$35.00 $30.00 $25.00 $20.00

Rents

$15.00 $10.00

Average Class A gross asking rent in the North market decreased slightly to $30.13, compared to $30.17 per square foot gross in the second quarter of 2016.

$5.00 $0.00

2011

2012

2013

The average gross asking rate for all classes remained relatively flat at $22.04 per square foot gross, compared to $22.05 in the second quarter of 2016.

Construction

2014

2015

Class B

Class A

Source: Costar; Colliers International Research

Class C

Top 10 Large Available Blocks by Square Feet

No new speculative construction was completed in the North market during the second quarter and none is expected for the remainder of 2016.

600 N US Highway 45

966,061

1000 Milwaukee Avenue

There are a few sites available for future build-to-suit projects in the North market, including Janko’s 170,000-squarefoot project in Lake Forest and Quadrangle Development’s 250,000-square-foot project in Deerfield.

405,039

3100 Sanders Road

365,268

2 Overlook Point

302,678

1615-1675 S Lakeside Drive

CLASS A CLASS B

207,512

300 Tower Parkway

175,545

26125 N Riverwoods Boulevard

159,821

300 N Field Drive

137,300

1 N Field Court

130,041

3600 W Lake Avenue

120,999

Significant Lease and Sale Activity Top North Office Leasing Activity 3Q 2016 TENANT

BUILDING

TOWN

CLASS

SIZE (SF)

DEAL TYPE

Fresenius USA Manufacturing*

Carriage Point

Lake Bluff

B

45,250

New

Land of Nod*

North Grove Corporate Park

Morton Grove

C

37,750

Renewal

Robert Morris University*

ITECH @ Amerhurst

Waukegan

B

24,000

Renewal

Northwestern University*

Church Street Office Center

Evanston

A

18,000

Renewal

*Colliers International Transaction

Recent North Office Investment Sales Activity 3Q 2016 STATUS

PROPERTY

TOWN

CLASS

SIZE (SF)

Sold

Three Overlook Point

Lincolnshire

A

283,257

Sold

3000 Lakeside Drive

Bannockburn

A

209,421

UC

Church Street Office Center

Evanston

A

155,652

UC

300 N Field Dr

Lake Forest

A

UC

One Conway Park

Lake Forest

New

155 N Pfingsten Road

Deerfield

FS=For Sale

11

2016

Average

NEW=New to Market

SALE PRICE

PRICE/SF

BUYER

SELLER

$212.35

Griffin Capital

Northwestern Mutual

$139.67

Dougherty Real Estate Equity Advisors

C-III Asset Management

TBD

TBD

TBD

Farbman Group

137,300

TBD

TBD

TBD

Pfizer

A

105,000

TBD

TBD

TBD

Fulcrum/Zell

A

117,036

TBD

TBD

TBD

Colony Realty Partners

$60,150,000.00 $29,250,000.00

UC=Under Contract

Research & Forecast Report | Third Quarter 2016 | Suburban Chicago / Office | Colliers International

Lisle-Naperville The Lisle-Naperville market suffered a setback as vacancy rises to a 10 year high.

Market Indicators Relative to prior periods

Q3-15

Q2-16

Q3-16

Vacancy rate

19.0%

19.4%

22.5%

(62,872)

44,426

(482,778)

$19.85

$20.40

$20.14

16,752,249

16,876,249

16,876,249

Absorption (YTD) Rents Inventory

Vacancy

Vacant Space by Property Type

The Lisle-Naperville market ended the third quarter of 2016 with 22.5 percent overall vacancy, up from 19.4 percent in the second quarter. Class A properties suffered the most as vacancy rose to 24.9 percent, up from 18.1 percent in the second quarter of 2016. This comes as no surprise as space from corporate users who have been out in the market has finally come to term.

Vacant Space By Property Type Class C 875,864 SF 9.3% Vacant

Class B 6,621,998 SF 21.0% Vacant

Sublease vacancy in the Lisle-Naperville market remains the highest of all the markets, ending the third quarter with 4.3 percent, up from 3.1 percent at the end of second quarter 2016.

Class A 9,378,387 SF 24.9% Vacant

Absorption The Lisle-Naperville market ended the third quarter of 2016 with 527,204 square feet of negative quarterly net absorption, compared to positive 20,872 square feet in the second quarter. This brings year-to-date net absorption in Lisle-Naperville to negative 482,778 square feet. The majority of the negative absorption in the Lisle-Naperville market occurred in Class A properties due to larger tenants such as ConAgra Foods and Unilever giving back space to the market.

