Midyear Review Chicago 2012 (3)

MIDYEAR 2012:Office – CBD/Suburban Divide

August 2nd 2012

Industrial – Going Strong

Chicago Economic, Office & Industrial Market OverviewMarket Overview

PresentersPresenters

Cushman & Wakefield Research

AGENDA

2012 NATIONAL ECONOMIC OUTLOOK - KEN McCARTHY

2012 CHICAGO REGION ECONOMIC OUTLOOK - KEN McCARTHY

NATIONAL OFFICE MARKETS – MARIA SICOLA

NATIONAL INDUSTRIAL MARKETS – MARIA SICOLA

CHICAGO OFFICE MARKETS – SIMONE SCHUPPANCHICAGO OFFICE MARKETS SIMONE SCHUPPAN

CHICAGO INDUSTRIAL MARKET – AMANDA ORTIZ

Q & A

CUSHMAN & WAKEFIELD 3

NATIONAL AND CHICAGO ECONOMIC OUTLOOK

Cushman & Wakefield ResearchOVERVIEW

2012: The year of government deleveraging

■ Reasons for Optimism– Business, households, investors still cautious, but balance sheets continue to improve

– Labor market fundamentals getting healthier

– Tech, Tech, Tech

■ Reasons for Concern■ Reasons for Concern– Uncertainty about taxes, regulations, financial, political, oil prices, Europe/U.S.

– Election uncertainty

– Fiscal Cliff

– Business and Consumer confidence flagging

– Europe

■ Real Estate Impact– Cautious users

– Risk Averse– Risk Averse

– Tech impacted markets among the best

– Full recovery occurs in 2013

– Supply remains constrained in most markets

Chi O tl k


■ Chicago Outlook– Employment slow to recover

– Industrial fundamentals healthier

Cushman & Wakefield ResearchU.S. GDP GROWTH IN RECOVERIES

114 +14.0%

110

112

h=10

0 +9.4%

106

108

Trou

gh

+6.7%

100

102

104

100

1 2 3 4 5 6 7 8 9 10 11 12 13Average Recovery (8 previous) Average Recovery (2 previous) 2009 Recovery


Source: U.S. Bureau of Economic Analysis

Cushman & Wakefield ResearchU.S. UNEMPLOYMENT RATE

11.0%

9.0%

10.0%

rce

7.0%

8.0%

t o

f Lab

or

Fo

r

4 0%

5.0%

6.0%

Per

cent

3.0%

4.0%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012


Cushman & Wakefield ResearchU.S. PRIVATE SECTOR EMPLOYMENT GROWTH

Monthly Average-Preceding Three Months

250

212.3

183.7

225.7

150

200

250

123.0111.7

156.7 158.0147.7

75.050

100

150

s o

f Per

sons

24.7

-50

0

50

Tho

usan

d

-131.3

-150

-100

50


150

Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12

Source: U.S. Bureau of Labor Statistics

Cushman & Wakefield ResearchU.S. WEEKLY UNEMPLOYMENT CLAIMS

650,000

550,000

600,000

400,000

450,000

500,000

300,000

350,000

400,000

250,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

National Recessions Unemployment Claims Healthy Labor Market



Cushman & Wakefield ResearchEMPLOYMENT CHANGE SINCE FEBRUARY 2010

By Industry Sector

1,353 1,3241,450Total Increase: +3.8 mil.P i t S 4 4 il

900

669650

850

1,050

1,250

erso

ns

Private Sector: +4.4 mil.

500353

23677

50

250

450

650

hous

ands

of P

e

-106

528-550

-350

-150

50

Th

-528



Cushman & Wakefield ResearchJOBS RECOVERED SINCE TROUGH

As a Percent of Jobs Lost

160 0%

150.

9%

31.6

%

30.3

%

100 0%

120.0%

140.0%

160.0%

1 13

91.2

%

87.4

%

71.6

%

70.5

%

1% % % % %

60.0%

80.0%

100.0%

7

59.

