Chicago 4.3% 6,200 jobs. 12 Properties 9.9 MSF. Economic Overview. Chicago Industrial Market. Second Quarter 2018 Industrial Market Report

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1 Second Quarter Industrial Market Report Chicago, Market Facts.% As of June, unemployment stood at.%, down basis points (bps) year-over-year., jobs Manufacturing jobs increased.% year-over-year, which equates to, jobs. Properties There were properties delivered during the second quarter of, totaling msf.. MSF There were leases signed during the second quarter, totaling. msf. The average deal size was, sf. avisonyoung.com Economic Overview Chicago s economy has seen significant improvement over the last months. As of May, unemployment stood at.% down basis points (bps) year-over-year, just slightly lower than the national average of.%. Cook and DuPage Counties saw the largest decreases in unemployment, down bps to.% and bps to.% respectively. Employment sectors which saw the largest year-over-year increases in jobs were construction, financial services, and government. Manufacturing jobs increased.% year-over-year, which equates to, jobs. As of March, total air cargo tonnage was recorded at, tons up.% from March. Chicago Industrial Market The Chicago Industrial Market saw leasing demand stay strong despite vacancy remaining stagnant at.%. Net absorption witnessed a sharp decline due to the amount of new product hitting the market, with much of it remaining vacant. Following several quarters of strong construction activity, there was a sharp decrease year-over-year, with. msf currently under construction down % from the second quarter of. Overall asking net rental rates remained relatively unchanged at $. psf. Transactional volume recorded a -.% dip year-over-year, currently recorded at $. million. page

2 Chicago Second Quarter Industrial Market Report Looking Ahead Trends To Watch MILWAUKEE WAUKESHA JEFFERSON RACINE WALWORTH ROCK KENOSHA WISCONSIN ILLINOIS Spec Construction: Speculative construction remains active across the Chicago market, with only % of projects currently under construction over, sf being delivered as build-to-suit. Some markets such as the I- and I- Corridors are beginning to oversaturate with vacant speculative buildings. Single Loading Buildings: Developers have been maximizing building efficiency by adding loading docks to only one side of the buildings and adding additional trailer parking. WINNEBAGO MC HENRY BOONE LAKE OGLE KANE DEKALB DUPAGE KENDALL CHICAGO LEE Lake Michigan COOK LA SALLE WILL GRUNDY ILLINOIS INDIANA Labor: Labor has become an increasingly important factor in site selection, primarily in markets where there is more intense competition between users. LAKE KANKAKEE NEWTON LIVINGSTON Industrial Submarkets by the Numbers Map Key Submarket Overall Market Inventory (sf ) Vacancy (sf ) Vacancy (%) Net Absorption Leasing Activity (sf ) Under Construction Avg Asking Rent,,,,,.%,,,,,, $. $. Lake County,,,,.%,,, Southern Wisconsin,,,,.%,,, $. North Cook,,,,.%,, $. O Hare,,,,.% -,,,,, $. South Chicago Industrial,,,,.% -,,,, $. North Chicago Industrial,,,,.% -,, $. West Cook,,,,.%,,, $. $. I- East Corridor,,,,.% -,,, I- West/Elgin Corridor,,,,.%,, $. McHenry County,,,,.% -,, $. East DuPage,,,,.% -,,,, $. US- Corridor,,,,.%,,,, $. South Cook,,,,.%,, $. I- Corridor,,,,.%,,,,, $. I- Corridor,,,.%,, $. I- Corridor,,,,.%,,,,, $. I- Corridor,,,,.% -,,, $. I- Corridor,,,,.% -,,, $. Northwestern Indiana,,,,.% -,,, $. avisonyoung.com page