Large Blocks of Availability Large blocks of availability are on the rise in the Lisle-Naperville market as it can accommodate eight large (100,000 square feet and above) users, six of them being Class A.

Class A

Class B

Class C

Net Absorption & Vacancy Net Absorption and Vacancy | Lisle-Naperville Office Market Lisle/Naperville Submarket 300,000

25.0%

228,284 22.5%

200,000 100,000

19.5%

82,531 45,63319.2%

19.1% 15,398

20.0%

19.7%

18.7%

0 15.0%

(100,000)

(72,169)

(200,000)

10.0%

(300,000) (400,000)

5.0%

(500,000) (600,000)

(482,778) 2011

2012

Source: Costar; Colliers International Research

2013

Absorption

2014

Vacancy

2015

2016

0.0%

Asking Gross Rental Asking Gross Rental Rates Rates | Lisle-Naperville Office Market Lisle/Naperville Submarket

Rents

$35.00 $30.00

Average Class A gross asking rent in the North market remained flat in the third quarter of 2016 at $27.88.

$25.00 $20.00

The average gross asking rate for all classes decreased to $20.14 per square foot gross, compared to $20.40 in the second quarter of 2016.

$15.00 $10.00 $5.00

Construction

$0.00

While no new speculative construction was completed in the Lisle-Naperville market during the second quarter of 2016, developers continue to seek locations for buildto-suit properties.

2011

2012

2013

2014

2015

Class B

Class A

Source: Costar; Colliers International Research

2016

Class C

Average

Top 10 Large Available Blocks by Square Feet *6200 S Route 53

360,000

263 Shuman Boulevard

354,000

2601 Navistar Drive

287,860

4201 Winfield Road

250,000

2400 Cabot Drive

205,633

215 W Diehl Road

162,000

2441 Warrenville Road

132,134

750 N Commons Boulevard

CLASS A CLASS B

112,605

4343 Commcerce Court

96,278

2200 Cabot Drive

*Sublease

87,364

Significant Lease and Sale Activity Top Lisle-Naperville Office Leasing Activity 3Q 2016 TENANT

BUILDING

TOWN

CLASS

SIZE (SF)

DEAL TYPE

Wilton

Washington Pointe

Naperville

A

86,000

New

Paychex North America*

27545 Diehl Road

Warrenville

B

22,000

New

Dealer E-Process

Arboretum Lakes IV

Lisle

A

18,500

New

*Colliers International Transaction

Recent Lisle-Naperville Office Investment Sales Activity 3Q 2016 STATUS

PROPERTY

TOWN

CLASS

SIZE (SF)

SALE PRICE

PRICE/SF

BUYER

SELLER

UC

Olympian Office Centre

Lisle

A

167,756

TBD

TBD

TBD

Riverview Realty Partners

New

Lucent Technologies

Naperville

A

516,120

TBD

TBD

TBD

Nokia

FS=For Sale

13

NEW=New to Market

UC=Under Contract

Research & Forecast Report | Third Quarter 2016 | Suburban Chicago / Office | Colliers International

Oak Brook The Oak Brook market lost some momentum after three consecutive years of declining vacancy.

Market Indicators Relative to prior periods

Q3-15

Q2-16

Q3-16

Vacancy rate

20.7%

18.8%

19.1%

280,796

264,432

179,169

$19.93

$19.84

$19.94

23,468,979

23,468,979

23,468,979

Absorption (YTD) Rents

Vacancy

Inventory

The Oak Brook market ended the third quarter of 2016 withVacant an Vacant Space by Property TypeType Space by Property Vacant Space By Property Type overall vacancy rate of 19.1 percent, up from 18.8 percent in the second quarter. While this is a setback for the market, it is still stronger than it was at the beginning of the year when overall Class vacancy was at 19.5 percent. ClassCC 1,085,111 999,111SF SF 18.4% 15.9%Vacant Vacant

While vacancy in Class A properties increased to 19.9 percent in the third quarter of 2016, up from 18.2 percent in the second quarter, Class B assets have witnessed a decrease in vacancy, dropping to 18.4 percent compared to 19.4 percent during the second quarter.

Class B B Class 8,961,842 SFSF 9,134,570 18.4% Vacant 21.3% Vacant

Sublease vacancy in the Oak Brook market is down, dropping to 1.0 percent, compared to 1.6 percent during the second quarter of 2016.

Absorption While third quarter net absorption in the Oak Brook market ended on a discouraging note at negative at 87,624 square feet, year-todate absorption remained positive at 179,169 square feet.

