Metropolitan ChicagoNAI HiffmanIndustrial Market ReportMid-Year 2009
www.hiffman.com
Committed to Chicago.
Connected to the World.™
I l l i n o i sW i s c o n s i n
Ind
ian
a
Illi
no
is
WaukeganRegional Airport
OhareInt'l Airport
WestoshaAirport
Chicago ExecutiveAirport
DupageAirport
Gary/Chicago Airpo
Chicago MidwayAirport
94
94
90
94
94
94
90
90
90
90
80
57
57
80
80
55
55
5588
290
290
294
294
355
355
39
39
Aurora
Plainfield
Munster
Hammond
Elk Grove Village
Schererville
Lake Zurich
Monee
Crystal Lake
MontgomeryWoodridge
Minooka
Addison
Arlington Heights
Pleasant Prairie
Grayslake
Skokie
Northbrook
FranklinPark
Naperville
Highland Park
North Aurora
BedfordPark
Park Forest
Tinley Park
NilesSchaumburg Des
Plaines
St Charles
New Lenox
Romeoville
WestChicago
Geneva
M
MattesonMokena
CarolStream
Bolingbrook
Lake Forest
Waukegan
Joliet
Elgin
Elmhurst
Burr Ridge
Vernon Hills
BuffaloGrove
Wood Dale
La Grange
PalosHeights
Elwood
Rockford
Belvidere
CherryValley
Beloit
helle
La Salle
DeKalb
Chicago
Evanston
WillowSprings
DownersGrove
1
2
35
67
9
10
11
12
8
4
3 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
Table o
f Co
ntents
Metropolitan ChicagoNAI HiffmanIndustrial Market ReportMid-Year 2009
NAI Hiffman understands that our success
is the direct result of creating successful
outcomes for our clients.
We build lasting relationships with our clients
and partners, engaging our individual initiative
joined with collaboration and teamwork.
Our unrelenting commitment to excellence
and integrity forms the foundation of our
guiding principles and shapes our strategies.
Committed to Chicago.
Connected to the World.™
Build on the power of our network.
Local Economy. . . . . . . . . . . . . . . . . . . . . . 4
Industrial Market Statistics. . . . . . . . . . . . . 5
Industrial Market Summary . . . . . . . . . . . . 6
Industrial Submarket Overviews
Lake County . . . . . . . . . . . . . . . . . . . 8
Southeast Wisconsin . . . . . . . . . . . . 10
I-90/Northwest . . . . . . . . . . . . . . . . . 12
Northwest Cook . . . . . . . . . . . . . . . . 14
North Cook . . . . . . . . . . . . . . . . . . . . 16
Fox Valley . . . . . . . . . . . . . . . . . . . . . 18
Central DuPage . . . . . . . . . . . . . . . . 20
O’Hare. . . . . . . . . . . . . . . . . . . . . . . . 22
West Cook . . . . . . . . . . . . . . . . . . . . 24
I-88 Corridor . . . . . . . . . . . . . . . . . . . 26
I-55 Corridor . . . . . . . . . . . . . . . . . . . 28
I-80/Joliet Corridor . . . . . . . . . . . . . . 30
Submarket Map . . . . . . . . . . . . . . . . . . . . . 32
Methodology / Defi nitions . . . . . . . . . . . . . 33
NAI Hiffman / NAI Global . . . . . . . . . . . . . . 34
1
2
3
4
5
6
7
8
9
10
11
12
Local EconomyPOPULATION (2008 EST.) 9,804,475
POPULATION CHANGE (2000-2008 EST.) +7.8%
NUMBER OF HOUSEHOLDS (2008) 3,516,729
MEDIAN HOUSEHOLD INCOME (2008 EST.) $67,234
GROSS METRO PRODUCT (2007) $506 BILLION
LABOR FORCE 4,999,179
JOBS GAINED (6/08-6/09) -186,411
CHICAGO AREA UNEMPLOYMENT RATE 11.3%
ILLINOIS UNEMPLOYMENT RATE 10.1%
U.S. UNEMPLOMENT RATE 9.5%
there are some signs that the rate at which it is climbing
should slow over the next few months as we approach
a peak of unemployed individuals.
In Illinois, the manufacturing industry lost 2,800 jobs
in June. While still a loss, the past six months have
consecutively posted 5,000+ jobs lost in the industry,
with March alone posting a 14,300 job loss. Since last
June, employment in the sector has dropped by 80,300
jobs, almost fourteen percent of its total workforce.
While manufacturing still defi nes much of the Midwest,
Chicago benefi ts from its diversifi ed base. The area is
not dependent on the auto industry, whose contraction
has dragged down the economies of neighboring
states. Steel, however, remains a focus for the region.
Demand for steel is starting to recover as industry
specialists insist the worst is over, but the strength of
the recovery is still unclear.
According to preliminary numbers for June, employment
in the professional and business services sector has
posted its fi rst month of job growth since December
2007. Down 66,300 jobs since June 2008, a slowdown
or perhaps reversal of job loss in the industry is a
promising trend.
The forecast for the remainder of 2009 calls for
stagnation in employment as the economy continues
its struggle. Unemployment should continue to climb,
but eventually level off as the recession winds down.
Chicago, the third largest metropolitan area in the U.S. after New York
and Los Angeles, is the most infl uential economic region between
the East and West Coasts. Situated at the geographical heart of the
nation, Chicago’s locational advantages have fostered its development
into an international center for banking, securities, high technology,
air transportation, business services, wholesale and retail trade, and
manufacturing. In addition, Chicago is one of the principal trading
centers for commodities, fi nancial, and derivative futures products. In
2008, Site Selection magazine once again named Chicago the number
one destination for new or expanded corporate facilities projects in the
nation, a position the city has held for six of the last seven years.
Chicago has a higher rate of employment in management, business &
fi nance and offi ce & administrative job growth than the nation. Likewise
it also has higher rates of production and transportation & material
moving occupations. This indicates both an “offi ce economy” as well
as a “production” and “distribution” economy. With one of the most
diversifi ed economies of any region in the country, Chicago is less
vulnerable to fl uctuations in individual industries than most other large
urban areas. The Chicago region’s considerable economic diversity is
refl ected in the ten largest publicly traded companies headquartered
here ranked by market capitalization: Abbott Laboratories, McDonald’s
Corp., Kraft Foods, Exelon Corp., Baxter International, Walgreen Co.,
Boeing, Caterpillar, Archer Daniels Midland Co., and CME Group Inc.
Over the past twelve months ending in June 2009, the Chicago-
Naperville-Joliet metropolitan area lost a total of 184,300 jobs. The
unemployment rate soared to 11.3% in June, a dramatic 63% increase
since last June when the unemployment rate was 6.9%. Nationally, at
the end of the second quarter, unemployment stood at 9.4%, the highest
it has been since 1983. While it continues to climb month after month,
2%
4%
6%
8%
10%
12%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Metro Chicago
1999
IllinoisU.S.
Local and National Unemployment
Statistical data as of June 2009 unless noted otherwise. Data from Bureau
of Labor Statistics, Bureau of Economic Nalaysis, ESRI, Illinois Department of
Employment Security
5 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
Local E
cono
my / Ind
ustrial Market S
tatistics
Submarket # Bldgs. Total RBA Vacant Vacancy 2Q09 Net YTD Net New Supply Under Constr.
(SF) (SF) Rate (%) Absorption (SF) Absorption(SF) (SF) (SF)
Chicago North 1,137 66,816,096 5,330,830 8.0% -90,989 -561,830 0 0
Chicago South 1,749 154,239,770 14,783,594 9.6% -1,079,572 -3,005,678 0 182,220
North Cook 717 46,760,058 3,046,904 6.5% -88,286 -365,862 0 0
West Cook 743 60,538,305 7,108,642 11.7% -305,028 -1,370,508 0 0
Southwest Cook 487 38,733,483 2,784,615 7.2% -706,146 -782,572 0 753,168
South Cook 1,125 85,431,508 10,785,797 12.6% -31,154 -1,820,198 0 12,600
I-57/Will Corridor 80 12,351,467 2,306,903 18.7% -208,530 -788,973 0 0
Lake County 929 66,652,043 6,784,542 10.2% -603,319 -985,124 150,192 568,543
Northwest Cook 527 28,787,011 3,507,636 12.2% 60,482 -125,923 0 121,457
O’Hare 1,735 101,236,619 12,089,704 11.9% -720,495 -602,587 0 0
Central DuPage 1,097 66,946,799 6,413,065 9.6% 329,379 2,242 0 0
I-55 Corridor 653 79,974,013 11,415,653 14.3% 309,859 -421,054 0 264,183
McHenry County 437 25,520,283 3,078,518 12.1% -80,420 -192,028 0 0
I-90/Northwest 429 25,450,233 2,803,758 11.0% -124,277 192,598 0 37,269
Fox Valley 494 32,075,871 3,588,278 11.2% -366,640 -219,884 31,439 0
I-88 Corridor 772 61,356,357 7,436,250 12.1% -650,372 -995,279 0 525,000
I-80/Joliet Corridor 613 62,369,997 12,130,879 19.5% 1,523,400 1,040,818 934,000 38,400
DeKalb County 57 6,970,869 275,116 3.9% 14,820 161,021 0 0
I-39 Corridor 218 23,981,891 4,487,006 18.7% -145,036 -364,807 0 72,000
Southeast Wisconsin 520 43,114,814 6,102,565 14.2% -282,020 -900,879 125,000 2,080,000
Northwest Indiana 430 35,694,907 4,187,331 11.7% -191,500 -114,250 0 0
Flex Space Summary
Total Flex Space 1,529 72,340,978 8,333,343 11.5% -444,447 -839,057 30,000 62,916
Total Market
Summary 16,478 1,197,343,372 138,780,929 11.6% -3,880,291 -13,059,814 1,270,631 4,717,756
The data compiled in the Chicago Industrial Market Report is the legal property of NAI Hiffman. Reproduction or dissemination of the information contained herein is strictly prohibited
without the expressed written consent of NAI Hiffman. This report contains information, including information available to the public, which has been relied upon by NAI Hiffman
on the assumption that it is accurate and complete without independent verification by NAI Hiffman. NAI Hiffman accepts no responsibility if this should prove to be inaccurate
or incomplete. No warranty or representation, express or implied, is made by NAI Hiffman as to the accuracy or completeness of the information contained herein, and same is
submitted subject to errors, omissions, and changes in market conditions.