3 Chica Second Quarter Industrial Market Report Vacancy & Availability Average Asking Rental Rate ($) Sitting at.%, overall market vacancy remained unchanged from first quarter. Most submarkets saw vacancy decrease. The I- West/Elgin Corridor, the I- Corridor, and O Hare saw the most dramatic decrease down bps to.%, bps to.% and bps to.% respectively. Due to msf of new product having been added to the submarket within the last months, the I- Corridor continued to record an increasing vacancy rate up bps to.%. $. $. $. $. $. $. $. $. $. Q Q Q Q Absorption & Demand Leasing activity across the market remained strong. There were leases signed during the second quarter, totaling. msf. This correlates to a.% increase when compared to the first quarter. The average deal size was, sf. Submarkets which recorded the most activity were O Hare, the I- Corridor, and the I- Corridor. These three submarkets accounted for % of the overall space leased. The largest lease signed during the second quarter was inked by HD Supply in the West Cook submarket. The industrial distributor took, sf at Northwest Ave in Northlake. Two of the other large leases signed during the quarter were located within the I- Corridor submarket. Glanbia, a nutritional food company, leased, sf of space at Orchard Gtwy in North Aurora. Dart, a foam product manufacturer, leased, of space at N Mitchell Rd in North Aurora. The Bolke-Miller Company, a food packaging company, preleased, sf at Bridge Dr in Waukegan, IL. Located within Lake County, the property is currently listed as proposed and being developed by Bridge Development Partners. The building is slated to commence construction during the third quarter of. Vacancy Rate (%) Q Q Net Absorption (MSF) Q Q Leasing Activity Q Q Q Q Overall asking rental rates remained relatively unchanged during the second quarter of, currently recorded at $. per square foot (psf ). % The O Hare, I- Corridor, and the I- Corridor submarkets accounted for % of the overall space leased. NUMBER OF DEALS Q Q Q Q Q Q Q Q Q Q Q Q Q SF LEASED Leased SF Number of Deals avisonyoung.com page

4 Chicago Second Quarter Industrial Market Report Construction Construction activity has remained strong across the market, with. msf currently under construction. There were properties delivered during the second quarter of, totaling msf, of which. msf was located within the I- Corridor. Submarkets which are seeing the most activity are the I- and I- Corridors, O Hare and South Chicago. Much of the space being developed within both the O Hare and South Chicago submarkets is labeled as infill. These submarkets are each recording upwards of msf of construction and totaling % of overall construction. The product currently under construction that is over, sf accounts for. msf of speculative space and only. msf (%) of build-to-suit space. Three properties over one million sf were delivered within the I- Corridor. The largest property being IKEA s distribution center located at Emerald Dr in Joliet. The. msf build-tosuit was developed by Gray Construction Co. Two speculative buildings were also delivered, totaling. msf. This now leaves the construction pipeline with no buildings over msf under construction. The largest property currently in development is LFI Industrial s,-sf speculative project on Ridgeland Ave in Monee, located within the I- Corridor submarket. The largest build-to-suit under construction is IDI Logistics project located at E Route in Antioch. The,-sf property is being built for Handi-foil. Investment Investment activity within the industrial product dipped slightly during the second quarter of. There were properties that traded with a transactional volume of $. million. The average price per sf (psf ) was recorded at $. To-date in, the top countries placing capital in industrial real estate are Singapore, Japan and Canada. Buyer composition remains centered around public REITs and institutional investors. The largest investment sale transaction during the second quarter was Daniel Burnham Dr in Portage, Indiana. The,-sf, class A property traded between DRA Advisors and Taurus Investment Holdings for $. million, or $. psf. The property was % leased at the time of sale to several tenants including Hosley International Distribution and MCP Performance Plastics. Busse Rd in Elk Grove Village traded for $. million, or $. psf. Duke Realty developed the,-sf building for Yusen Logistics, who negotiated the sale price as part of a sale leaseback agreement. The largest investment sale transaction during the second quarter was Daniel Burnham Drive in Portage, Indiana. Notable Leases Tenant Address Submarket Size (SF) Type HD Supply Northwest Ave West Cook, New Glanbia Orchard Gtwy I- Corridor, New Dart N Mitchell Rd I- Corridor, New RJW Transport Inc Veterans Pkwy I- Corridor, New Bolke-Miller Company Bridge Dr Lake County, New iherb Auto Mall Dr I-/West Elgin Corridor, New Notable Sales Address Size (SF) Buyer Seller Sales Price Daniel Burnham Dr, Portage, IN, Taurus Investment Holdings, LLC DRA Advisors LLC $,, Busse Rd, Elk Grove Village, IL, Yusen Logistics Inc Duke Realty Corporation $,, George St, Melrose Park, IL, LBA Realty Sears Holding Corporation $,, S Torrance Ave, Chicago, IL, Great Lakes Reloading CenterPoint Properties $,, avisonyoung.com page