Class A A Class

Class Class BB

Net & Vacancy NetAbsorption Absorption and Oak Brook Submarket

Class Class CC

Vacancy | Oak Brook Office Market

600,000

Class A properties were responsible for a majority of the negative absorption in the third quarter as Redbox returned over 100,000 square feet of its headquarter space to the market.

500,000

Large Blocks Of Availability

100,000

The Oak Brook market offers limited options for large space requirements. Four properties in the Oak Brook market can accommodate large (100,000 square feet and above) users, 3 of them being Class A.

Class A 13,241,609 SF Class A 17.8% Vacant 13,508,026 SF 19.9% Vacant

23.5% 23.0%

468,344

22.9%

22.5%

400,000 300,000

220,895

21.9%

21.7%

22.0%

21.8% 247,383 179,169

200,000

21.0% 20.5%

0

20.0%

19.9%

(44,269)

(100,000)

19.5% 19.1%

(200,000) (300,000)

21.5%

(229,370) 2011

2012

Source: Costar; Colliers International Research

2013

Absorption

2014

Vacancy

2015

2016

19.0% 18.5%

Rents

Asking Gross Rental Asking Gross Rental Rates Rates | Oak Brook Office Market Oak Brook Submarket

Class A average gross asking rate in the Oak Brook market remained relatively flat at $29.42 per square foot gross, compared to $29.41 in the second quarter of 2016.

$35.00 $30.00 $25.00 $20.00

The average gross asking rate for all classes increased to $19.94 per square foot gross, compared to $19.84 in the second quarter of 2016.

$15.00 $10.00 $5.00

Construction

$0.00

No new construction was completed in the Oak Brook market during the second quarter of 2016. However, build-to-suit activity continues as Chamberlain Group, a division of Duchossois Group, is building a 228,600-square-foot office development on the land it acquired from Follett Corporation on Windsor Drive in Oak Brook with completion expected in early 2017.

2011

2012

2013

2014

2015

2016

Source: Costar; Colliers International Research

Top 10 Large Available Blocks by Square Feet 700 Oakmont Lane

256,767

2655 Warrenville Road

149,615

*2707 Butterfield Road

120,156

*3333 Finley Road

103,368

747 E 22nd Street

95,078

1 Tower Lane

89,896

4 Westbrook Corporate Center

82,728

3050 Highland Parkway

CLASS A CLASS B

74,319

1000 Royce Boulevard

68,000

2000 Spring Road

65,679

*Sublease

Significant Lease and Sale Activity Top Oak Brook Office Leasing Activity 3Q 2016 TENANT

BUILDING

TOWN

CLASS

SIZE (SF)

DEAL TYPE

Abercrombie & Kent

Executive Towers West

Downers Grove

A

45,500

New

Thomson Reuter*

1111 W 22nd Street

Oak Brook

A

22,500

Renewal

Citadel Investments

Esplanade V

Downers Grove

A

22,000

Renewal

Rush Medical

Mid America Plaza

Oakbrook Terrace

A

20,000

New

Vision Solutions, Inc.*

Oakbrook Terrace Corp Ctr II

Oakbrook Terrace

B

18,000

Renewal

Daugherty Systems, Inc.*

Oakbrook Terrace Tower

Oakbrook Terrace

A

15,000

New

*Colliers International Transaction

Recent Oak Brook Office Investment Sales Activity 3Q 2016 STATUS

PROPERTY

TOWN

CLASS

SIZE (SF)

SALE PRICE

PRICE/SF

BUYER

SELLER

Sold

Commerce Plaza

Oak Brook

A

515,005

$10,192,500.00

$187.00

Equus Partners

The Blackstone Group

Sold

1 & 2 Mid America Plaza

Oakbrook Terrace

A

409,260

$78,000,000.00

$190.59

Equus Partners

Lincoln Property

Sold

Woodlake Corporate Center

Lombard

B

158,454

$28,300,000.00

$107.73

Brennan Investment Group

UBS Realty Investors

Sold

Citibank Office Plaza

Oak Brook

A

107,780

$17,489,500.00

$162.24

Franklin Partners

American Realty Advisors

LN=Lisle/Naperville

15

N=North

NW=Northwest

OB=Oak Brook Area

O=O’Hare

FS=For Sale

NEW=New to Market

UC=Under Contract

Research & Forecast Report | Third Quarter 2016 | Suburban Chicago / Office | Colliers International