Industrial Market StatisticsNAI HiffmanIndustrial Market ReportMid-Year 2009
Metropolitan ChicagoNAI HiffmanIndustrial Market ReportMid-Year 2009
Market Summary
Chicago is the second largest industrial market in the U.S. with over one
billion SF of inventory. The Chicago industrial market remains the most
infl uential in the Midwest, due to its growing prominence as an inland
port and its diverse labor pool. It has the second largest workforce in the
country and is the largest manufacturing market.
Chicago’s strategic location and transportation infrastructure make it
the most important transportation center in the country. Located in the
path of three of the nation’s busiest transcontinental expressways (I-80,
I-90 and I-94), Chicago also claims 70 percent of the nation’s rail and
intermodal activity. Furthermore, O’Hare International Airport remains
one of the world’s busiest airports, while the Great Lakes canal system
accommodates vital barge and shipping traffi c.
Quarter in Review. The credit crisis and subsequent recession
continue to make a mark on the Chicago industrial real estate market.
Manufacturers and distributors have been moving less product due to
the economy, resulting in fi ve consecutive quarters of rising vacancies
since 2007 and depressed demand. The most challenging real estate
market in decades has seen millions of SF of negative net absorption,
minimal investment, and few property sales. New construction starts are
virtually nonexistent and many ongoing development projects have lost
their fi nancing as investors have pulled out. The commercial real estate
market generally lags the economy by about 12 months, so even if the
general economy turns the corner sooner than expected, Chicago’s
industrial market will not be as quick to respond.
The overall vacancy rate at the end of June reached 11.6% for the
industrial market, up from 11.29% in March, resulting in net absorption
totaling roughly negative 3.9 million SF. While not as severe as fi rst
quarter’s net absorption total of negative 9.2 million SF, it has had
the effect of pushing the vacancy rate to its highest level since 1991.
-12,000,000
-8,000,000
-4,000,000
0
4,000,000
8,000,000
12,000,000
0%
2%
4%
6%
8%
10%
12%
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Net Absorption (SF)Vacancy Rate (%)
Vacancy and Absorption
Construction Starts and Deliveries
0
2 MM
4 MM
6 MM
8 MM
10 MM
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Construction Starts (SF)
Deliveries (SF)
Source: CoStar
Industrial Base Growth by Quarter
0.9 Billion
1.0 Billion
1.1 Billion
1.2 Billion
2000
2005
2006
2007
2008
Total Industrial Base (SF)
2009
2001
2002
2003
2004
# INDUSTRIAL BUILDINGS 16,478
MARKET SIZE (SF) 1,197,373,372
VACANCY 138,780,929 SF (11.6%)
2Q09 NET ABSORPTION -3,880,291
YTD NET ABSORPTION -13,059,814
NEW SUPPLY (SF) 1,270,631
UNDER CONSTRUCTION (SF) 4,717,756
7 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
The news is not all negative, however, as leasing activity continues
to accelerate market-wide. The majority of these deals are lease
renewals, as landlords look to secure their tenants well in advance
of the expiration dates on their leases by offering signifi cant rent
reductions, fl exible terms and free rent. Pent-up demand, due to
the unpredictable economy, is resulting in developers seeing more
requests for proposals from brokers, a sign that companies may
be getting more serious about their real estate decisions.
Looking Forward. The future of Chicago’s industrial market
is highly dependent on the resiliency of the global and national
economies. Just as a positive economic outlook leads to individuals
increasing their personal spending, a recovering economy will
lead to companies feeling more confi dent investing in real estate.
Although many proposed and planned development projects
remain in the pipeline, new construction will remain limited until the
abundance of vacant space in the market begins to be absorbed.
Leasing will remain active as tenants look to take advantage of the
market by saving money on their rent through renegotiating their
lease terms or signing a new lease.
The evolving Chicago industrial market is critical to the nation’s
manufacturing, distribution and transportation industries and
is centrally located. These signifi cant advantages will allow the
market to maintain its value and recover more quickly than other
industrial markets throughout the country.
O’Hare
South Cook
I-55 Corridor
Central DuPage
Lake County
I-80/Joliet Corridor
I-88 Corridor
West Cook
North Cook
Southeast Wisconsin
Southwest Cook
Northwest Indiana
Fox Valley
Northwest Cook
McHenry County
I-90/Northwest
I-39 Corridor
I-57/Will Corridor
DeKalb County
101,236,619 SF
85,431,508 SF
79,974,013 SF
66,946,799 SF
66,652,046 SF
62,369,997 SF
61,356,357 SF
60,538,305 SF
46,760,058 SF
43,114,814 SF
38,733,483 SF
35,694,907 SF
32,075,871 SF
28,787,011 SF
25,520,283 SF
25,450,233 SF
23,981,891 SF
12,351,467 SF
6,970,869 SF
Suburban Submarkets by Size
Capitalization Rate and Properties Sold
0
20
40
60
80
100
120
6%
7%
8%
9%
10%
11%
12%
2001
2002
2003
2004
2005
2006
2007
2008
2009
Cap Rate (%)# of Properties Sold
Industrial Market Trends
VacancyRate
NetAbsorption
AskingRents
Signifi cant Industrial Lease Transactions 2nd Qtr. 2009
Property Address Submarket City Leased (SF) Tenant Comments
1700 & 1701 Leider Ln. Lake County Buffalo Grove 196,850 Hyper Microsystems New lease
815 Kimberly Dr. Central DuPage Carol Stream 250,902 Hart & Cooley New, long-term lease
794-854 Golf Ln. Bensenville O’Hare 352,119 The Bradford Exchange Lease renewal
3710-3720 River Rd. West Cook Franklin Park 195,071 R&M Trucking Company New lease
1701 Remington Blvd. I-55 Corridor Bolingbrook 800,000 Home Depot Lease renewal
Industrial M
arket Sum
mary
I l l i n o i sW i s c o n s i n
WaukeganRegional Airport
22
176
120
21
176
83
60
22
173
12
12
45
4145
41
294
94
Zion
Lake Zurich
ake
Grayslake
Highland Park
P l ti
Fox Lake
Lake Forest
Waukegan
cHenry
Vernon Hills
BuffaloGrove
MundeleinLibertyville
Gurnee
NorthChicago
Lake County
Submarket Trends
VacancyRate
NetAbsorption
AskingRents
33%7%
7%
9%
10%
11%23%
Waukegan
North Chicago
Buffalo Grove
Gurnee
Libertyville
Other Lake County Suburbs
Lake Zurich
Inventory By City
POPULATION 712,453 (est.)
2000–2008 POPULATION CHANGE +10.6% (est.)
# INDUSTRIAL BUILDINGS 929
MARKET SIZE (SF) 66,652,043
VACANCY 6,784,542 SF (10.18%)
2Q09 NET ABSORPTION -603,319
YTD NET ABSORPTION -985,124
NEW SUPPLY (SF) 150,192
UNDER CONSTRUCTION (SF) 568,543
The Lake County industrial submarket is notable for its roster of
corporate headquarters and heavy concentration of owner–occupied
real estate, all located within close proximity to the I-94 Tri-State Tollway.
Entrepreneurial owners and corporate managers residing along the
lakefront and northwest Lake County make this area attractive for
investment. Corporate neighbors including Abbott, Baxter, Caremark,
Takeda, Walgreens and WMS join privately held companies such as
CDW, Medline and ULINE to form a vibrant base of employment. Lake
County’s relatively low property tax rates attract companies from Cook
County, although infrastructure demands have begun to slightly even
the playing fi eld. Lake County’s population has grown as development
pushes father north and west.
Vacancy and Absorption. At the end of June, the Lake County overall
vacancy stood at 10.18%, up from 9.3% in March, resulting in net
absorption totaling negative 985,124 SF for the fi rst half of the year.
Lake County has rarely seen vacancy in the double-digits in its history.
Several of the recently constructed speculative developments in the
submarket remain at least partially vacant, a trend seen among recent
speculative development throughout the market.
“Several of the recently constructed speculative developments in the submarket
remain at least partially vacant.”
Lake County Overview
-800,000
-600,000
-400,000
-200,000
0
200,000
400,000
0%
2%
4%
6%
8%
10%
12%
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Net Absorption (SF)Vacancy Rate (%)
Vacancy and Absorption
0
200,000
400,000
600,000
800,000
1,000,000
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Deliveries (SF)
Under Construction (SF)
Under Construction & Recent Deliveries
Pictured Above: 1700 Leider Ln., where Hyper Microsystems
leased a total of 196,850 SF between two buildings
9 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
0
20
40
60
80
100
1,000 – 19,999
SF Available
20,000 – 49,999
SF Available
50,000 – 99,999
SF Available
100,000 – 199,999
SF Available
200,000+
SF Available
# of Buildings
1.3 MM
1.9 MM
2.3 MM
2.1 MM
0.8 MM1,000 – 19,999 SF Available
20,000 – 49,999 SF Available
50,000 – 99,999 SF Available
100,000 – 199,999 SF Available
200,000+ SF Available
Available Space Profi leConstruction. Construction continues on a 470,000 SF facility
located in IDI’s Antioch Corporate Center, a new 200-acre
park underway in Antioch. Panattoni delivered a 150,192 SF
speculative building over the past quarter, located in the new
Trumpet Corporate Park in Zion.
Transaction Activity. The most signifi cant transaction in the
second quarter involved computer storage device manufacturer
and distributor Hyper Microsystems expanding from their current
location to the nearby Aptakisic Creek Corporate Park in Buffalo
Grove, where they leased a total of 196,850 SF. Leasing activity
is on the rise in Lake County due to aggressive leasing incentives
being extended by institutional ownership.
Looking Forward. As the ongoing recession continues to
unfold, vacancy will rise in the near-term, resulting in consecutive
quarters of negative net absorption. Tenants will benefi t from
from low rental rates and incentives being offered in today’s
“tenants’ market”.
Lake County Sale Transactions 2nd Qtr. 2009
Property Address City Size (SF) Sale Price Price PSF Buyer Seller
45-85 Albrecht Dr. Lake Bluff 256,298 $13,175,000 $51.41 Globe Corporation Investment trust
0%
1%
2%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Sublease Vacancy (%)
1999
Lake County Submarket Sublease Vacancy Rate
Lake Co
unty Overview
Lake County Lease Transactions 2nd Qtr. 2009
Property Address City Leased (SF) Tenant Comments
1700 & 1701 Leider Ln. Buffalo Grove 196,850 Hyper Microsystems New lease
3800-3898 Sunset Ave. Waukegan 108,000 Cornfields, Inc. Lease renewal
610 Schelter Rd. Lincolnshire 98,735 Star Creations Build-to-suit lease
1883 Circuit Dr. Round Lake Beach 17,168 Midwest Printed Circuits New lease
1451-1485 S. Lakeside Dr. Waukegan 16,461 Veridian Healthcare, LLC New lease
1353 Armour Blvd. Mundelein 11,216 Air Flow Company New lease
I l l i n o i sW i s c o n s i n
WestoshaAirport
KenoshaRegional
Airport
83
50
142
31
32
16541
4594
Zi
Pleasant Prairie
Kenosha
RacineSturtevantBurlington
Southeast Wisconsin
Submarket Trends
VacancyRate
NetAbsorption
AskingRents
Inventory By City
POPULATION 251,319 (est.)