5 Chicago Second Quarter Industrial Market Report CHICAGOLAND Construction & Deliveries Notable Q Construction [,+ SF Projects] Market Building NRA Type Delivery Date Developer Major Tenants % Leased** I- Corridor Ridgeland Ave, Speculative Q- LFI Industrial N/A % I- Corridor Bluff Rd - Interchange Logistics Park, Speculative Q- CT Realty Advisors N/A % I- Corridor Bluff Rd - Interchange Logistics Park, Speculative Q- CT Realty Advisors N/A % South Chicago W rd St, Speculative Q- MAT N/A % Lake County Gregory Dr, BTS Q- IDI Logistics Undisclosed % I- Corridor US Route, Speculative Q- Clarion Partners N/A % I- Corridor N Pinnacle Dr, Speculative Q- Panattoni Development Co N/A % O'Hare Copenhagen Ct, Speculative Q- Panattoni Development Co N/A % O'Hare Seymour Ave, Speculative Q- CenterPoint Properties N/A % West Cook S th Ave, Speculative Q- Bridge Development Royal Group % South Chicago W st St, Speculative Q- McShane Development N/A % US- Corridor Brewster Creek Blvd, BTS Q- Rana USA Rana USA % I- Corridor S Ridgeland Ave, Speculative Q- Hillwood N/A % I- Corridor Finley Rd, Speculative Q- Bridge Development N/A % I- Corridor Internationale Pky, Speculative Q- Prologis N/A % O'Hare Franklin Ave, Speculative Q- Bridge Development N/A % I- Corridor Curtiss St, BTS Q- Rexnord Corp Rexnord Corp % Southern WI th Ave, Speculative Q- Zilber Property Group N/A % I- Corridor Lacy Rd, Speculative Q- Bridge Development N/A % O'Hare Seymour Ave, Speculative Q- CenterPoint None %,,, Total,, Notable Q Deliveries Market Building NRA Type Developer Major Tenants % Leased** I- Corridor Emerald Dr,, BTS Gray Construction Ikea % I- Corridor Channahon Rd,, Speculative The Opus Group None % I- Corridor S Frontage Rd,, Speculative USAA Real Estate None % South Chicago S Torrence Ave, BTS Centerpoint Properties CRRC Sifang America % I- Corridor Route & Houbolt Rd, Speculative First Industrial Realty Trust None % North Cook Howard St, Speculative Hillwood Development Company None % Lake County Bridge Dr, BTS Bridge Development Visual Pak % I- Corridor Terminal Ct, BTS Meridian Design Build N/A % O'Hare N York Rd, Speculative Liberty Property Trust None % North Cookr Chaddick Dr, Speculative Sitex Group None % North Cook Wheeling Rd, BTS Pal Group, Inc. Pal Group, Inc. % Lake County - Ensell Rd, Speculative Schaff International Schaff International % Construction Completed Total,, avisonyoung.com page