Third Quarter 2016 Office Market Statistics | Local Standards BLDGS

TOTAL INVENTORY SF

DIRECT VACANCY RATE

SUBLEASE VACANCY RATE

VACANCY VACANCY RATE QUARTERLY NET NET YTD RATE PRIOR CURRENT ABSORPTION –SF ABSORPTION –SF QTR QTR

Class A

37

8,128,694

14.4%

0.6%

14.9%

13.6%

(105,990)

(65,692)

0

0

$31.15

Class B

49

4,904,353

26.1%

0.1%

26.2%

26.1%

(4,098)

(79,047)

0

0

$18.94

Class C

8

274,430

12.9%

0.0%

12.9%

12.9%

-

(2,212)

0

0

$13.17

Subtotal

94

13,307,477

18.7%

0.4%

19.1%

18.2%

(110,088)

(146,951)

0

0

$21.09

Class A

87

18,623,928

18.4%

1.0%

19.5%

18.9%

(116,651)

160,279

0

0

$24.73

Class B

171

10,501,459

28.3%

0.3%

28.6%

28.5%

(8,549)

(72,573)

0

0

$17.19

Class C

28

1,440,427

10.7%

2.3%

12.9%

14.8%

26,313

(6,292)

0

0

$14.07

Subtotal

286

30,565,814

21.4%

0.9%

22.3%

22.0%

(98,887)

81,414

0

0

$18.66

Class A

111

18,439,512

20.1%

0.9%

21.1%

21.5%

74,027

(166,431)

0

0

$30.13

Class B

152

9,445,330

13.2%

0.5%

13.7%

13.9%

16,217

(13,092)

0

0

$18.56

Class C

29

1,147,720

19.0%

0.0%

19.0%

18.5%

(5,724)

(3,474)

0

0

$17.42

Subtotal

292

29,032,562

17.9%

0.7%

18.6%

18.9%

84,520

(182,997)

0

0

$22.04

CLASS

COMPLETIONS CURRENT QTR - SF

UNDER CONSTRUCTION - SF

RENTS

O’HARE

NORTHWEST

NORTH

LISLE/NAPERVILLE Class A

54

9,378,387

21.5%

3.4%

24.9%

18.1%

(639,451)

(637,087)

0

0

$27.88

Class B

122

6,621,998

14.9%

6.1%

21.0%

22.7%

117,649

155,836

0

0

$17.71

Class C

23

875,864

9.3%

0.0%

9.3%

8.7%

(5,402)

(1,527)

0

0

$14.83

Subtotal

199

16,876,249

18.3%

4.3%

22.5%

19.4%

(527,204)

(482,778)

0

0

$20.14

Class A

68

13,508,026

19.3%

0.6%

19.9%

18.2%

(222,102)

(196,481)

0

0

$29.42

Class B

142

8,961,842

16.5%

1.9%

18.4%

19.4%

94,238

337,575

0

0

$17.61

Class C

21

999,111

15.9%

0.0%

15.9%

19.9%

40,240

38,075

0

0

$12.78

Subtotal

231

23,468,979

18.1%

1.0%

19.1%

18.8%

(87,624)

179,169

0

0

$19.94

OAK BROOK

SUBURBAN TOTAL Class A

357

68,078,547

19.0%

1.2%

20.2%

18.7%

(1,010,167)

(905,412)

0

0

$28.66

Class B

636

40,434,982

19.7%

1.6%

21.3%

21.8%

215,457

328,699

0

0

$18.00

Class C

109

4,737,552

13.7%

0.7%

14.4%

15.5%

55,427

24,570

0

0

$14.45

Subtotal

1,102

113,251,081

19.0%

1.3%

20.3%

19.7%

(739,283)

(552,143)

0

0

$20.37

QUARTERLY COMPARISON AND TOTALS Q3-16

1,102

113,251,081

19.0%

1.3%

20.3%

19.7%

(739,283)

(552,143)

0

0

$20.37

Q2-16

1,102

113,251,081

18.4%

1.3%

19.7%

20.1%

469,698

180,918

0

0

$20.41

Q1-16

1,102

113,251,081

18.8%

1.4%

20.1%

19.9%

(288,780)

(288,780)

0

0

$20.36

Q4-15

1,102

113,251,081

18.7%

1.2%

19.9%

20.4%

763,818

1,448,085

124,000

0

$20.34

Q3-15

1,101

113,127,081

19.1%

1.4%

20.4%

21.0%

660,446

684,267

0

124,000

$20.14

*AT&T Corporate Campus, a 1.6 million square foot asset in Hoffman Estates has been removed from our statistics as it is currently in receivership. Once the situation with this asset has been dtermined and it is recapitalized we will place it back into the inventory.