2000–2008 POPULATION CHANGE +5.6% (est.)
# INDUSTRIAL BUILDINGS 520
MARKET SIZE (SF) 43,114,814
VACANCY 6,102,565 SF (14.15%)
1Q09 NET ABSORPTION -282,020
YTD NET ABSORPTION -900,879
NEW SUPPLY (SF) 125,000
UNDER CONSTRUCTION (SF) 2,080,000
The Lakeview Corporate Park in Pleasant Prairie, Wisconsin accounts
for the lion’s share of our statistical tracking in the Southeast Wisconsin
industrial submarket. This 1,500-acre business park was developed in
the late 1980’s by Wispark, the development subsidiary of Wisconsin
Energy Corporation. Owned by both Wispark and CenterPoint
Properties, the park boasts 25 million SF and is home to an international
roster of companies including S.C. Johnson, IRIS, Yamaha and Jelly
Belly. The primary advantages of the Southeast Wisconsin submarket
are the availability of affordable land for “big box” development as well
as lower utility costs, property taxes and workers’ compensation when
compared to submarkets in Illinois.
Vacancy and Absorption. While vacancy has been on the rise since
2008, the area is subject to sudden adjustments due to the large size of
many of the transactions that take place. Southeast Wisconsin ended
the second quarter with 14.15% vacancy, resulting in net absorption
totaling negative 900,879 SF for the fi rst half of 2009. Many of the
area’s large “big-box” spaces that can accommodate users from
100,000-600,000 SF remain on the market.
“While vacancy has been on the rise since 2008, the area is subject to sudden
adjustments due to the large size of transactions that take place.”
Southeast Wisconsin Overview
-1,000,000
-500,000
0
500,000
1,000,000
1,500,000
0%
3%
6%
9%
12%
15%
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Net Absorption (SF)Vacancy Rate (%)
Vacancy and Absorption
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Deliveries (SF)
Under Construction (SF)
Under Construction & Recent Deliveries
7%
16%
18%
23%
36%
Racine
Burlington
Kenosha
Sturtevant
Pleasant Prairie
Pictured Above: Artist rendering of ULINE’s new
corporate headquarters under construction in Pleasant Prairie
11 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
0
10
20
30
1,000 – 19,999
SF Available
20,000 – 49,999
SF Available
50,000 – 99,999
SF Available
100,000 – 199,999
SF Available
200,000+
SF Available
# of Buildings
3.8 MM
1.5 MM
0.8 MM
0.6 MM0.3 MM
1,000 – 19,999 SF Available
20,000 – 49,999 SF Available
50,000 – 99,999 SF Available
100,000 – 199,999 SF Available
200,000+ SF Available
Available Space Profi le
Construction. Construction continues on the new ULINE
facility in Pleasant Prairie where the rapidly growing packaging
supply company plans to move its corporate headquarters
from Waukegan when construction is completed. The 196
acre site, located at the southeast corner of I-94 and Highway
65, will feature a 200,000 SF corporate offi ce building and a 1
million SF distribution center. Gordon Food Service’s 587,000
SF distribution center on 134 acres is still under construction,
expecting to deliver in January of 2010.
Transaction Activity. During the second quarter, GBC renewed
its lease for 56,050 SF at 10150 80th Avenue in Pleasant Prairie.
Unifi ed Solutions leased 277,454 SF at 9801 80th Avenue in
Pleasant Prairie.
Looking Forward. Southeast Wisconsin will continue to draw
companies from south of the border looking to escape Illinois’
perceived tax burden. CenterPoint Properties will remain a
strong presence in the submarket delivering proven results. The
large number of available high cube, “big-box” properties will
cause continued downward pressure on Lake County, Illinois
rental rates. Most of Southeast Wisconsin’s industrial inventory
features 28’–30’ clear heights and exterior truck loading, an
advantage compared to the second generation competition in
Lake County, Illinois.
Southeast Wisconsin Projects Under Construction 2nd Qtr. 2009
Southeast Wisconsin Recent Deliveries 2nd Qtr. 2009
Property Address City Size (SF) Comments
8100 60th St. Kenosha 731,000 Build-to-suit distribution center for Affiliated Foods Midwest Cooperative Inc.
88th Ave @ State Route 158 Kenosha 600,000 New Rust-Oleum Corp. warehouse and distribution center, room for up to 250,000 SF expansion
8123 116th St. Pleasant Prairie 452,769 Vacant
12501 Globe Dr. Racine 321,600 Vacant
Property Location City Size (SF) Comments
Southwest of I-94 and County Hwy. Q Pleasant Prairie 1,200,000 Part of new ULINE campus including a 200,000 SF corporate headquarters
Southwest of Hwy. 20 and County Hwy. V Mt. Pleasant 600,000 HSA Commercial, Inc. to build up to 10 buildings on 90-acre land site
10901 38th St. Kenosha 587,000 New distribution facility for Gordon Food Service on 134-acre land site
So
utheast Wisco
nsin Overview
72
2531
31
4720
90
South Elgin
EastDundee
Elgin
Hampshire Carpentersville
I-90/Northwest
Submarket Trends
NetAbsorption
AskingRents
Inventory By City
POPULATION 208,728 (est.)
2000–2008 POPULATION CHANGE +23.96% (est.)
# INDUSTRIAL BUILDINGS 429
MARKET SIZE (SF) 25,450,233
VACANCY 2,803,758 SF (11.02%)
2Q09 NET ABSORPTION -124,277
YTD NET ABSORPTION 192,598
NEW SUPPLY (SF) 1
UNDER CONSTRUCTION (SF) 37,269
The I-90/Northwest industrial submarket is attractive to companies
looking for excellent interstate access, relatively low taxes, potential
incentives and a strong labor pool. Most of the industrial inventory
base in the submarket is located within minutes of a 4-way
intersection with I-90. This serves to make the I-90/Northwest
submarket a good distribution point for companies that are serving the
I-90/upper-midwest supply chain. Relatively low taxes are a benefi t
throughout the submarket, and TIF incentives are available in some
areas. Additionally, the Elgin area provides an abundant, educated
labor pool. Population along and near the Fox River has increased
dramatically over the past decade.
Vacancy and Absorption. Following two quarters of declining vacancy
rates and positive net absorption, the I-90/Northwest submarket
resumed the trend of increasing vacancies and negative net absorption
this quarter, posting a vacancy rate of 11.02% in June, up from 10.5%
in March, resulting in net absorption totaling negative 124,277 SF. As
demand and transaction volume remain low, we expect these trends to
continue in the near-term.
“Leasing activity remains elevated, likely due to aggressive rental rates and leasing incentives from institutional ownership.”
I-90/Northwest Overview
-400,000
-200,000
0
200,000
400,000
600,000
800,000
0%
2%
4%
6%
8%
10%
12%
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
Net Absorption (SF)Vacancy Rate (%)
2Q09
Vacancy and Absorption
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Deliveries (SF)
Under Construction (SF)
Under Construction & Recent Deliveries
VacancyRate
9%
3%5%
7%
76%
Elgin
Dundee, Genoa, Marengo, Hampshire, etc.
East Dundee
South Elgin
Carpentersville
Pictured Above: 305-335 Corporate Dr. in Elgin, where
Art Supply signed a lease for 125,000 SF during the second quarter
13 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
0
10
20
30
40
50
1,000 – 19,999
SF Available
20,000 – 49,999
SF Available
50,000 – 99,999
SF Available
100,000 – 199,999
SF Available
200,000+
SF Available
# of Buildings
0.5 MM
0.7 MM 0.7 MM
0.9 MM0.3 MM
1,000 – 19,999 SF Available
20,000 – 49,999 SF Available
50,000 – 99,999 SF Available
100,000 – 199,999 SF Available
200,000+ SF Available
Available Space Profi leConstruction. Following the push for new construction in the
I-90/Northwest submarket in 2006-2007, developers reacted to
the difference between supply and demand, reducing the amount
of new development since. Several proposed buildings remain in
the pipeline, a sign that development should pick up again when
the market turns around.
Transaction Activity. Leasing activity remains elevated, likely
due to aggressive rental rates and leasing incentives from
institutional ownership. The 431,318 SF speculative building
located at 305-335 Corporate Drive in Elgin’s Fox River Business
Center signed its fi rst lease during the second quarter, as tenant
Art Supply took 125,000 SF.
Looking Forward. The I-90/Northwest submarket will remain an
attractive location for businesses due to the lower tax base, strong
labor pool and interstate access. Tenants will continue to fi nd
leasing opportunities such as incentives and aggressive rates.
I-90/Northwest Sale Transactions 2nd Qtr. 2009
Property Address City Size (SF) Sale Price Price PSF Buyer Seller
2755 Alft Ln. (Building 2) Elgin 100,294 $6,500,000 $64.81 Seigle Investments LLC Ryan Companies US, Inc.
1155 Bowes Rd. Elgin 34,400 $1,825,500 $53.07 Quality Craft Inc. The Missner Group Company
I-90/No
rthwest O
verview
I-90/Northwest Lease Transactions 2nd Qtr. 2009
Property Address City Leased (SF) Tenant Comments
305-335 Corporate Dr. Elgin 125,000 Art Supply New lease
210-220 Corporate Dr. Elgin 34,449 Exhibit Fabrications New lease
1155 Bowes Rd. Elgin 34,400 Quality Craft, Inc. New lease
300 Brook St. Elgin 33,000 Midnight Slumber New lease
0%
0.5%
1.0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Sublease Vacancy (%)
1999
I-90/Northwest Sublease Vacancy Rate
OhareInt'l Airport
Chicago Executive
Airport
53
72
68
62
58
19
59 12
14
20
355
290
294
90
Elk Grove Village
Lake Zurich
Arlington Heights
gin
F kli
Palatine
Schaumburg Des Plaines
Bloomingdale
EastDundee
gin
BuffaloGrove
Wood Dale
Streamwood
Barrington
HoffmanEstates
Mt. Prospect
Bartlett
Northwest Cook
Submarket Trends
NetAbsorption
AskingRents
Inventory By City
POPULATION 514,784 (est.)
2000–2008 POPULATION CHANGE -0.1% (est.)