55.6

54.1

%

51.3

%

50.5

%

46.2

%

44.0

%

41.8

%

39.9

%

38.9

%

34.6

%

31.9

%

29.1

%

27.3

%

25.1

%

19.3

%

0.0%

20.0%

40.0%



Cushman & Wakefield ResearchINDUSTRIAL DRIVERS

Manufacturers’ Shipments

475,000

425,000

375,000

ons

of D

olla

rs

325,000

Milli

o

275,000 1995 1997 1999 2001 2003 2005 2007 2009 2011

CUSHMAN & WAKEFIELD 12Source: U.S. Census Bureau, Cushman & Wakefield Research Services

National Recessions Mfg Shipments

Cushman & Wakefield ResearchTRUCK TONNAGE INDEX

120

125

110

115

120

95

100

105

000=

100

85

90

95 2

75

80

1995 1997 1999 2001 2003 2005 2007 2009 2011

CUSHMAN & WAKEFIELD 13Source: American Trucking Association, Cushman & Wakefield Research Services

National Recessions Truck Tonnage

Cushman & Wakefield ResearchU.S. IMPORTS AND EXPORTS OF GOODS

Excluding Bulk Items

190,000

170,000

130,000

150,000

ons

of D

olla

rs

110,000

Milli

o

70,000

90,000

1995 1997 1999 2001 2003 2005 2007 2009 2011

CUSHMAN & WAKEFIELD 14Source: U.S. Census Bureau, Cushman & Wakefield Research Services

National Recessions Exports Plus Imports

Cushman & Wakefield ResearchECONOMIC OVERVIEW & FORECAST

Payroll Employment Chicago versus U.S.

3,925137 000

138,000

3 825

3,875

135,000

136,000

137,000

3,775

3,825

133,000

134,000

3,675

3,725

130 000

131,000

132,000

3,575

3,625

128,000

129,000

130,000

US Chicago12/07-2/10 -6.3% -7.3%2/10-6/12 +3.0% +2.4%

CUSHMAN & WAKEFIELD 15Source: U.S. Bureau of Labor Statistics

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

U.S. (Left Scale) Chicago

Cushman & Wakefield ResearchEMPLOYMENT STRUCTURE

U.S. versus Chicago

Trade; Transport; UtilitiesFinancial

Construction4%

Information2%

Natural Resources1%U.S.

20%

Government17%

Manufacturing9%

Financial 6%

17%

Education and H l h S

Professional and

Leisure and Hospitality

11%Financial

7%

Construction3%

Information2%

Health Services16%

Business Services14%

Trade; Transport;

Utilities21%

Professional

Manufacturing9%

Professional and Business

Services18%

Leisure and Hospitality

10%


Education and Health Services

16%Government

14%

Chicago



ECONOMIC OVERVIEW & FORECASTJobs Recovered Since February 2010As a Percent of Jobs LostJ