16

Research & Forecast Report | Third Quarter 2016 | Suburban Chicago / Office | Colliers International

Third Quarter 2016 Office Market Statistics | Includes Owner Occupied Properties CLASS

BLDGS

TOTAL TOTAL TOTAL INVENTORY DIRECT SUBLEASE QUARTERLY NET NET YTD VACANCY RATE VACANCY RATE SF VACANCY RATE VACANCY RATE ABSORPTION –SF ABSORPTION –SF CURRENT QTR PRIOR QTR

COMPLETIONS CURRENT QTR - SF

UNDER CONSTRUCTION - SF

O’HARE Class A

40

8,512,703

13.4%

0.5%

14.0%

13.0%

(82,551)

(42,253)

0

0

Class B

62

5,488,880

28.8%

0.1%

28.9%

27.5%

(75,471)

(266,664)

0

0

Class C

17

721,942

6.3%

0.0%

6.3%

6.2%

(150)

1,120

0

0

Subtotal

119

14,723,525

18.8%

0.3%

19.2%

18.1%

(158,172)

(307,797)

0

0

Class A

103

22,752,977

22.4%

0.9%

23.3%

17.8%

(608,474)

(353,404)

783,800

0

Class B

322

16,812,420

22.4%

0.3%

22.7%

21.0%

(286,900)

(206,670)

0

0

Class C

65

2,389,554

13.2%

1.4%

14.5%

14.7%

3,123

(36,250)

0

0

Subtotal

489

41,954,951

21.9%

0.7%

22.6%

18.9%

(892,251)

(596,324)

783,800

0

Class A

142

24,376,911

18.3%

0.7%

19.0%

18.7%

(53,866)

(292,124)

0

0

Class B

283

21,650,613

10.4%

0.3%

10.7%

11.0%

56,804

(643,166)

0

0

Class C

63

2,196,276

12.7%

0.2%

12.9%

12.5%

(8,231)

(6,164)

0

0

Subtotal

488

48,223,800

14.5%

0.5%

15.0%

15.0%

(5,293)

(941,454)

0

0

NORTHWEST

NORTH

LISLE/NAPERVILLE Class A

64

12,089,711

18.8%

2.6%

21.4%

19.1%

(288,447)

(278,483)

0

0

Class B

205

10,948,818

13.2%

3.7%

16.9%

18.4%

222,238

(72,134)

75,000

0

Class C

50

1,608,387

11.1%

0.0%

11.1%

10.6%

(6,897)

(3,386)

0

0

Subtotal

319

24,646,916

15.8%

2.9%

18.7%

18.2%

(73,106)

(354,003)

75,000

0

Class A

72

14,148,966

18.4%

0.5%

19.0%

17.6%

(162,230)

(153,142)

32,000

0

Class B

220

12,704,017

13.3%

1.3%

14.7%

15.4%

95,123

338,133

0

0

Class C

48

1,865,887

10.9%

0.0%

10.9%

13.3%

43,610

28,877

0

0

Subtotal

340

28,718,870

15.7%

0.9%

16.5%

16.4%

(23,497)

213,868

32,000

0

OAK BROOK

SUBURBAN TOTAL Class A

421

81,881,268

19.0%

1.0%

20.0%

17.7%

1,195,568)

(1,119,406)

815,800

0

Class B

1,092

67,604,748

15.9%

1.0%

17.0%

15.9%

11,794

(850,501)

75,000

0

Class C

243

8,782,046

11.6%

0.4%

12.1%

12.4%

31,455

(15,803)

0

0

Subtotal

1,756

158,268,062

17.3%

1.0%

18.2%

17.1%

1,152,319)

(1,985,710)

890,800

0

QUARTERLY COMPARISON AND TOTALS Q3-16

1,756

158,268,062

17.3%

1.0%

18.2%

17.1%

(1,152,319)

(1,985,710)

890,800

0

Q2-16

1,753

157,377,262

16.1%

1.0%

17.1%

16.7%

(540,076)

(833,391)

0

890,800

Q1-16

1,753

157,377,262

15.7%

1.0%

16.7%

16.5%

(293,315)

(293,315)

0

890,800

Q4-15

1,753

157,377,262

15.6%

0.9%

16.5%

16.7%

435,259

446,097

124,000

890,800

Q3-15

1,752

157,253,262

15.7%

1.0%

16.7%

16.9%

216,602

121,442

22,000

982,800

17

Research & Forecast Report | Third Quarter 2016 | Suburban Chicago / Office | Colliers International