# INDUSTRIAL BUILDINGS 527
MARKET SIZE (SF) 28,787,011
VACANCY 3,507,636 SF (12.18%)
2Q09 NET ABSORPTION 60,482
YTD NET ABSORPTION -125,923
NEW SUPPLY (SF) 0
UNDER CONSTRUCTION (SF) 121,457
The Northwest Cook submarket remains a desirable location for
entrepreneurial owners and corporate managers who reside in the
area’s suburban communities. The submarket is conveniently located
within close proximity of Chicago’s O’Hare International Airport with
excellent access to Chicago and the western suburbs using I-90,
I-290 and Route 53. The user base generally consists of specialized
manufacturing and service companies. Many international companies,
particularly Asian and European, have located their North American
headquarters here due to the proximity to the airport. Few distribution
facilities exist relative to neighboring submarkets. Many users come
from the comparatively cramped O’Hare submarket looking for more
space or a location closer to their residences, but don’t want to move
all the way west to Elgin or beyond. While high Cook County taxes
may be prohibitive to some users, landlords continue to offer lower net
rents to attract tenants.
Vacancy and Absorption. Vacancy rates have been generally rising
over the past few years and ended the second quarter at 12.18%. Net
absorption was slightly positive to end the quarter.
“Vacancy rates will remain elevated or climb as companies in the area
consolidate and restructure.”
Northwest Cook Overview
-500,000
-250,000
0
250,000
500,000
750,000
0
3
6
9
12
15
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
Net Absorption (SF)Vacancy Rate (%)
2Q09
Vacancy and Absorption
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Deliveries (SF)
Under Construction (SF)
Under Construction & Recent Deliveries
VacancyRate
14%
7%7%
10%
15%19%
28%Schaumburg
Bartlett, Hoffman Estates, Roling Meadows, etc.
Palatine
Mt. Prospect
Northlake
Barrington
Streamwood
Pictured Above: 1420 Brewster Creek Blvd. in Bartlett, where Auto Truck Group
purchased the 103,000 SF building on May 18th, 2009 for $127.30 PSF
15 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
0
15
30
45
60
75
1,000 – 19,999
SF Available
20,000 – 49,999
SF Available
50,000 – 99,999
SF Available
100,000 – 199,999
SF Available
200,000+
SF Available
# of Buildings
2.0 MM
1.2 MM
0.7 MM
0.9 MM
0.5 MM1,000 – 19,999 SF Available
20,000 – 49,999 SF Available
50,000 – 99,999 SF Available
100,000 – 199,999 SF Available
200,000+ SF Available
Available Space Profi leConstruction. There are few vacant land sites for new
construction in the Northwest Cook submarket, thus it is
commonly referred to as an “infi ll market”. The majority of
construction projects are building additions, but these have been
few and far between due to the current economic situation.
Transaction Activity. Leasing activity remains limited to
smaller-sized deals and lease renewals in the Northwest Cook
submarket. One of the reasons for this lack of activity is potential
tenants looking elsewhere to avoid the tax burdens of Cook
County. Similar to other submarkets, sales transactions are few
due to diffi culty fi nancing major purchases.
Looking Forward. Net rental rates will continue to contract as
owners offer signifi cant incentives for tenants to renew or sign
new leases to stave off vacancy. Vacancy rates will remain
elevated or climb as companies in the area consolidate and
restructure.
Northwest Cook Sale Transactions 2nd Qtr. 2009
Property Address City Size (SF) Sale Price Price PSF Buyer Seller
1420 Brewster Creek Blvd. Bartlett 103,000 $13,111,583 $127.30 Auto Truck Group Abbott Land & Investment Corp.
1020 Lunt Ave. Schaumburg 16,065 $750,000 $46.69 Private trust Lunt 1020 LLC
No
rthwest C
oo
k Overview
0%
0.5%
1.0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Sublease Vacancy (%)
1999
Northwest Cook Sublease Vacancy Rate
Northwest Cook Lease Transactions 2nd Qtr. 2009
Property Address City Leased (SF) Tenant Comments
2290-2300 Hammond Dr. Schaumburg 38,500 NexGen Building Supply Lease renewal
514-540 Hicks Rd. Palatine 31,600 BCI Acrylic Bath Systems New lease
900-926 Estes Ave. Schaumburg 8,160 Buraq Wholesale New lease
2246 N. Palmer Dr. Schaumburg 5,500 D.R. Fiddick & Sons Inc. New lease
1437-1455 Payne Rd. Schaumburg 4,500 Woodfield Chevrolet New lease
OhareInt'l Airport
ago ExecutiveAirport
43
21
58
68
4114
294
94
90
Glencoe
e
n s
Skokie
Northbrook
Park Ridge
NilesDes Plaines
Grove
Lincolnwood
MortonGrove Evanston
Wheeling
Chicago
North Cook
Submarket Trends
NetAbsorption
AskingRents
Inventory By City
POPULATION 416,471 (est.)
2000–2008 POPULATION CHANGE +2.3% (est.)
# INDUSTRIAL BUILDINGS 717
MARKET SIZE (SF) 46,760,058
VACANCY 3,046,904 SF (6.52%)
2Q09 NET ABSORPTION -88,286
YTD NET ABSORPTION -365,862
NEW SUPPLY (SF) 0
UNDER CONSTRUCTION (SF) 0
The North Cook submarket remains a desirable location for users
seeking quick access to Chicago, major area expressways and
Chicago’s northern suburbs. It is also attractive to long-term Chicago-
based users looking to stay close to the city, while escaping Chicago
politics. The area has the advantage of an inventory of buildings with
better specifi cations than many of the antiquated buildings found in the
city of Chicago. Additionally, it tends to be a comparatively user/buyer
market, with limited leasing opportunities. The user base generally
consists of service providers and machine shops who tend to remain
in their locations for extended periods of time, resulting in limited
transaction velocity in the submarket. The inventory base is mostly
comprised of 1960’s–1970’s-era buildings with lower ceilings and low
parking ratios. High taxes may be a deterrent for some users, while
others are willing to pay the price for the location.
Vacancy and Absorption. An historically stable submarket, vacancy
has wavered between 5% and 8% for the past several years. While
vacancy rates have been climbing since the third quarter of 2008, no major
jumps have occurred and are not expected. The second quarter ended
with a 6.52% vacancy rate and net absorption of negative 88,286 SF.
“There are few leasing opportunities in the North Cook submarket as it is historically a
user/buyer market.”
North Cook Overview
-500,000
-240,000
20,000
280,000
540,000
800,000
0%
2%
4%
6%
8%
10%
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
Net Absorption (SF)Vacancy Rate (%)
2Q09
Vacancy and Absorption
14%
8%
13%
17%20%
28%Wheeling
Evanston, Glenview, Lincolnwood, Northfield, etc.
Northbrook
Skokie
Niles
Morton Grove
VacancyRate
Pictured Above: 6250 W. Howard St. in Niles, purchased by
Speciality Print Communications on June 16th, 2009 for $46.16 PSF
17 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
0
20
40
60
80
100
1,000 – 19,999
SF Available
20,000 – 49,999
SF Available
50,000 – 99,999
SF Available
100,000 – 199,999
SF Available
200,000+
SF Available
# of Buildings
0.7 MM
1.4 MM0.7 MM
1.1 MM0.7 MM
1,000 – 19,999 SF Available
20,000 – 49,999 SF Available
50,000 – 99,999 SF Available
100,000 – 199,999 SF Available
200,000+ SF Available
Available Space Profi leConstruction. The North Cook submarket has experienced
very little new development in recent years due to its status as a
mature market. The most recent project was the re-development
of the Niles Distribution Center by Duke Realty Corp. in 2008.
Transaction Activity. The most signifi cant transaction of the
recent quarter involved the sale of 6250 W. Howard in Niles to
direct-mail resource Speciality Print Communications. While a
few leases have occurred over the past few quarters, there remain
few leasing opportunities in the submarket as it is historically a
user/buyer market.
Looking Forward. Vacancy levels in the North Cook submarket
are generally lower than the rest of the Chicago Metropolitan
market. While vacancy may continue to edge up over the coming
quarters, it will remain well below the market average. Net rental
rates should continue to fall until demand and transaction activity
pick up again.
North Cook Sale Transactions 2nd Qtr. 2009
North Cook Lease Transactions 2nd Qtr. 2009
Property Address City Leased (SF) Tenant Comments
747 Glenn Ave. Wheeling 70,671 Corpak Med Systems New lease
8220 N. Austin Ave. Morton Grove 55,000 GHP New lease
747-797 S. Glenn Ave. Wheeling 14,300 MMA Enterprises New lease
6310-6344 W. Gross Point Rd. Niles 10,700 Saranda’s Furniture, Inc. New lease
3410-3726 W. Touhy Ave. Skokie 7,393 Korean Store Lease renewal
Property Address City Size (SF) Sale Price Price PSF Buyer Seller
6250 W. Howard St. Niles 72,580 $3,350,000 $46.16 Speciality Print Communications Woodward Control
No
rth Co
ok O
verview
0%
0.5%
1.0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Sublease Vacancy (%)
1999
North Cook Sublease Vacancy Rate
DupageAirport
31
25
64
38
59
64
3847
30
88
Aurora
Batavia
South Elgin
Naperville
North Aurora
St Charles
West ChicagoCa
Sugar Grove
Elgin
Geneva
Streamwoo
Fox Valley
Submarket Trends
NetAbsorption
AskingRents
Inventory By City
POPULATION 115,079 (est.)
2000–2008 POPULATION CHANGE +37.3% (est.)
# INDUSTRIAL BUILDINGS 494
MARKET SIZE (SF) 32,075,871
VACANCY 3,588,278 SF (11.19%)
2Q09 NET ABSORPTION -366,640
YTD NET ABSORPTION -219,884
NEW SUPPLY (SF) 31,439
UNDER CONSTRUCTION (SF) 0
The Fox Valley submarket lies between the I-90/Northwest submarket
to the north and the I-88 Corridor submarket to the south and has
limited access to major expressways. It is primarily an owner/user
market with leasing opportunities in the smaller to mid-size range. The
user base generally consists of manufacturing companies that serve
the area and are within close proximity to users’ homes. Much of
the inventory is composed of mid-1980’s buildings in contrast to the
modern “big-box” distribution warehouses of neighboring submarkets.
Many users choose to be in the Fox Valley submarket because they
need to be there and remain in the submarket long-term, resulting in
limited transaction velocity.
Vacancy and Absorption. Vacancy jumped during the second quarter,
fi nishing June with a rate of 11.19%, up from 10% in March. Behind the
jump in vacancy was a signifi cant amount of negative net absorption
totaling negative 366,640 SF for the quarter, due to companies
downsizing production, consolidating multiple locations or letting their
leases expire. Historically a consistent submarket in terms of vacancy
due to long-term users and an owner/user reputation, the Fox Valley
submarket is experiencing the highest vacancy rates of its history.