50.0%

44.0%

31 9%35 0%

40.0%

45.0%

31.9%

25.0%

30.0%

35.0%

10.0%

15.0%

20.0%

0.0%

5.0%

U S Chicago



U.S. Chicago

Cushman & Wakefield ResearchCHICAGO EMPLOYMENT CHANGE

Since February 2010 , by Industry Sector

75 Total Increase: +92,400P i t S +112 400

57

47

2735

45

55

65

Per

sons

Private Sector: +112,400

2721

168 8

5

15

25

35

Tho

usan

ds o

f P

0 -3-7

-25

-15

-5T

CUSHMAN & WAKEFIELD 18Source: U.S. Bureau of Labor Statistics

Cushman & Wakefield ResearchEMPLOYMENT FORECAST

Payroll Employment Forecast: Chicago

3,950

4,000

3,850

3,900Full recoveryQ4-15

3 700

3,750

3,800

3,600

3,650

3,700

3,500

3,550

CUSHMAN & WAKEFIELD 19Source: U.S. Bureau of Labor Statistics, Moody’s Analytics

Cushman & Wakefield ResearchMIDWEST MANUFACTURING INDEX

110

115

100

105

110

85

90

95

007=

100

75

80

85 2

65

70

1995 1997 1999 2001 2003 2005 2007 2009 2011

CUSHMAN & WAKEFIELD 20Source: Federal Reserve Bank of Chicago

National Recessions Midwest Manufacturing Index

U.S. OFFICE MARKET

Cushman & Wakefield ResearchU.S. OFFICE MARKET

Leasing activity totaled 29.8 msf in the CBDs; down 29% from 2q 2011

Suburban leasing was up marginally – by 3msf – to 61.7 msf

San Francisco and New York remain strong especially in comparison to other markets San Francisco and New York remain strong especially in comparison to other markets

Positive absorption in both CBD and suburban markets

Rental increases are submarket and asset driven

Oversupply is not the issue; the issue remains uncertainty in the global economy

Investment activity remains extremely weak with exception of core and trophy assets but real


Investment activity remains extremely weak with exception of core and trophy assets but real estate remains attractive with low Treasury bond yields and volatile stock market