6 Chicago Second Quarter Industrial Market Report Contiguous Blocks [Available Class A Space,+ SF] Building Address Submarket Name City State Year Built Rentable Building Area Max Building Percent Contiguous Leased Space Owner Name Channahon Rd I- Corridor Joliet IL,,,, % AEW Capital Management E Laraway Rd I- Corridor Joliet IL,,,, % Core Industrial Partners S Frontage Rd I- Corridor Channahon IL,,,,, % USAA Reaal Estate Company E Millsdale Rd I- Corridor Joliet IL,, % Hillwood Ridgeland Ave I- Corridor Monee IL,, % Location Finders International Graaskamp Blvd I- Corridor Wilmington IL,, % Ridge Property Trust W Airport Rd I- Corridor Romeoville IL,, % DCT Industrial Trust Inc Mark Collins Dr South Cook Sauk Village IL,, % Warehouse Specialists Inc W Bluff Rd I- Corridor Channahon IL,, % IDI Logistics Bluff Road I- Corridor Romeoville IL,, % CT Realty Investors Southcreek Pky I- Corridor Romeoville IL,,.% Panattoni Development Company Bluff Road I- Corridor Romeoville IL,, % CT Realty Investors W rd St South Chicago Chicago IL,, % Marina Crossings Owner LLC N Division St McHenry County Harvard IL,, % Edward Gong Laraway Rd I- Corridor Joliet IL,, % GIC Real Estate Ellis Rd I- Corridor Joliet IL,, % CBRE Global Investors Ltd th Ave Southern WI Pleasant Prairie WI,, % UBS Real Estate Investments Inc Pinnacle Dr I- Corridor Romeoville IL,, % DCT Industrial Trust Inc Rock Creek Blvd I- Corridor Joliet IL,, % CBRE Global Investors Ltd US Route I- Corridor Channahon IL,, % Clarion Partners Falcon Ct I- East Corridor Streamwood IL,, % The Opus Group Southcreek Pky I- Corridor Romeoville IL,, % Pizzuti Companies W Walter Strawn Dr I- Corridor Elmwood IL,,, % CenterPoint Properties S. Pinnacle Dr I- Corridor Romeoville IL,, % Panattoni Development Company Inc W th St West Cook McCook IL,, % Heitman LLC Copenhagen Ct O'Hare Franklin Park IL,, % Panattoni Development Company Inc E North Ave US- Corridor Carol Stream IL,, % Dermody Properties Inc Veterans Pky I- Corridor Bolingbrook IL,, % Prologis Route & Houbolt Rd I- Corridor Joliet IL,, % First Industrial Realty Trust, Inc Ameriplex Dr Northwest Indiana Portage IN,, % DRA Advisors LLC N Division St McHenry County Harvard IL,, % Edward Gong Seymour Ave O'Hare Franklin Park IL,, % CenterPoint Properties Remington Blvd I- Corridor Bolingbrook IL,, % McShane Development Co W st St South Chicago Chicago IL,, % McShane Development Co W rd St I- Corridor Lockport IL,, % Exeter Property Group LLC Dalton Ln I- Corridor Bolingbrook IL,, % Northern Builders st St Southern WI Somers WI,, % First Industrial Realty Trust Inc Brewster Creek Blvd I- East Corridor Bartlett IL,, % Exeter Property Group S Ridgeland Ave I- Corridor Tinley Park IL,, % Hillwood Finley Rd I- Corridor Downers Grove IL,, % Bridge Development Partners Rock Creek Blvd I- Corridor Joliet IL,, % IDI Logistics Internationale Pky I- Corridor Woodridge IL,, % Prologis Santa Fe Dr I- Corridor Hodgkins IL,, % Seefried Properties Inc Tri State Pky Lake County Gurnee IL,, % Allergan W rd St South Cook Bedford Park IL,, % Global Logistic Properties Ltd W th St I- Corridor Bolingbrook IL,, % IDI Logistics Bur Wood Dr Lake County Waukegan IL,, % Sun Life Institutional Investments th Ave Southern WI Pleasant Prairie WI,, % Majestic Realty Co S Frontage Rd E I- Corridor Channahon IL,, % Crow Holdings th Ave Southern WI Kenosha WI,, % South th Street LLC N County Line Rd East DuPage Elmhurst IL,, % Industrial Property Trust, Inc Alft Ct I- West/Elgin Corridor Elgin IL,, % Molto Capital LLC Alft Ln I- West/Elgin Corridor Elgin IL,, % Northern Builders S Cleveland Ave I- Corridor Monee IL,, % Exeter Property Group Howard St North Cook Skokie IL,, % Hillwood Development Company - W Crossroads Pky I- Corridor Romeoville IL,, % DCT Indstrial Trust Inc Lacey Rd I- Corridor Downers Grove IL,, % Bridge Development Partners S Mount Prospect Rd O'Hare Des Plaines IL,, % James Campbell Company LLC Seymour Ave O'Hare Franklin Park IL,, % CenterPoint Properties N Enterprise St I- Corridor Aurora IL,, % High Street Realty Company LLC Gregory Dr Lake County Antioch IL,, % IDI Logistics Bilter Rd I- Corridor Aurora IL,, % Liberty Property Trust S Pulaski Rd South Chicago Chicago IL,, % PGIM Real Estate Gateway Dr I- Corridor Bolingbrook IL,, % Prologis Bilter Rd I- Corridor Aurora IL,, % Liberty Property Trust Wirsing Pky I- Corridor DeKalb IL,, % JPMorgan Chase & Co W rd St I- Corridor Lockport IL,, % Exeter Property Group LLC avisonyoung.com page

7 For more information, please contact: Kathleen Cavanaugh Research Manager.. Greg Rogalla Senior Research Analyst.. Avison Young Chicago One South Wacker Drive, Ste. Chicago, Illinois, avisonyoung.com Avison Young - Chicago, LLC. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.