“Signifi cant adjustments in absorption are not anticipated due to the relatively low transaction velocity in the submarket.”
Fox Valley Overview
-800,000
-600,000
-400,000
-200,000
0
200,000
400,000
0%
2%
4%
6%
8%
10%
12%
2Q09
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
Net Absorption (SF)Vacancy Rate (%)
Vacancy and Absorption
0
100,000
200,000
300,000
400,000
500,000
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Deliveries (SF)
Under Construction (SF)
Under Construction & Recent Deliveries
11%
25%
28%
35% West Chicago
Geneva
Batavia
St. Charles
VacancyRate
Pictured Above: 1155 Harvester Ln. in West Chicago, where
tenant Liquid Container renewed their lease during the second quarter
19 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
0
10
20
30
40
50
1,000 – 19,999
SF Available
20,000 – 49,999
SF Available
50,000 – 99,999
SF Available
100,000 – 199,999
SF Available
200,000+
SF Available
# of Buildings
1.5 MM
0.8 MM
0.7 MM
1.3 MM
0.5 MM1,000 – 19,999 SF Available
20,000 – 49,999 SF Available
50,000 – 99,999 SF Available
100,000 – 199,999 SF Available
200,000+ SF Available
Available Space Profi leConstruction. The newest building to the submarket, a
31,439 SF industrial condominium building located at 310-
330 St. Charles in West Chicago was delivered during the
past quarter. Little ongoing development remains. Recent
development has seen little interest or activity due to the
limited access to the area and the ongoing economic situation.
When vacant space in the submarket is eventually absorbed,
development should pick up again west of the Fox River, as little
industrial-zoned land is left in the communities near the river.
Transaction Activity. Largely a user/buyer market, a few
signifi cant lease transactions occurred during the past quarter.
Sales activity remains limited, due to the long-term nature of many
area users and the tight credit market for prospective buyers.
Looking Forward. Vacancy rates will continue to slowly
climb over the coming quarters, but signifi cant adjustments in
absorption are not anticipated due to the relatively low transaction
velocity in the submarket.
Fox Valley Sale Transactions 2nd Qtr. 2009
Fox Valley Lease Transactions 2nd Qtr. 2009
Property Address City Leased (SF) Tenant Comments
1155 Harvester Ln. West Chicago 106,461 Liquid Container Lease renewal
1800 W. Hawthorne Ln. West Chicago 56,266 Norix Group, Inc. New lease
1200-1202 Nagel Blvd. Batavia 42,543 Hobi International Inc. New lease
1100 Commerce Dr. West Chicago 12,464 QuestMark Flooring New lease
Property Address City Size (SF) Sale Price Price PSF Buyer Seller
None to report
Fo
x Valley Overview
0%
1%
2%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Sublease Vacancy (%)
1999
Fox Valley Sublease Vacancy Rate
OhareInt'l Airport
53
19
64
83
53
20
294
88
355
290
Elk Grove Village
Addison
Schaumburg
Bloomingdale
est ChicagoCarol Stream
Elmhurst
W
LombardGlen Ellyn
GlendaleHeights
Central DuPage
Submarket Trends
NetAbsorption
AskingRents
Inventory By City
POPULATION 393,294 (est.)
2000–2008 POPULATION CHANGE +1.0% (est.)
# INDUSTRIAL BUILDINGS 1,097
MARKET SIZE (SF) 66,946,799
VACANCY 6,413,065 SF (9.58%)
2Q09 NET ABSORPTION 329,379
YTD NET ABSORPTION 2,242
NEW SUPPLY (SF) 0
UNDER CONSTRUCTION (SF) 0
The well-positioned Central DuPage industrial submarket benefi ts from
advantages including relatively low taxes, newer building inventory and
an educated workforce. The recent completion of the I-355 extension,
Chicago’s newest expressway, has improved access to the area and
spurred interest in the mature market. Users in the Central DuPage
submarket vary by type and are not limited to primarily distribution like
other nearby submarkets.
Vacancy and Absorption. The Central DuPage submarket was one of
the only to report positive absorption and a lower vacancy rate at the
end of the second quarter, thanks to a recent spur of leasing and sales
activity that has negated the fi rst quarter’s negative net absorption
tallies. At the end of June, the vacancy rate was 9.58%, down from
10.1% in March. Relative to neighboring submarkets, sublease listings
are more common in Central DuPage, accounting for more than 1%
of vacancy, but still remain much lower than the record amount of
sublease space on the market during the early 2000s.
Construction. New speculative construction has declined throughout
the submarket due to general market conditions, absorption concerns
“Leasing activity should continue to accelerate as landlord concessions
encourage tenants to take advantage of low rates and attractive terms.”
Central DuPage Overview
-800,000
-300,000
200,000
700,000
1,200,000
0%
3%
6%
9%
12%
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
Net Absorption (SF)Vacancy Rate (%)
2Q09
Vacancy and Absorption
0
100,000
200,000
300,000
400,000
500,000
600,000
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Deliveries (SF)
Under Construction (SF)
Under Construction & Recent Deliveries
18%
7%9%
10%
29%
27%
Addison
Hanover Park
Elmhurst
Glendale Heights
Carol Stream
Bloomingdale, Lombard, Roselle, Vill Park, Wheaton
VacancyRate
Pictured Above: 815 Kimberly Dr. in Carol Stream, where tenant
Hart & Cooley signed a longer-term lease during the second quarter
21 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
0
20
40
60
80
100
1,000 – 19,999
SF Available
20,000 – 49,999
SF Available
50,000 – 99,999
SF Available
100,000 – 199,999
SF Available
200,000+
SF Available
# of Buildings
2.9 MM0.9 MM
1.5 MM
1.7 MM
0.9 MM1,000 – 19,999 SF Available
20,000 – 49,999 SF Available
50,000 – 99,999 SF Available
100,000 – 199,999 SF Available
200,000+ SF Available
Available Space Profi leand increased vacancy. This trend will likely continue until
existing vacant space is eventually absorbed. Rental rates have
contracted, making new speculative or build-to-suit projects
unlikely unless a specialty building is required.
Transaction Activity. The fi rst half of 2009 has seen a relatively
active transactional period in the Central DuPage submarket,
especially compared to neighboring submarkets. Demand was
largely infl uenced by larger tenants during the fi rst quarter, while
the second quarter featured primarily smaller-sized leases.
Looking Forward. Leasing activity should continue to accelerate
during the coming quarters as landlord concessions encourage
tenants to take advantage of attractive terms and low lease rates
being extended by area landlords. Low taxes, excellent access
and newer product will help the Central DuPage submarket be a
leader as the real estate market eventually starts to turn around.
Central DuPage Sale Transactions 2nd Qtr. 2009
Central DuPage Lease Transactions 2nd Qtr. 2009
Property Address City Size (SF) Sale Price Price PSF Buyer Seller
111 S. Rohlwing Rd. Addison 100,000 $3,500,000 $35.00 Venus Laboratories, Inc. Minuteman International Inc.
330 W. North Ave. Addison 53,389 $2,600,000 $48.70 330 W. North Avenue LLC Private trust
200 Wrightwood Ave. Elmhurst 48,000 $2,625,000 $54.69 200 Wrightwood, LLC John Morrell & Co.
Central D
uPag
e Overview
Property Address City Leased (SF) Tenant Comments
815 Kimberly Dr. Carol Stream 250,902 Hart & Cooley New, long-term lease
99 Internationale Blvd. Glendale Heights 48,311 K&K Screw New lease
91 Mitchell Ct. Addison 45,000 Simplexgrinnell Lease renewal
596 Lamont Rd. Elmhurst 41,356 Stenograph, LLC New lease
775 W. Belden Ave. Addison 32,920 Cosmo Films New lease
0%
1%
2%
3%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Sublease Vacancy (%)
1999
Central DuPage Sublease Vacancy Rate
OhareInt'l Airport
83
19
72
45
355290 294
90
Elk Grove Village
Addison
Heights
Park Ridge
Franklin Park
Bensenville
Nmburg Des Plaines
ngdale
Elmhurst Melrose
MortoGrov
Wood Dale
daleghts
Itasca
O’Hare
Submarket Trends
NetAbsorption
AskingRents
Inventory By City
POPULATION 136,821 (est.)
2000–2008 POPULATION CHANGE -2.4% (est.)
# INDUSTRIAL BUILDINGS 1,735
MARKET SIZE (SF) 101,236,619
VACANCY 12,089,704 SF (11.94%)
2Q09 NET ABSORPTION -720,495
YTD NET ABSORPTION -602,587
NEW SUPPLY (SF) 0
UNDER CONSTRUCTION (SF) 0
The O’Hare submarket is unique due to its close proximity to O’Hare
International Airport and its central location at the crossroads of
Chicago’s expressway system. The O’Hare submarket holds the most
industrial inventory of all of the Chicagoland submarkets. Elk Grove
Village alone is the nation’s largest industrial park, boasting more than
40 million SF of industrial and fl ex space. Many of the buildings in
the submarket are older and functionally obsolete. Redevelopment and
construction has slowed dramatically.
Vacancy and Absorption. O’Hare land values were near record
highs around $25 PSF in 2007. Industrial land values have dropped
precipitously over the past several quarters since the redevelopment
bubble burst. This is attributed to the ailing economy, increased
vacancy and negative absorption. Vacancy continued to climb through
the fi rst half of 2009, ending the second quarter at nearly 12%, up from
10.1% a year ago. After slightly positive net absorption during the
fi rst quarter, signifi cant vacancies turned the year-to-date absorption
strongly negative for the submarket during the second quarter, due to
net absorption totaling negative 720,495 SF from March through June.
More than 17 million SF is available.
“Despite respectable amounts of leasing activity relative to other submarkets, it has not been enough to stave off rising vacancies and negative net absorption.”