Cushman & Wakefield ResearchNATIONAL OFFICE

CBD & Suburban Leasing Activity

200

140

160

180

et

80

100

120

Mill

ions

Squ

are

Fee

20

40

60

0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12

CBD Suburban

CUSHMAN & WAKEFIELD 23Source: Cushman & Wakefield


CBD & Suburban Overall Absorption

100

60

80

et

20

40

Mill

ions

Squ

are

Fee

-20

0

-40

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12

CBD Suburban



Sublease Availabilities

90

60

70

80

et

30

40

50

Mill

ions

Squ

are

Fee

10

20

30

0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12

CBD Suburban



NATIONAL OFFICEConstruction Completions vs. Overall Vacancy Rates

24.0%120

18.0%

20.0%

22.0%

80

100

14.0%

16.0%

18.0%

60

80

10.0%

12.0%

20

40

6.0%

8.0%

0


CBD Completions Suburban Completions CBD Vacancy Rate Suburban Vacancy

Source: Cushman & Wakefield

U.S. INDUSTRIAL MARKET

Cushman & Wakefield ResearchU.S. INDUSTRIAL MARKETS

Industrial Overall Leasing Activity

400

300

350

feet

2 2 2

316

354.5

322

326. 2

30

150

200

250

mill

ion

squa

re f

277.3

282.9

277.9

6.6 .2 .2 278.8 230.8

268.8

6.4

152.8

50

100

150

0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD12


*Data as of Second Quarter 2012 Source: Cushman & Wakefield Research


Overall Absorption

200

100

150

feet

14.2

75.9

146.0

111.9

94.4 -6.4

13.1

94.4

39.7

0

50

mill

ion

squa

re f

-48.9

-125.1

-100

-50

-150

100

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD12


*Data as of Second Quarter 2012 Source: Cushman & Wakefield


Construction Completions versus Overall Vacancy Rates

14.0%145 0

10.0%

12.0%

105 0

125.0

145.0

feet

6.0%

8.0%

65 0

85.0

105.0

mill

ion

squa

re f

vacancy

2.0%

4.0%

25 0

45.0

65.0

0.0%

2.0%

5.0

25.0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 YTD12

New Construction Overall Vacancy Rate



*Data as of Second Quarter 2012 Source: Cushman & Wakefield Research


Warehouse Overall Vacancy Rates vs. Rental Rates

14.0%$7.00

$6.44

$6.50

$6.51

$6.45

$6.17

$5.89

10.0%

12.0%

$5.00

$6.00

$4.96

$4.84

$4.70

$4.62

$4.57

$4.61

$4.56

$4.57

$4.59

$4.58

$4.62

$4.64

6.0%

8.0%

$3.00

$4.00

$/ps

fvacancy

2.0%

4.0%

$1.00

$2.00

$

0.0%

2.0%

$0.00

$1.00

1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12

R t l R t O ll V R t


Rental Rates Overall Vacancy Rate



Warehouse/Distribution Cycle

OR

AB

LE

Slow Growth Accelerating

LA

ND

LO

RD

FA

VO

ChicagoChicago, Houston, Inland Empire

Palm Beach, FL

LT

FA

VO

RA

BL

E

Ft. Lauderdale, Portland, New Jersey

PA I-81/I-78 Corridor, Orange County

Denver, Greater LAAtlanta, Dallas, Miami

Philadelphia, Silicon Valley, Seattle

Minneapolis, Orlando, Phoenix, Tampa

Sacramento

Central Valley CA, Suburban MD

Baltimore, Long Island NY,

Recovering

TE

NA

NT

Downturn

eapo s, O a do, oe , a paOakland, North Bay CA, Jacksonville

Boston, Northern VASan Diego

Rent growth acceleratingIdeal for owners of property

Rent at or near bottom of market cycleIdeal for tenants leasing or seeking to lease property

Rent still elevated but falling from top of market cycleFalling rents promise future opportunity for tenants

Rent growth slowingStill landlord favorable but growth is down from peak



Cushman & Wakefield ResearchNATIONAL INDUSTRIAL

Second Quarter 2012 Industrial Stats

MarketTotal Industrial

Inventory

Direct Vacancy

Rate

Overall Vacancy

Rate

Annual Direct Asking Rent

(NNN)

Under Construction

YTD 2012 Total Leasing Activity

YTD 2012 Total Overall Net Absorption

Greater Los Angeles 1,068,818,710 4.3% 4.6% $6.34 2,327,316 18,872,249 1,288,544

% % $Inland Empire 415,478,185 7.4% 7.6% $4.53 6,642,648 12,876,110 5,115,073

Orange County 275,686,012 5.5% 5.6% $7.94 26,000 6,324,863 865,070

LOS ANGELES BASIN* 1,745,270,256 5.2% 5.5% $6.12 8,995,964 37,723,218 7,253,356

CHICAGO 1,148,952,426 8.9% 9.4% $4.10 3,683,246 18,171,803 6,078,532

C t l NJ 327 076 264 8 0% 8 6% $5 28 864 000 6 635 679 2 789 636Central NJ 327,076,264 8.0% 8.6% $5.28 864,000 6,635,679 2,789,636

Northern NJ 284,938,891 9.3% 9.9% $6.08 567,639 3,460,048 (1,817,530)

Long Island NY 126,195,121 11.9% 12.5% $6.99 196,000 980,212 (853,249)

NEW YORK/NEW JERSEY 738,210,276 9.2% 9.8% $5.97 1,627,639 11,075,939 118,857

Miami 160,875,806 7.4% 7.4% $5.24 189,906 1,433,878 510,664, , , , , ,

Orlando 105,579,186 12.1% 12.4% $5.35 237,960 2,444,058 633,394

Jacksonville 100,687,468 11.0% 11.1% $3.80 0 609,026 (101,596)

FLORIDA* 659,073,817 8.5% 8.7% $5.31 1,307,935 8,793,529 3,067,552

ATLANTA 516,011,066 9.7% 9.8% $3.75 2,325,047 9,069,777 3,017,391

DALLAS/FORT WORTH 514,412,336 10.8% 11.2% $4.18 2,955,146 9,766,869 4,075,023

PA I-81/I-78 Distribution Corridor 215,270,850 8.6% 9.1% $3.79 6,044,673 4,250,909 1,997,175

Philadelphia, PA 277,464,546 6.0% 6.4% $4.94 1,348,000 3,229,224 1,903,090

PHILADELPHIA 492,735,396 7.1% 7.6% $4.33 7,392,673 7,480,133 3,900,265


HOUSTON 353,750,019 7.3% 7.6% $4.70 2,087,404 9,130,399 700,914

PHOENIX 263,298,403 11.7% 12.2% $6.96 237,992 5,233,062 2,528,122

Not all large markets are included on this list. LA Basin: two markets are included in both LA and Orange Counties - LA Basin total reflects adjusted figures; Florida total also includes Ft Lauderdale, Tampa, Palm Beach & Pinellas Counties and Lakeland Area.

