Chicago Metropolitan Industrial Market Overview

November 16 2010

Prepared by:George Cutro

Colliers International

Industrial Market Presentation Outline

Chicago’s Industrial Market Statistics

Chicago’s “Core” Markets

Central DuPage Fox Valley I-55 Lake County North Suburbs O’Hare

Largest Transactions of 2010

Changes and Industry Trends

Chicago Industrial Market Area

Metro Chicago Gross Absorption

31.68

Sq .

Ft.

Mil l

ion s

46.88 49.72 46.87 59.78 57.20 53.3843.37 46.06 45.5 38.56

Metro Chicago Construction Deliveries

2.08

Sq .

Ft.

Mil l

ion s

19.85 12.27 13.36 15.22 17.54 20.90 20.86 21.84 19.10 6.80

Metro Chicago Net AbsorptionS

q . F

t. M

il lio

n s

Metro Chicago Vacancy Rates

Central DuPage

Inventory 83.97 msfAvailable SF 9.93 msfVacancy Rate 11.83 %

YTD Leasing Volume (sf) 1.44 msf YTD Sales Volume (sf) 197,300 sfYTD Net Absorption (sf) -683,000 sf

Central DuPage Notes

• Vacancy rate climbs!• 2010 leasing volume down.• Demand up for buildings for sale.• Rents higher for “Core” product near I-355

expressway.

Fox Valley

Inventory 89.10 msfAvailable SF 12.06 msfVacancy Rate 13.54 %

YTD Leasing Volume (sf) 1.56 msf YTD Sales Volume (sf) 1.40 msfYTD Net Absorption (sf) 1.34 msf

Fox Valley Notes

• Available supply dropping• Sale volume spikes• Positive absorption!

I-55 Corridor

Inventory 72.94 msfAvailable SF 12.87 msfVacancy Rate 17.64 %

YTD Leasing Volume (sf) 2.33 msf YTD Sales Volume (sf) 666,700 sfYTD Net Absorption (sf) -1.39 msf

I-55 Corridor Notes

• YTD leasing volume down.• Net absorption negative!• Speculate development non-existent• 17.64 % highest vacancy rate ever!

Lake County

Inventory 69.95 msfAvailable SF 10.15 msfVacancy Rate 14.51 %

YTD Leasing Volume (sf) 1.20 msf YTD Sales Volume (sf) 401,000 sf YTD Net Absorption (sf) -640,500 sf

Lake County

• Vacancy rate falls!• Third quarter net absorption posts positive

results!• Local company expands presence in

market.

North Suburbs

Inventory 57.65 msfAvailable SF 5.90 msfVacancy Rate 10.23 %

YTD Leasing Volume (sf) 255,700 sf YTD Sales Volume (sf) 172,700 sf YTD Net Absorption (sf) -2.33 msf

North Suburbs

• Vacancy rate at all-time high.• Inventory continues to shrink.• Sale activity Anemic!

O’Hare

Inventory 140.18 msfAvailable SF 17.50 msfVacancy Rate 12.48 %

YTD Leasing Volume (sf) 3.91 msf YTD Sales Volume (sf) 524,200 sfYTD Net Absorption (sf) -644,100 sf

O’Hare Notes

• Vacancy rate hits all time high.• Leasing activity up.• 6B Tax program still obtainable.• Freight forwarders in play

Top Lease Transactions 2010

Clorox 1,350,000 sf Far South

World Kitchen, LLC 700,200 sf Far South

3M 650,000 sf DeKalb Co.

Sony Music Entertainment 579,900 sf I-55

BP North American 574,300 sf NW Ind.

Jacobson Companies “Fonterra Milk Prdts” 507,200 sf I-80

AGL Direct 499,200 sf I-55

Midwest Custom Case, Inc. 455,900 sf Far South

NACA Logistics USA, Inc. 440,200 sf Central DuPage

Hosely International Trading Company 376,000 sf NW Ind.

Top User Sale Transactions

Uline 1,000,000 sf SE Wis.

Freudenberg Household Products 525,000 sf I-88

R. R. Donnelley 514,000 sf I-88

MAT Holdings 506,800 sf I-55

Ionian, LLC 492,800 sf Chicago

Gordon Food Service 480,000 sf SE Wis.

The Jel Sert Company 304,500 sf I-88

GRM Information Management Svc’s 296,100 sf South Subs.

Ascent Corporation 284,200 sf I-290 North

EMCO Chemical Distributors 259,600 sf SE Wis.

Metro Chicago Trends

• Speculative development dead, however BTS construction volume up

• Institution/REIT Landlords compete hard for deals• Land prices falling???• Cap rates for “Core Product” falling• Some landlords not competing for high TI transactions• Ownership stability