2016 INVESTMENT SALE ACTIVITY | SUBURBAN CHICAGO STATUS PROPERTY

TOWN

SUBMARKET CLASS

SIZE (SF) SALE PRICE

BUYER

SELLER

QUARTER

Medline Industries

W.P. Carey

1Q2016

Zeller Realty Group

KBS Real Estate Investment

3Q2016

Sperry Commercial

MassMutual Life Insurance

3Q2016

Equus Partners

The Blackstone Group

3Q2016

$163.34

Fulcrum Asset Advisors

John Buck Company

2Q2016

$166.74

Oak Street Real Estate Capital

Motorola Solutions

2Q2016

Equus Partners

Lincoln Property

3Q2016

Imperial Realty Company

Lionstone Investments

2Q2016

Griffin Capital

Northwestern Mutual

3Q2016

$28.87

Marc Realty

John Buck Company

1Q2016

$44.27

Patriot Equities LP

Aramark

2Q2016

Dougherty Real Estate Equity Advisors

C-III Asset Management

3Q2016

$28.95

Vinayaka Holdings Corporation

Westport Capital Partners

1Q2016

$89.06

SVN Equities. LLC

EverWest Real Estate Partners

2Q2016

American Landmark Properties

TA Realty

2Q2016

Brennan Investment Group

UBS Realty Investors

3Q2016

Wintrust Financial Corporation

Fulcrum Asset Advisors

3Q2016

Steelbridge Capital

Sabal Financial Group

2Q2016

$26.90

AMERCO Real Estate Co

The Blackstone Group

2Q2016

$9,850,000.00

$92.19

Farbman Group

EverWest Real Estate Partners

1Q2016

126,088

$5,309,000.00

$42.11

Bradford Allen Realty Services

J. Emil Anderson & Son, Inc.

2Q2016

A

107,780

$17,489,500.00

Franklin Partners

American Realty Advisors

3Q2016

NW

A

94,916

$4,296,847.32

$45.27

Hamilton Partners

Principal Real Estate Investors, LLC

1Q2016

Summit Oaks

Oakbrook Terrace OB

B

91,844

$5,015,000.00

$54.60

Forefront Properties, LLC

WH&H Realty Advisors/Blue Vista

2Q2016

Corporetum III

Lisle

A

91,722

$6,000,000.00

$65.42

American Landmark Properties

Prudential Life Insurance

1Q2016

Sold

3 Lakes Drive

Northfield

N

B

679,000

$44,700,000.00

Sold

Woodfield Preserve

Schaumburg

NW

A

647,216

$73,500,000.00

Sold

Woodfield Corporate Center

Schaumburg

NW

A

532,972

$32,000,000.00

Sold

Commerce Plaza

Oak Brook

OB

A

515,005

$10,192,500.00

Sold

3, 6, 9 Parkway North

Deerfield

N

A

484,328

$78,500,000.00

Sold

Motorola Solutions Tech Center

Schaumburg

NW

C

479,800

$80,000,000.00

Sold

1 & 2 Mid America Plaza

Oakbrook Terrace OB

A

409,260

$78,000,000.00

Sold

Concourse Office Plaza

Skokie

N

A

294,073

$30,500,000.00

Sold

Three Overlook Point

Lincolnshire

N

A

283,257

$60,150,000.00

Sold

Meadows Corporate Center

Rolling Meadows

NW

A

270,200

$7,800,000.00

Sold

2300 & 2500 Warrenville Road

Downers Grove

OB

B

248,475

$11,000,000.00

Sold

3000 Lakeside Drive

Bannockburn

N

A

209,628

$25,250,000.00

Sold

One Woodfield Lake Schaumburg

NW

B

204,345

$5,915,000.00

Sold

Washington Commons

Naperville

LN

B

202,101

$18,000,000.00

Sold

Oakbrook Place

Oak Brook

OB

B

179,400

$24,000,000.00

Sold

Woodlake Corporate Center

Lombard

OB

B

158,454

$28,300,000.00

Sold

Northwest Plaza

Rosemont

O

B

155,649

$8,600,000.00

Sold

500 Davis Street

Evanston

N

A

126,788

$18,000,000.00

Sold

5201 Tollview Drive Rolling Meadows

NW

B

126,284

$3,397,500.00

Sold

Boulevard 40

Northbrook

N

A

106,850

Sold

Touhy Office Plaza at O'Hare

Des Plaines

O

B

Sold

Citibank Office Plaza

Oak Brook

OB

Sold

1200 Arlington Heights Road

Itasca

Sold

Sold

LN=Lisle/Naperville

18

PRICE/ SF

N=North

NW=Northwest

LN

OB=Oak Brook Area

O=O’Hare

FS=For Sale

$65.83 $113.33 $61.38 $187.00

$190.59 $103.72 $212.35

$134.12

$133.78

$107.73 $55.25

$142.00

$162.24

NEW=New to Market

UC=Under Contract

Research & Forecast Report | Third Quarter 2016 | Suburban Chicago / Office | Colliers International