CHICAGO OFFICE MARKET


24CHICAGO CBDMarket Trends and Indicators

TOTAL MARKET SIZE = 218.7 MILLION SQUARE FEETCBD = 123.1 MILLION SQUARE FEET

12 M th

SUBURBAN = 95.6 MILLION SQUARE FEET• Overall vacancy dropped 0.7 percentage points to 14.2% year-over-year.

• New leasing activity slowed during the second quarter Year to date activity

CHICAGO YTD 201212 MonthForecast

Total Absorption 639,425 sf

second quarter. Year-to-date activity equaled approximately 2.4 msf, 41.5% less than the 4.1 msf reported at mid-year 2011.

• Investment activity totaled 8.2 msf, more th d bl th t d d t thi Leasing Activity 2.4 msf

Overall Vacancy Rate

14.2%

Overall Asking R

$31.79

than double the amount recorded at this time last year.

• Many renewals, which do not count towards leasing activity, were signed in the second

Rents$31.79

UnderConstruction

0 msf

quarter.


Cushman & Wakefield ResearchCHICAGO CBD

Class A Direct Vacancy vs. Asking Rental Rates

12 0%

14.0%$40.00

$38.17

$38.45

$38.41

$38.28

$37.78

$38.05

$38.28 $37.3

$37.55

$38.00

$37.65

$37.63

$38.01

$38.02

10.0%

12.0%

$38.00

32

5

6.0%

8.0%

$34.00

$36.00

2 0%

4.0%

$32.00

0.0%

2.0%

$30.00

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12


Class A Asking Rent Class A Vacancy Rate


New Leasing Activity

14

5.410

12

6.7

5 1 5 3 5 1

8.9

5.03.1 2.8

4.94.6 3.6

3.93 4

3.36

8

ons

Squa

re F

eet

8.73.6

4.2 4.3 4.25.1 5.3

3.63.0

2.4

5.1

2.4

3.4

2.2

2

4Mill

i

02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD

2012

1H 2H


12-year historical average for 1H


Renewal Activity

60 0%

70.0%8.0

5.0 5.1 5.35.1

50.0%

60.0%

6.0

ons

3.6

4.24.4 4.2

3.6

3.0

2 4

30.0%

40.0%

4.0

uare

Fee

t in

Mill

io

2.4 2.4

0 5 0.6 0.7

1.4

2.3

0.80.9 1.1

1.31.4 1.4

1.110.0%

20.0%2.0

Sq

0.5

0.0%0.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD 2012

L i A i i 1 H lf R l A i i 1 H lf 1 H lf l i i % f ll l i i i


Leasing Activity 1st Half Renewal Activity 1st Half 1st Half renewal activity as % of overall leasing activity


26CHICAGO CBDYTD 2012 Leasing by Industry

Legal ServicesBuilding

g y y

Legal Services28%

Non-profits/ Associations

Government4%

gConstruction/General

Contractors2%

Other5%

5%

Business Services21%Education Health &

Social Services

Engineers/Architects/ Accountants

6%

Technology12%

FIRE11%

6%



NOTE: Includes renewals


Investment Activity

30

13.214.1

20

25

10

15

ons

Squa

re F

eet

12.9 14.2

3 1 0 2 4.08.21.6 0.3 4.0

6.25

10

Mill

i

3.1 0.20.9

4.00

2006 2007 2008 2009 2010 2011 YTD 2012

1H 2H


Cushman & Wakefield ResearchSelected 4th Quarter Lease Comps 27CHICAGO CBD

Top Q1 & Q2 2012 Leasing and Sales Transactions

Type Address Submarket Tenant SF Industry

Renewal 321 North Clark River North Foley Lardner 169,000 Legal

330 N h W b hNew

330 North WabashAvenue

River North Latham & Watkins LLP 137,000 Legal

New 330 North Wabash River NorthSmithBucklinCorporation

111,081 Business Services

Renewal 175 West Jackson Blvd Central LoopU.S. Securities and Exchange Commission