O’Hare Overview
-1,500,000
-800,000
-100,000
600,000
1,300,000
2,000,000
0%
3%
6%
9%
12%
15%
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Net Absorption (SF)Vacancy Rate (%)
Vacancy and Absorption
0
200,000
400,000
600,000
800,000
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Deliveries (SF) Under Construction (SF)
Under Construction & Recent Deliveries
11%
9%
43%
18%
1%
18%
Elk Grove Village
Wood Dale
Itasca
Bensenville
Des Plaines
Rosemont
VacancyRate
Pictured Above: 777 Mark St. in Wood Dale, where CNA International Inc.
signed a 234,000 SF lease during the second quarter
23 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
0
50
100
150
200
1,000 – 19,999
SF Available
20,000 – 49,999
SF Available
50,000 – 99,999
SF Available
100,000 – 199,999
SF Available
200,000+
SF Available
# of Buildings
2.8 MM5.1 MM
4.2 MM3.6 MM
1.6 MM1,000 – 19,999 SF Available
20,000 – 49,999 SF Available
50,000 – 99,999 SF Available
100,000 – 199,999 SF Available
200,000+ SF Available
Available Space Profi leConstruction. New construction in the O’Hare submarket
has nearly ground to a halt as planned projects are few and
far between. A majority of the recent speculative construction
projects in the O’Hare submarket are currently sitting vacant.
Transaction Activity. Despite respectable amounts of leasing
activity relative to other submarkets, it has not been enough to
stave off the ongoing trends of rising vacancies and negative net
absorption. While spaces large and small are changing hands,
companies continue to downsize or allow their leases to expire
due to the ongoing economic recession.
Looking Forward. Vacancy rates will continue to increase slowly,
but eventually stabilize when vacant space is absorbed as pent-
up activity accelerates. Signifi cant incentives and concessions
being extended by landlords should facilitate this process when
the capital markets permit substantial lending.
O’Hare Sale Transactions 2nd Qtr. 2009
O’Hare Lease Transactions 2nd Qtr. 2009
Property Address City Leased (SF) Tenant Comments
794-854 Golf Ln. Bensenville 352,119 The Bradford Exchange Lease renewal
777 Mark St. Wood Dale 234,000 CNA International Inc. New lease
2600 Elmhurst Rd. Elk Grove Village 105,000 Moss, Inc. New lease
1200-1280 Kirk St. Elk Grove Village 87,600 Universal Beauty Products New lease
2501-2575 Allan Dr. Elk Grove Village 50,560 Kamino International Transport New lease
Property Address City Size (SF) Sale Price Price PSF Buyer Seller
476-482 Thomas Dr. Bensenville 119,000 $5,750,000 $48.32 Central States Trucking Co. ProLogis
880 Industrial Dr. Bensenville 24,150 $1,450,000 $60.04 Loftus Holdings LLC Keith Madelung
880 Busse Rd. Elk Grove Village 20,000 $1,400,000 $70.00 Advanced Valve Technology Arthur Machinery, Inc.
O’H
are Overview
0%
1%
2%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Sublease Vacancy (%)
1999
O’Hare Sublease Vacancy Rate
OhareInt'l Airport
64
19
43
45
20
290
29494
90
90
290
k Grove Village
Skokie
Oak Park
Franklin Park
Bensenville
Niles
Elmhurst MelrosePark
Bellwood
SchillerPark
Chicago
West Cook
Submarket Trends
NetAbsorption
AskingRents
Inventory By City
POPULATION 241,764 (est.)
2000–2008 POPULATION CHANGE -5.4% (est.)
# INDUSTRIAL BUILDINGS 743
MARKET SIZE (SF) 60,538,305
VACANCY 7,108,642 SF (11.74%)
2Q09 NET ABSORPTION -305,028
YTD NET ABSORPTION -1,370,508
NEW SUPPLY (SF) 0
UNDER CONSTRUCTION (SF) 0
The West Cook submarket draws companies from the city of Chicago
looking for a more functional building and additional amenities
compared to the aging, often obsolete inventory of properties in
Chicago. Additionally, companies migrate to the area from the nearby
O’Hare submarket where interstate and airport access is similar, but
rental rates tend to be higher. The West Cook submarket benefi ts from
good access to the city of Chicago, close proximity to area interstates
and rail providers and relatively low rental rates. It is primarily an owner/
user market, but leasing opportunities have increased as institutional
and private owners have entered this market.
Vacancy and Absorption. Similar to the O’Hare submarket, industrial
land values were driven to near record high levels during 2006-2007,
as interested investors purchased land for development. Much of this
recent development is now sitting vacant due to the current economic
situation and the high asking rates associated with the vacant space.
The vacancy rate has been on a steady climb since the beginning of
2008, approaching 12% at end of the fi rst half of 2009. Net absorption
has closely followed this trend, totalling negative 305,028 SF for the
fi rst quarter and a substantial negative 1,370,508 SF year-to-date.
“Tenants with upcoming expirations are increasingly taking advantage of the low
rents and leasing incentives being offered.”
West Cook Overview
-1,500,000
-1,000,000
-500,000
0
500,000
1,000,000
1,500,000
0%
2%
4%
6%
8%
10%
12%
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
Net Absorption (SF)Vacancy Rate (%)
2Q09
Vacancy and Absorption
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Deliveries (SF)
Under Construction (SF)
Under Construction & Recent Deliveries
12%
5%8%
9%
29%
37%
Franklin Park
Harwood Heights, Hillside, Maywood, Norridge, River Grove
Schiller Park
Bellwood
Melrose Park
Berkeley
VacancyRate
Pictured Above: A rendering of 3710-3720 River Rd. in Franklin Park, where
R&M Trucking Company leased a total of 195,071 SF during the second quarter
25 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
0
10
20
30
40
50
1,000 – 19,999
SF Available
20,000 – 49,999
SF Available
50,000 – 99,999
SF Available
100,000 – 199,999
SF Available
200,000+
SF Available
# of Buildings
3.4 MM
3.2 MM
2.2 MM
1.3 MM0.4 MM
1,000 – 19,999 SF Available
20,000 – 49,999 SF Available
50,000 – 99,999 SF Available
100,000 – 199,999 SF Available
200,000+ SF Available
Available Space Profi leConstruction. Following the recent development boom of 2006-
2008, the number of new construction projects has ground to a
halt, due to absorption concerns and climbing vacancy rates.
Transaction Activity. The most signifi cant activity in the West
Cook submarket during the second quarter was air and ocean
freight forwarding fi rm R&M Trucking Company’s lease of
195,071 SF. As asking rents continue to contract, the recently
constructed vacant space in the West Cook submarket will
eventually be absorbed, allowing vacancy rates to stabilize.
Sales activity remains very limited as fi nancing is diffi cult to
obtain for potential buyers, and asking prices remain elevated
relative to market conditions.
Looking Forward. As market conditions continue to force
landlords to lower asking rates, leasing activity will increase
as tenants with upcoming expirations are taking advantage of
leasing incentives. Eventually, this trend will result in absorption
of vacant space throughout the submarket.
West Cook Sale Transactions 2nd Qtr. 2009
West Cook Lease Transactions 2nd Qtr. 2009
Property Address City Leased (SF) Tenant Comments
3710-3720 River Rd. Franklin Park 195,071 R&M Trucking Company New lease
100 W. Whitehall Dr. Northlake 89,837 Farmers Brothers Coffee Co. New lease
150 N. 25th Ave. Melrose Park 76,790 Smart Box Chicago, Inc. New lease
2501 W. Grant Ave. Bellwood 39,583 Dynamic Manufacturing, Inc. New lease
9400 W. King St. Franklin Park 33,790 American Metalcraft New lease
Property Address City Size (SF) Sale Price Price PSF Buyer Seller
3434 Runge St. Franklin Park 51,666 $2,950,000 $57.10 Grant Park Packing Sitex Realty Group, LLC
2575 W. LeMoyne St. Melrose Park 20,176 $804,500 $39.87 Dynamic Fastener Sitex Realty Group, LLC
West C
oo
k Overview
0%
1%
2%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Sublease Vacancy (%)
1999
West Cook Sublease Vacancy Rate
DupageAirport
56
2531 59
59
53
8356
3430
30
55
294
88
355
290
Aurora
MontgomeryWoodridge
Batavia
Naperville
North Aurora
St Charles
West ChicagoCarol Stream
Bolingbrook
Sugar Grove
Elmhurst
DownersGrove
Oak Brook
Lisle
I-88 Corridor
Submarket Trends
NetAbsorption
AskingRents
Inventory By City
POPULATION 556,685 (est.)
2000–2008 POPULATION CHANGE +21.0% (est.)
# INDUSTRIAL BUILDINGS 772
MARKET SIZE (SF) 61,356,357
VACANCY 7,436,250 SF (12.12%)
1Q09 NET ABSORPTION -650,372
YTD NET ABSORPTION -995,279
NEW SUPPLY (SF) 0
UNDER CONSTRUCTION (SF) 525,000
The I-88 Corridor industrial submarket has seen increased demand
and speculative development during the past few years, due to the lack
of land for development in feeder markets such as Central DuPage and
West Cook. Developers were drawn to the large available land sites
and easy access to major expressways that the I-88 submarket has to
offer. This rapid pace of development has slowed over the past few
quarters as obtaining project fi nancing has become diffi cult, vacancy
has increased and activity has been limited.
Vacancy and Absorption. Over the past year, vacancy rates in the
I-88 Corridor have climbed from 8.2% to 12.12%, the highest level
seen in the submarket’s history. Signifi cant negative net absorption
has been the result, and the second quarter was no exception, posting
net absorption numbers totaling negative 650,372 SF. Available supply
has eclipsed 10 million SF (16.9%) for the fi rst time.
Construction. Much of the speculative development that has been so
prevalent throughout the area has been put on hold due to the current
economic climate, change in demand and diffi culty fi nancing new
projects. Construction during the foreseeable future will likely be limited
“Over the long-term, the plethora of quality product will help the I-88 Corridor continue
to attract tenants.”
I-88 Corridor Overview
-1,000,000
-600,000
-200,000
200,000
600,000
1,000,000
0%
3%
6%
9%
12%
15%
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
Net Absorption (SF)Vacancy Rate (%)
2Q09
Vacancy and Absorption
0
250,000
500,000
750,000
1,000,000
1,250,000
1,500,000
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Deliveries (SF) Under Construction (SF)
Under Construction & Recent Deliveries
17%
7%
15%
18%
43%
Aurora
Oswego, Westmont, North Aurora, Hinsdale, Lisle, etc.
Downers Grove
Montgomery
Naperville
VacancyRate
Pictured Above: A rendering of Park Buterfield, where tenant
InnerWorkings, Inc. signed a lease for 55,055 SF during the second quarter
27 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
0
20
40
60
80
100
1,000 – 19,999
SF Available
20,000 – 49,999
SF Available
50,000 – 99,999
SF Available
100,000 – 199,999
SF Available
200,000+
SF Available
# of Buildings
4.7 MM
1.8 MM
1.7 MM
1.5 MM
0.8 MM1,000 – 19,999 SF Available
20,000 – 49,999 SF Available
50,000 – 99,999 SF Available
100,000 – 199,999 SF Available
200,000+ SF Available
Available Space Profi leto build-to-suit and highly customized projects, such as the new
525,000 SF FHP facility currently under construction by IDI in
Aurora’s Prairie Point West Industrial Park. The most recently
completed project was a 463,636 SF speculative distribution
building located in the Liberty Business Center Aurora.