2016 INVESTMENT SALE ACTIVITY | SUBURBAN CHICAGO STATUS PROPERTY

TOWN

SUBMARKET CLASS

SIZE (SF) SALE PRICE

PRICE/ SF

BUYER

SELLER

QUARTER

Nanta Buranakanchana

Younan Properties

3Q2016

Sold

Kensington Corp Ctr I

Mount Prospect

NW

A

87,453

Undisclosed

Sold

Midwest Office Center

Oakbrook Terrace OB

B

77,039

$4,305,000.00

$55.88

Viking Partners Oakbrook, LLC

The Blackstone Group

2Q2016

Sold

415 Executive Center

Waukegan

N

B

73,418

$2,150,000.00

$29.28

Ascendance Partners, LLC

First City Financial Corp.

2Q2016

Sold

1501 Mittel Boulevard

Wood Dale

NW

B

72,260

$14,000,000.00

$193.74

Broadstone Real Estate, LLC

Lend Lease RE Investments

3Q2016

Sold

Butterfield Ridge Office Centre

Downers Grove

OB

B

71,552

$3,045,000.00

$42.56

Azim Hemani

LNR Partners, LLC

2Q2016

Sold

Kensington Business Center

Mount Prospect

NW

B

71,310

$2,250,000.00

$31.55

Nicholas & Associates

HSBC Card Services

1Q2016

Sold

Terrace Oaks

Oakbrook Terrace OB

B

55,829

$5,100,000.00

$91.35

Undisclosed

Terrace Oaks Associates

2Q2016

Sold

Park Ridge Office Center

Park Ridge

O

B

55,772

$2,400,000.00

$43.03

Imperial Realty Company

William Napleton

1Q2016

Sold

Basswood Executive Plaza

Schaumburg

NW

B

54,641

$1,257,000.00

$23.00

The Capital Companies, LLC

Exeter Property Group

1Q2016

Sold

Executive Office Center

Burr Ridge

OB

B

50,000

$2,550,000.00

$51.00

Anthony Cairo

Jack Napoleon

1Q2016

UC

Riverway

Rosemont

O

A

699,120

TBD

TBD

TBD

The Blackstone Group

Marketing

UC

Olympian Office Centre

Lisle

LN

A

167,756

TBD

TBD

TBD

Riverview Realty Partners

Marketing

UC

Church Street Office Center

Evanston

N

A

155,652

TBD

TBD

TBD

Farbman Group

Marketing

UC

300 N Field Drive

Lake Forest

N

A

137,300

TBD

TBD

TBD

Pfizer

Marketing

UC

Woodfield Green Executive Centre

Hoffman Estates

NW

B

109,392

TBD

TBD

TBD

JHO Mutual

Marketing

UC

One Conway Park

Lake Forest

N

A

105,000

TBD

TBD

TBD

Fulcrum/Zell

Marketing

New

Schaumburg Corporate Center

Schaumburg

NW

A

965,986

TBD

TBD

TBD

John Hancock

Marketing

New

Lucent Technologies

Naperville

LN

A

516,120

TBD

TBD

TBD

Nokia

Marketing

New

Balmoral Business Campus

Rosemont

O

A

233,845

TBD

TBD

TBD

TA Realty

Marketing

New

The Pointe at Itasca Itasca

NW

A

159,966

TBD

TBD

TBD

Northwestern Mutual

Marketing

New

6300 N River Road

O

B

137,942

TBD

TBD

TBD

Sierra US

Marketing

New

155 N Pfingsten Road

Deerfield

N

A

117,036

TBD

TBD

TBD

Colony Realty Partners

Marketing

FS

Central Park of Lisle

Lisle

LN

A

622,287

TBD

TBD

TBD

The Blackstone Group

Marketing

FS

One Pierce Place

Itasca

NW

A

578,737

TBD

TBD

TBD

Hamilton Partners

Marketing

FS

500 Park Boulevard Itasca

NW

A

450,614

TBD

TBD

TBD

Hamilton Partners

Marketing

FS

Parkview Plaza

Oakbrook Terrace OB

A

264,162

TBD

TBD

TBD

TIAA-CREF

Marketing

FS

1200 Lakeside Drive

Marketing

FS

Rosemont

N

A

260,084

TBd

TBD

TBD

Equity Commonwealth

One Parkway North Deerfield

N

A

256,743

TBD

TBD

TBD

The Blackstone Group

Marketing

FS

One Medline Place

Mundelein

N

A

252,826

TBD

TBD

TBD

Medline Industries

Marketing

FS

O'Hare Corporate Towers

Rosemont

O

B

202,325

TBD

TBD

TBD

Lincoln Property