102,613 GovernmentExchange Commission

New 10 South LaSalle Central Loop Chicago Title & Trust 86,207 FIRE

AddressSales Price

Price PSF

Seller Buyer Buyer Type Comments(Millions)

PSFy y yp

20 North Wacker Dr $126 $149 Tishman Speyer Berkley Properties InstitutionalCivic Opera, 75% occupied, renovations planned

500 North Michigan Ave

$71 $222 Zeller Realty GroupThe MacerichCompany

U.S. InvestorNew owner plans to convert to retail space

350 North Orleans St$228 $190 Vornado Realty Trust Shorenstein Properties U.S. Investor

96% leased; Chicago Sun-Times major tenant

141 West Jackson Blvd$151 $120 CME Group

GlenStar Properties JV USAA Real Estate

Regional PrivateInvestor

Partial sale-leaseback by the Chicago Mercantile Exchange

Foreign Private


200 North LaSalle St $101 $161Onni Development Capital Corp

YounanForeign PrivateReal Estate Developer

Loan on building was past due

Source: Cushman & Wakefield Research & Real Capital Analytics


36CHICAGO SUBURBANMarket Trends and Indicators

TOTAL MARKET SIZE = 95.6 MILLION SQUARE FEET

SUBURBAN CHICAGO

YTD 2012

12 MonthForecast

Total Absorption (355,075) sf

• Year-to-date leasing activity is at 2.5 msf, 10.7% higher than the 2.3 msf recorded at mid-year 2011.

p ( , )

Leasing Activity 2,539,175 sf

Overall Vacancy Rate

22.5%

• Mid-year investment sale activity increased to 1.7 msf in 2012 from 1.2 msf in 2011.

• Direct weighted average asking rents d $21 74 f b h d f Q2 Overall Asking

Rents$21.56

UnderConstruction

0 msf

stood at $21.74 psf by the end of Q2 2012, an increase of 1% from $21.53.Q2 2011.


Cushman & Wakefield ResearchCHICAGO SUBURBAN

Class A Direct Vacancy vs. Rental Rates

20.5%

$28 00

$30.00

$2

$26.67 $2 $2

20.0%

$26.00

$28.00

25.50

25.52

25.32

$25.00

$24.90

$24.94

$24.76

$24.53

$24.41

$24.37

$24.28

$24.45

$24.19

19.0%

19.5%

$22.00

$24.00

18.5%

$18 00

$20.00

18.0%$16.00

$18.00

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12


Class A Asking Rent Class A Vacancy Rate

Cushman & Wakefield ResearchCHICAGO SUBURAN

New Leasing Activity

12

4 98

10

4.94 4

4.9

8.9

2.9

4.6

3.1

3.7

3.53.1

2 6 2.64

6

ons

Squa

re F

eet

8.7 2.5

3.7 3.8 3.5

4.4

3.6 3.3

1.9

2.8 2.92.5

1.71.9

2.6

2

4

Mill

i

02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD

2012

1H 2H


12-year historical average for 1H

Cushman & Wakefield ResearchCHICAGO SUBURBAN

Renewal Activity

60 0%

70.0%6.0

3.84.1

3.7 3.83.5

4.4

3.6

50.0%

60.0%

4.0

ons

3.3

1 9

2.82.9

2.530.0%

40.0%

uare

Fee

t in

Mill

io

1.9

0.6

1.0

0.6

1.1

0.5

1.1 1.1 1.1

0.410.0%

20.0%2.0Sq

0.2 0.2 0.20.4

0.0%0.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD 2012

L i A i i 1 H lf R l A i i 1 H lf 1 H lf l i i % f ll l i i i




38SUBURBAN CHICAGO2012 YTD Leasing by Industry

Manufacturing/Industrial29%

Printing, Publishing and

Building Construction/General

Contractors29%

Technology4%

Communications3%

Related2%

1%

Legal Services

4%

4%

Non-

Other4%

Education Health & Social Services

18%FIRE17%

Business Services13%

profits/Associations5%




Cushman & Wakefield ResearchSelected 4th Quarter Lease Comps 33CHICAGO SUBURBAN

Top Q1 & Q2 2012 Leasing and Sales Transactions


New3800 Golf Rd,

Atrium Corporate Center Rolling Meadows

Northwest Capital One 158,582 FIRERolling Meadows

New75 North Fairway

Vernon HillsCentral North/Tri-State Carefusion 150,000

Manufacturing/Industrial(medical)