Transaction Activity. Signifi cant transactions are few and far
between in the submarket; instead activity remains limited to
smaller-sized deals and lease renewals. The current “tenants’
market” should translate to increased activity if the economy
begins to turn the corner and demand grows.
Looking Forward. Over the near-term, the ongoing trends
throughout the market and economy will continue to negatively
impact the I-88 Corridor submarket, leading to rising vacancy,
negative net absorption, additional available supply on the
market and contracting rental rates. Over the long-term, the
plethora of quality product will help the I-88 Corridor continue to
attract tenants.
I-88 Corridor Sale Transactions 2nd Qtr. 2009
I-88 Corridor Lease Transactions 2nd Qtr. 2009
Property Address City Leased (SF) Tenant Comments
3553 Butterfield Rd. Aurora 55,055 InnerWorkings, Inc. New lease
1703 Eastwood Dr. Aurora 35,695 Tracker Industries, Inc. Lease renewal
3565 Butterfield Rd. Aurora 32,541 Cano Container New lease
1936 University Ln. Lisle 15,400 Ames Supply Co. Lease renewal
Property Address City Size (SF) Sale Price Price PSF Buyer Seller
1555 & 1567 Frontenac Rd. Naperville 48,500 $3,285,500 $67.74 R&J Commercial Properties Frontenac Road Partnership
I-88 Co
rrido
r Overview
0%
1%
2%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Sublease Vacancy (%)
1999
I-88 Corridor Sublease Vacancy Rate
Italics denotes NAI Hiffman transaction
171
59
59
53
30 55
355
294
88
Plainfield
Woodridge
Naperville
aHinsdale
Romeoville
Bolingbrook
Burr Ridge
WiSpr
DownersGrove
I-55 Corridor
Submarket Trends
VacancyRate
NetAbsorption
AskingRents
9%5% 5%
10%
34%
37%
Bolingbrook
Plainfield
Lemont
Woodridge
Romeoville
Burr Ridge, Forest View,Willowbrook
Inventory By City
POPULATION 238,889 (est.)
2000–2008 POPULATION CHANGE +34.5% (est.)
# INDUSTRIAL BUILDINGS 653
MARKET SIZE (SF) 79,974,013
VACANCY 11,415,653 SF (14.27%)
2Q09 NET ABSORPTION 309,859
YTD NET ABSORPTION -421,054
NEW SUPPLY (SF) 0
UNDER CONSTRUCTION (SF) 264,183
Of all of the Chicago area industrial submarkets, the I-55 Corridor
submarket has seen the most activity and development interest over
the past several years. As a result, much of the available land parcels
have been developed or are controlled by developers, rendering the
I-55 Corridor submarket an “infi ll market” with little additional land for
signifi cant new development.
Vacancy and Absorption. The I-55 Corridor was one of only a few
submarkets to record a drop in vacancy and positive net absorption
during the second quarter. While area companies continue to contract
in today’s economy, releasing additional vacant space into the market,
a rash of large lease transactions occurred during the fi rst half of 2009–
enough to slightly lower vacancy rates and result in a period of positive
absorption. At the end of June, 14.27% of the submarket’s industrial
base sat vacant, compared to 14.7% last quarter. The corridor posted
net absorption totaling 578,946 SF for the fi rst half of 2009.
Construction. A hot spot for recent development, new construction
starts have been few, as construction is limited to ongoing projects
that began before the credit crisis and subsequent recession hit.
“Following a period of limited leasing activity in the second half of 2008, a surge of transactions
has taken place during the fi rst half of 2009.”
I-55 Corridor Overview
-1,000,000
0
1,000,000
2,000,000
3,000,000
4,000,000
0%
4%
8%
12%
16%
20%
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
Net Absorption (SF)Vacancy Rate (%)
2Q09
Vacancy and Absorption
0
750,000
1,500,000
2,250,000
3,000,000
3,750,000
4,500,000
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Deliveries (SF)
Under Construction (SF)
Under Construction & Recent Deliveries
Pictured Above: 1701 Remington Blvd., in Bolingbrook, where Home Depot
renewed their lease for 800,000 SF of distribution space during the second quarter
29 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
0
10
20
30
40
50
1,000 – 19,999
SF Available
20,000 – 49,999
SF Available
50,000 – 99,999
SF Available
100,000 – 199,999
SF Available
200,000+
SF Available
# of Buildings
8.4 MM
2.2 MM
1.3 MM
1.1 MM
0.5 MM
1,000 – 19,999 SF Available
20,000 – 49,999 SF Available
50,000 – 99,999 SF Available
100,000 – 199,999 SF Available
200,000+ SF Available
Available Space Profi leThe widening of Weber Road and the rebuilding of the Weber
Road/I-55 interchange will pave the way for future development
when some of the more than 11 million SF sitting vacant in the
corridor is absorbed.
Transaction Activity. Following a period of limited leasing
activity in the second half of 2008, a surge of transactions has
taken place during the fi rst half of 2009. Typical of the area, many
of the recent leases have been for large distribution spaces to be
occupied by international companies such as Home Depot, Sanyo
Logistics, and Canon USA. While sales activity remains limited,
leasing will continue as tenants look to take advantage of low
asking rates, signifi cant leasing incentives, and fl exible landlords.
Looking Forward. Benefi tting from a diverse industrial base, a
large and educated labor pool and excellent access via I-55 and
I-355, the I-55 Corridor submarket will see consistent interest
and activity over coming quarters, and will be a leader when the
real estate market starts to turn the corner.
I-55 Corridor Sale Transactions 2nd Qtr. 2009
Property Address City Size (SF) Sale Price Price PSF Buyer Seller
1375-1385 N. Weber Rd. Romeoville 658,060 $21,800,000 $33.13 Molto Capital LLC RREEF
I-55 Co
rrido
r Overview
0%
1%
2%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Sublease Vacancy (%)
1999
I-55 Corridor Sublease Vacancy Rate
I-55 Corridor Lease Transactions 2nd Qtr. 2009
Property Address City Leased (SF) Tenant Comments
1701 Remington Blvd. Bolingbrook 800,000 Home Depot Lease renewal
860 W. Crossroads Pky. Romeoville 214,932 Sanyo Logistics Corporation New lease
860 W. Crossroads Pky. Romeoville 217,592 LeSaint Logistics New lease
10350 N. Beaudin Blvd. Woodridge 174,008 Canon USA, Inc. New lease
760 Crossroads Pky. Bolingbrook 165,000 Kumho Tire USA, Inc. New lease
2 Gateway Ct. Bolingbrook 163,470 OHL New lease
101 E. Crossroads Pky. Bolingbrook 118,860 Honeywell New lease
A
53
53
59
102
113
71
126
23
47
113170
30
30
34
6
5252
6
45
655 355
294
88 55
55
80
57
Aurora
Plainfield
Minooka
North Aurora
Tinley Park
New LenoxMokena
Kankakee
Bolingbrook
Joliet
Elwood
le Ottawa
Seneca
DownersGrove
Channahon
Shorewood
I-80/Joliet Corridor
Submarket Trends
NetAbsorption
AskingRents
Inventory By City
POPULATION 426,928 (est.)
2000–2008 POPULATION CHANGE +38.9% (est.)
# INDUSTRIAL BUILDINGS 613
MARKET SIZE (SF) 62,369,997
VACANCY 12,130,879 SF (19.45%)
1Q09 NET ABSORPTION 1,523,400
YTD NET ABSORPTION 1,040,818
NEW SUPPLY (SF) 934,000
UNDER CONSTRUCTION (SF) 38,400
The I-80/Joliet Corridor submarket has historically catered to multi-
state “big box” distribution. Its access to I-80 and I-55 position the
corridor well for distribution operations. In addition, the nation’s largest
inland port is located in Elwood. This intermodal development, also
known as Logistics Park – Chicago, has remained a bright spot not
only in the corridor, but for the entire Chicago market. The reason for
its continued success is the development’s ability to offer tremendous
transportation savings to importing operations as well as being a
pre-approved Foreign Trade Zone. This intermodal development has
fueled the region’s growth, while the developments located outside of
the intermodal “campus” are positioned to cater to heavy distribution
prospects whose supply chains are not designed to bring their
international containers inland.
Vacancy and Absorption. The I-80/Joliet corridor experienced a drop
in vacancy during the second quarter for the fi rst time since 2007.
At the end of June, vacancy in the corridor was 19.45%, down from
20.7% in March, resulting in net absorption totaling positive 1,523,400
SF. A large part of this absorption was due to the delivery of grocery
wholesaler Centrella’s new distribution center totaling 934,000 SF at
2600 New Lenox Rd. in Joliet.
“It has become a very opportune time for corporations to consider renegotiating lease
terms or moving into the area.”
I-80/Joliet Corridor Overview
-1,000,000
200,000
1,400,000
2,600,000
3,800,000
5,000,000
7%
10%
13%
16%
19%
22%
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
Net Absorption (SF)Vacancy Rate (%)
2Q09
Vacancy and Absorption
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
Deliveries (SF)
Under Construction (SF)
Under Construction & Recent Deliveries
25%
5%10%
16% 44%
Joliet
Mokena, New Lenox, Shorewood, Frankfort, etc.
Ottawa
Minooka
Elwood
VacancyRate
Pictured Above: 251 Laraway Rd. in Joliet where
California Cartage Company leased 374,460 SF
31 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
0
20
40
60
80
100
1,000 – 19,999
SF Available
20,000 – 49,999
SF Available
50,000 – 99,999
SF Available
100,000 – 199,999
SF Available
200,000+
SF Available
# of Buildings
9 MM
2.8 MM
0.4 MM0.6 MM
0.7 MM 1,000 – 19,999 SF Available
20,000 – 49,999 SF Available
50,000 – 99,999 SF Available
100,000 – 199,999 SF Available
200,000+ SF Available
Available Space Profi leConstruction. Now that Centrella’s new facility has been
delivered, few new development projects are underway. However,
several planned and proposed projects remain in the pipeline.
The Logistics Park – Chicago intermodal development in Elwood
is preparing to break ground on a 1.2 million SF speculative
facility – one of the few new speculative developments in all of
Chicago. In addition, a new intermodal development has now
recently broken ground in Joliet. The new intermodal is projected
to begin operations in 2010.