Marketing

FS

Corporetum VI

Lisle

LN

A

172,695

TBD

TBD

TBD

Winthrop Realty Trust

Marketing

LN=Lisle/Naperville

19

N=North

Bannockburn

NW=Northwest

OB=Oak Brook Area

O=O’Hare

FS=For Sale

NEW=New to Market

UC=Under Contract

Research & Forecast Report | Third Quarter 2016 | Suburban Chicago / Office | Colliers International

2016 INVESTMENT SALE ACTIVITY | SUBURBAN CHICAGO STATUS PROPERTY

TOWN

SUBMARKET CLASS

SIZE (SF) SALE PRICE

PRICE/ SF

BUYER

SELLER

QUARTER

FS

Estancia Corporate Centre

Burr Ridge

OB

A

167,401

TBD

TBD

TBD

BJF Estancia, LLC

Marketing

FS

Woodlake Corporate Center

Lombard

OB

B

158,454

TBD

TBD

TBD

UBS Realty Investors

Marketing

FS

Lisle Executive Center

Lisle

LN

B

150,036

TBD

TBD

TBD

Boxer Property

Marketing

FS

600 N Field Drive

Lake Forest

N

A

137,498

TBD

TBD

TBD

James Campbell Company

Marketing

FS

1 N Field Drive

Lake Forest

N

A

130,401

TBD

TBD

TBD

Brunswick Corporation

Marketing

FS

777 Big Timber Road

Elgin

NW

A

127,280

TBD

TBD

TBD

InterCoastal Group

Marketing

FS

2245 Sequoia Drive

Aurora

LN

A

116,545

TBD

TBD

TBD

Zeller Realty Group

Marketing

FS

Golf Corporate Centre

Arlington Heights NW

B

93,000

TBD

TBD

TBD

Chicagoland Commercial

Marketing

FS

1200 Shermer Road

Skokie

N

A

80,811

TBD

TBD

TBD

Intercontinental Real Estate

Marketing

FS

Fox River Corporate Center

North Aurora

LN

B

77,006

TBD

TBD

TBD

Starwood Properties Trust

Marketing

FS

Commerce Center at O'Hare

Des Plaines

O

B

69,500

TBD

TBD

TBD

Pritchett Realty Corporation

Marketing

FS

Eden's Gateway

Skokie

N

B

65,368

TBD

TBD

TBD

The Alter Group

Marketing

FS

Meridian Lakes Plaza

Aurora

LN

B

64,258

TBD

TBD

TBD

ACG Management Co

Marketing

FS

Finley Business Center

Lombard

OB

B

63,196

TBD

TBD

TBD

Pritchett Realty Corporation

Marketing

LN=Lisle/Naperville

20

N=North

NW=Northwest

OB=Oak Brook Area

O=O’Hare

FS=For Sale

NEW=New to Market

UC=Under Contract

Research & Forecast Report | Third Quarter 2016 | Suburban Chicago / Office | Colliers International

502 offices in 67 countries on 6 continents

MARKET CONTACT: Ronna Larsen Research Manager, Suburban Office | Chicago +1 847 698 8517 [email protected]

United States: 140 Canada: 31 Latin America: 24 Asia Pacific: 199 EMEA: 108

$2.3

billion in annual revenue

1.7

billion square feet under management

16,300

professionals and staff

About Colliers International Colliers International Group Inc. (NASDAQ: CIGI; TSX: CIG) is a global leader in commercial real estate services with more than 16,300 professionals operating from 502 offices in 67 countries. With an enterprising culture and significant insider ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include brokerage, global corporate solutions, investment sales and capital markets, project management and workplace solutions, property and asset management, consulting, valuation and appraisal services, and customized research and thought leadership. Colliers International has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals’ Global Outsourcing for 10 consecutive years, more than any other real estate services firm. colliers.com

Copyright © 2016 Colliers International The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.