New3 Parkway North

DeerfieldCentral North/Tri-State

Mondelez International(Kraft)

105,000Manufacturing/Industrial

(food)

5550 Prairie Stone Parkway American Continental Renewal

5550 Prairie Stone ParkwayHoffman Estates.

NorthwestAmerican Continental

University74,000 Education

NewColumbia Centre III

RosemontO’Hare World Kitchen 55,000

Manufacturing/Industrial(kitchenware)

Sales Address Price

(Millions)Price PSF Seller Buyer Type Comments

4 Parkway North,Deerfield

$40.9 $238 John Buck Company Wells Core Office REITInstitutional

Investor

100% occupied; CF Industries, Lundbeck

main tenants

C l E N l Continental ExecutivePark, Vernon Hills

$27.5 $123 PacTrust PWA Real EstateNational private

investor

Caremark Towers INorthbrook

$21 $123 Fulcrum Asset ServicesWhite Oak Realty Partners

JV Syndicated EquitiesRegional private

investor

67% leased; building


6400 Shafer Ct,Rosemont

$10.8 $66 Ruben YbaraCrossroads Development

PartnersRegional private

investor

67% leased; building traded for 3rd time in

5 years


CHICAGO INDUSTRIAL MARKET


48CHICAGO INDUSTRIALMarket Trends and Indicators

TOTAL MARKET SIZE = 1 1 BILLION SQUARE FEET

CHICAGOYTD 2012

12 MonthForecast

TOTAL MARKET SIZE = 1.1 BILLION SQUARE FEET

• Leasing activity gaining momentum

• Large leasing transactions have fueled recovery in the region

Total Absorption 6.1 msf

Leasing Activity 18.2 msf

Overall Vacancy 9 4%

recovery in the region

• Asking rental rates have yet to increase significantly, still favorable climate for tenants y

Rate9.4%

Overall Asking Rents $4.05

Under Construction 3.7 msf

• New construction is on the rise and some speculative projects have begun in the Chicago market



48CHICAGO INDUSTRIALMarket Trends and Indicators

0 00

0.10

0.20

Chicago MSA Employment (% Change)

• Business sectors impacting industrial

-0 50

-0.40

-0.30

-0.20

-0.10

0.00 • Business sectors impacting industrial activity added jobs in recent months

• Local economy slowly improving

Chicago Fed Midwest Manufacturing Index (CFMMI)-0.70

-0.60

-0.50

Manufacturing Output Indexes % Change from1 month ago 3 months ago 1 year ago


Chicago Fed Midwest Manufacturing Index (CFMMI)

US Industrial Production-Manufacturing (IPMFG)