Transaction Activity. The most signifi cant transaction during
the second quarter took place at developer Ryan Companies’
Laraway Crossings Business Park, where trucking, warehousing
and freight forwarding company California Cartage signed
a lease for 374,460 SF. Looking to lease vacant space and
secure tenants, institutional owners are becoming increasingly
fl exible with lease terms and rental rates. It has become a very
opportune time for corporations to consider renegotiating lease
terms or moving into the area, as existing vacancy will continue
to cause downward pressure on rental rates.
Looking Forward. Vacancy will remain elevated as even several
signifi cant transactions will not make an appreciable dent on the
more than 12 million SF that sits vacant in the submarket. Multiple
years of positive absorption (particularly of the non-intermodal
developments) must occur before achieving a balance between
supply and demand. With room for growth, excellent access and
transportation options and a sizeable, educated labor pool, the
future of the I-80/Joliet Corridor is promising.
I-80/Joliet Corridor Sale Transactions 2nd Qtr. 2009
I-80/Joliet Corridor Lease Transactions 2nd Qtr. 2009
Property Address City Leased (SF) Tenant Comments
251 Laraway Rd. Joliet 374,460 California Cartage Company New lease
7979 W 183rd St. Tinley Park 129,873 Owens and Minor New lease
Property Address City Size (SF) Sale Price Price PSF Buyer Seller
615 E. Kankakee River Dr. Wilmington 71,000 $4,185,000 $58.94 International Transload Logistics Private
22030 Howell Dr. New Lenox 14,602 $300,000 $20.55 Private Trust Fleischhauer Klaus
I-80/Joliet C
orrid
or O
verview
Italics denotes NAI Hiffman transaction
I l l i n o i sW i s c o n s i n
Ind
ian
a
Illi
no
is
WaukeganRegional Airport
Ohare
WestoshaAirport
Chicago ExecutiveAirport
DupageAirport
Gary/Chicago Airp
Chicago MidwayAirport
171
43
22
53
1
176
1
72
38
38
21
120
21
59
176
72
64
120
25
64
50
25
60
83
83
31
31
43
59
53
60
31
47
22
83
23
53
173
173
25
59
53
47
23
53
64
176
76
83
38
173
47
71
23
75
394
20
30
12
41
30
12
34
52
6
52
45
20
30
41
45
30
30
52
14
30
30
45
6
12
14
41
51
51
355
90
55
90
94
94
9094
9480
80
80
55
55
57
57
88
294
294
294
290
290
35539
39
90
Aurora
Plainfield
Hazel Crest
Munster
Glencoe
Hammond
Elk Grove Village
Zion
Lake Zurich
Monee
Crystal Lake
MontgomeryWoodridge
Minooka
Batavia
Arlington Heights
South Elgin
Pleasant Prairie
Grayslake
Skokie
Northbrook
Park Ridge
Franklin Park
Naperville
Highland Park
North Aurora
BedfordPark
Hinsdale
Park Forest
Bensenville
East Chicago
Tinley Park
NilesSchaumburgDes Plaines
St Charles
New Lenox
Romeoville
Bloomingdale
West Chicago
Fox Lake
Dundee
MattesonMokena
Blue Island
Carol Stream
Bolingbrook
Lake Forest
Waukegan
Joliet
Oak Lawn
Sugar Grove
Elgin
Elmhurst
Burr Ridge
MelroseParkGeneva
McHenry
Vernon Hills
BuffaloGrove
Mundelein
MortonGrove
Wood Dale
Cicero
La Grange
Westchester
PalosHeights
Elwood
Rockford
Belvidere
CherryValley
Beloit
elle
La SalleOttawa
Seneca
DeKalb
Hampshire
Chicago
Evanston
WillowSprings
DownersGrove
Streamwood
1
2
3
4
5
6
8
9
10
19
12
13
14
15
16
5317
18
19
11
20
21
7
vansnstonv n
Chicago North1
Chicago South2
North Cook3
West Cook4
Southwest cook5
South Cook6
I-57/Will Corridor7
Lake County8
Northwest Cook9
O’Hare10
Central DuPage11
I-55 Corridor12
McHenry County13
I-90 Northwest14
Fox Valley15
I-88 Corridor16
I-80/Joliet Corridor17
DeKalb County18
I-39 Corridor19
Southeast Wisconsin20
Northwest Indiana21
Industrial Submarket Map
© 2009 NAI Hiffman
33 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
Sub
market M
ap / M
ethod
olo
gy / D
efi nitions
The information included in this report is the result of a compilation
and analysis of data from various sources on class A, class B
and class C industrial properties located in the metropolitan
Chicago area defi ned by the submarket map on the opposite
page. NAI Hiffman obtained the information from property
representatives, CoStar Group, RealCapital Analytics, industry
periodicals and magazine, our in-house property database, and
other sources. NAI Hiffman greatly appreciates the participation
of each of these individuals, companies and resources,
without whose help this report would not have been possible.
All of the information detailed throughout this report is saved
and organized in our own in-house database and is regularly
updated. Utilizing this database, we can analyze, calculate and
report demographic information, inventory, vacancy, availability,
net absorption, and transactional information.
Methodology &Defi nitions
Methodology
Defi nitionsThe NAI Hiffman Industrial Market Report tracks several measures
of market conditions. This information is collected for individual
properties then consolidated, organized and analyzed for
submarket and market totals. These terms, used throughout the
report, are defi ned below according to NAIOP Terms & Defi nitions.
Total Inventory (Market Size). The total square footage of gross
rentable area in a specifi c market. It includes the gross rentable
area in buildings that have received a certifi cate of occupancy.
Total inventory increases when a new building is delivered and
decreases when an existing building is destroyed, demolished or
its use changes.
Vacancy Rate. A measurement expressed as a percentage of
the total amount of vacant space divided by the total amount of
inventory. Vacant space is inventory that is not currently occupied.
Net Absorption. The net change in occupied space
in a given market between the current measurement
period and the last measurement period. Net
absorption can be either positive or negative and must
include decreases as well as increases in inventory
levels. For the purpose of this report, sublease space
is included in the calculation of net absorption.
New Supply. The total inventory delivered to the
market since the last measurement period. Delivered
is defi ned as total square footage and/or number
of buildings that has completed construction and
received a certifi cate of occupancy during a stated
period.
Under Construction. Buildings where either: a)
actually ground breaking has occurred (site excavation
or foundation work) and construction is ongoing (not
abandoned or discontinued) but for which a certifi cate
of occupancy has not yet been issued; or b) properties
undergoing conversion to offi ce from another use or
c) properties undergoing a major renovation where
75 percent or more of the building is not available for
lease and building generally requires a certifi cate of
occupancy to be made available for lease.
Available Space. The total amount of space that is
currently being marketed as available for lease in a
given time period. It includes space that is available,
regardless of whether the space is vacant, occupied,
available for sublease, or available at a future date.
Available space excludes shadow space.
Shadow Space. That portion of leased space which
is vacant but not available space. Shadow space is
diffi cult to measure. (Synonym: phantom space)
NAI Hiffman & NAI Global
The Power of Global Reach.
NAI Global is the premier network of independent commercial real estate fi rms and is one of the largest commercial real estate service providers worldwide. What makes us different is the way we bring together people and resources in over 325 offi ces in 55 countries around the world to deliver results for our clients. As the world’s only managed network of commercial real estate fi rms, we conclude over $45 billion in business annually by working together to help our clients strategically optimize their assets. We also manage over 200 million SF of commercial space. For more information, visit www.naiglobal.com.
In 2007-2008, NAI Global received top industry rankings:• Ranked #2 brokerage network by Real Estate Forum• Ranked #3 brokerage by Commercial Property News• Ranked #4 by Lipsey’s Top 25 Real Estate Brands
NAI Global is based in Princeton, New Jersey. A dedicated staff, strategically positioned around the world, providestechnology, marketing and corporate services support to NAI Global’s network of real estate offi ces.
The Power of Local Knowledge.NAI Hiffman is the largest full service, privately-owned commercial real estate brokerage and management company in theChicago region. With over 220 brokers and employees, NAI Hiffman is dedicated to providing our clients with the most comprehensive real estate services. Our clients come to us for our deep local knowledge and they build their business on the power of our global managed network.
NAI Hiffman delivers world-class, results-oriented, offi ce, industrial, retail, and investment brokerage and management services including:
Acquisition & DispositionsLeasing & SubleasingTenant RepresentationProperty Management
Sale/LeasebackBuild-to-SuitInvestment ServicesSite Selection
Due DiligenceMarket ResearchConsulting & Strategic PlanningReceivership & REO Disposition
35 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – MID-YEAR 2009
NAI Hiffman
Dennis Hiffman
Chairman & CEO
630 691 0616
David Peterson, RPA
COO
630 693 0691
Industrial Services
John Cash, SIOR
Exec. V.P. /Managing Director
630 691 0609
Duke Botthof
Executive Vice President
630 693 0641
Brian Colson
Executive Vice President
630 691 0619
Steve Connolly
Executive Vice President
630 693 0642
Benjamin Cremer
Vice President
630 691 0614
Kelly Disser
Associate
630 317 0721
Eric Fischer
Senior Associate
630 693 0677
Jeff Fischer
Vice President
630 317 0726
Larry Goldwasser
Vice President
312 327 6848
David Haigh
Associate
630 693 0649
Daniel Leahy, SIOR
Executive Vice President
630 691 0604
Jay Maher, III
Associate
312 327 6846
Irvin Malik
Associate
312 327 6837
Adam Marshall
Senior Associate
630 691 0603
Mark Moran
Executive Vice President
630 693 0656
Lawrence Much, SIOR
Executive Vice President
630 691 0606
Michael Robbins
Associate
630 693 0680
Adam Roth, CCIM
Vice President
630 691 0607
Stephen Sullivan
Vice President
847 610 0123
Eric Tresslar
Vice President
630 693 0650
David Troha
Associate
630 693 0696
John Whitehead
Associate
630 693 0643
Daniel Wilkins
Associate
630 693 0653
Investment Services
Chad Firsel
Executive Vice President
312 327 6855
Arthur Burrows
Senior Vice President
630 693 0675
Kyle Glascott
Associate
312 327 6857
Mike Tenteris
Senior Vice President
312 327 6823
William Montana
Senior V.P./Managing Director
Multifamily Investment Sales
630 317 0715
Brent Jacob
Associate
Multifamily Investment Sales
630 693 0647
Research
Craig Hurvitz
Director of Statistics and
Market Information
630 693 0645
Marketing
Julia Sutherland
Marketing Director
630 317 0701
Jennifer Burke
Catherine DeBoer
Elsa Gaztambide
Karen Kirian
Alison O’Connell
Melody Palese
Denise Racana
Jonathan Skaggs
Alicia Smiley