1.1 2.1 11.0

0.7 0.8 5.6


49CHICAGO INDUSTRIALOverall Vacancy Rates vs. Asking Rents

12.0%$4.50

$4.45 $4.36

$4.33 $4.2 $

11.0%

11.5%

$4.25

26 $4.19 $4.09

$4.04

$4.04

$4.04

$4.06 $3.98

$4.01

$4.01

$4.05

9.5%

10.0%

10.5%

$4.00

$ /s

f/yr

8 0%

8.5%

9.0%

$3 50

$3.75

8.0%$3.50Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212

Asking Rent Vacancy Rate


Cushman & Wakefield ResearchCHICAGO INDUSTRIAL

Mid-Year Leasing and Renewal Activity

70.0%25.0

15.4

19.4

15.2

18.517.6

16.5

18.250.0%

60.0%

20.0

14.1 13.9

11.7 11.5

13.9

30.0%

40.0%

10.0

15.0

2.1 1 7

3.7 3.3

4.9

3.2 2.1

5.4 4.2

7.0

5.1

2.5 10.0%

20.0%

5.0

2.1 1.7 2.1

0.0%0.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD 2012



Cushman & Wakefield ResearchCHICAGO INDUSTRIAL

2012 Leasing by Industry

M fManufacturing27%

Business Services7%

Construction1%

Communications0%

Other10%

Wholesale Trade25%

Retail Trade11%


Transportation/Public Utilities

19%


Cushman & Wakefield ResearchSelected 4th Quarter Lease Comps 33CHICAGO INDUSTRIAL

Top Q2 12 Leasing and Sales Transactions


New Home Depot BTS Interstate 80 Home Depot 1 600 000 Retail TradeNew Home Depot BTS Interstate 80 Home Depot 1,600,000 Retail Trade

New Tinley Park Corporate Center Interstate 80 M. Block & Sons 915,643 Wholesale Trade

New Heartland Corporate Center Interstate 80 Wilton Industries 492,869 Wholesale Trade

New Joliet Distribution Center Interstate 80 Ozburn-Hessey Logistics 476,965 Transportation

Renewal Butterfield Center Southern Fox Valley Nippon Express USA 410,000 Transportation

Sales PriceAddress SF

Sales Price(Millions

Price PSF Seller Buyer Buyer Type Comments

Portfolio Sale,6 Buildings

1,789,819 $87.0 $48.61Benderson

Development Company

CenterPointProperties

Investor Fully leased

2400 Dralle Road 1 350 000 $64 3 $47 59 USAA Real EstateCBRE Global

Investor Fully leased2400 Dralle Road 1,350,000 $64.3 $47.59 USAA Real EstateInvestors

Investor Fully leased

1860 W Jefferson Ave.

828,748 $46.4 $55.99 RREEF Duke Realty Investor Fully leased

901 Carlow Drive 747,152 $34.6 $46.26 TIAA-CREF Heitman InvestorHome Depot to vacate at end of

2013


2013702 Commerce Center Drive

696,540 $25.1 $36.04 USAA Real Estate Koch Industries Investor Fully leased


Cushman & Wakefield ResearchCHICAGO

Construction Completions vs. Overall Vacancy Rates

12.0%25,000

(000s sf) Vacancy Rate

9.0%

10.0%

11.0%

20,000

5 0%

6.0%

7.0%

8.0%

10 000

15,000

2.0%

3.0%

4.0%

5.0%

5,000

10,000

0.0%

1.0%

0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD12





54LOOKING FORWARDChicago Area

OFFICE CBD

• Vacancy down slightly

• Overall new leasing activity expected to remain slow for the remainder of the election year (some g y p y (exceptions

• Investment activity – additional buildings trading in the second half

• Asking rates overall flat to slight increase; landlords have leverage depending on specific building/space

• One or two high-rises to break ground late 2012/early 2013 • One or two high-rises to break ground late 2012/early 2013

OFFICE Suburban

• Vacancy improving slightly as tenants move to new locations (however muted by musical chairs and consolidations)consolidations)

• Leasing activity slow for rest of year

• Investment activity slow with still unstable market fundamentals

INDUSTRIAL

• Vacancy to improve further

• Leasing activity solid; expected to remain stable through year-end

• Speculative construction picking up specifically in the I-80 Corridor


p p g p p y

Q & A

MARIA SICOLA415-773-3542

KEN McCARTHY212-698-2502

One Maritime Plaza, Suite 900San Francisco, CA [email protected]

SIMONE SCHUPPAN

1290 Avenue of the AmericasNew York, NY [email protected]

AMANDA ORTIZSIMONE SCHUPPAN312-470-1891200 South Wacker, Suite 2800Chicago, IL [email protected]

AMANDA ORTIZ847-518-32356133 North River Road, Rosemont, IL [email protected]

www.cushmanwakefield.com

Documents

Midyear Review Chicago 2012 (3)