Suburban Office CHICAGO OFFICE MARKET OVERVIEW Q SUBURBAN OFFICE

Transcription

1 Q1 SUBURBAN OFFICE CHICAGO OFFICE MARKET OVERVIEW MARKET INDICATORS Suburban Office Q4 Q1 VACANCY 20.4% 20.3% YTD ABSORPTION 916, ,280 RENTS $19.90 $19.74 INVENTORY 119,051, ,051,661 - Suburban Office While the suburban Chicago office market got off to a slow start in, velocity seems to be picking up, as more tenants begin to contemplate relocations. The suburban Chicago office market was quiet in the first quarter of after witnessing the completion of several large lease transactions in the prior quarter. Over 675,000 square feet of lease transactions greater than 50,000 square feet were signed in the fourth quarter of, compared to just 110,000 square feet in the first quarter. However, even with its subtle decrease in vacancy in the first quarter, the suburban office market achieved its lowest vacancy level in over four years. TRENDS While it remains a tenant s market with landlords continuing to offer aggressive incentive packages, Class A space is tightening and rental rates have stabilized, signaling that the opportunity for tenants to take advantage of generous concessions is is tapering off. In addition, high quality large blocks of Class A and B space in the suburban office market are diminishing, causing tenants to expand their geographic boundaries and creating positive absorption in weaker markets. Catamaran s move to the Northwest market earlier this year from the Lisle-Naperville market is a prime example. VACANCY Overall vacancy in the suburban office market decreased modestly in the first quarter of, down to 20.3 percent from 20.4 percent at year-end. While the North market showed the most significant improvement, the Lisle-Naperville market continued to have the lowest overall vacancy rate, ending the first quarter at 18.0 percent. While it was a tight race between the Oak Brook and O Hare markets, Oak Brook retained the highest vacancy in the suburbs, ending the first quarter of at 21.8 percent. While direct vacancy saw a slight decrease in in the first quarter of, dropping to 18.7 percent from 18.8 percent at year-end, sublease vacancy remained flat at 1.6 percent. LEASE AND SALE ACTIVITY Notable lease transactions in the first quarter of include Hospira s 137,500-square-foot renewal at Conway Park in Lake Forest; AIU Online s 65,000-square-foot renewal at Presidents Plaza in Chicago; Patterson Medical s 53,000-square-foot lease at Cantera Meadows West in Warrenville; and Association Management Center s 47,500-square-foot lease at O Hare Plaza in Chicago. Top investment sales in the first quarter of include Agellan Commercial REIT s $83.4 million purchase of Naperville Woods Office Center, a two-building 486,979-square-foot property in Naperville; and Teachers Retirement System of Illinois $23.5 million purchase of Greenspoint Office Park, a three-building, 498,635-square foot property in Hoffman Estates. Additionally, Saban Capital Group, Inc. made two acquisitions totaling nearly $50 million when it closed on 2300 E. Devon Avenue, a 239,331-square-foot property in Des Plaines, and 111 Pfingsten Road, a 120,927-square foot property in Deerfield.

2 RESEARCH REPORT Q1 SUBURBAN CHICAGO OFFICE ABSORPTION Overall net absorption ended the first quarter of at positive 195,280 square feet, a sizable decline from the fourth quarter s positive 480,051 square feet of absorption. The Lisle/ Naperville, North and Oakbrook markets achieved positive overall net absorption, while the O Hare and Northwest markets posted negative results. NET ABSORPTION AND VACANCY SUBURBAN OFFICE MARKET Square Footage 1,500,000 1,000,000 Vacancy (%) 500, % 20.0% 15.0% 10.0% 5.0% 0.0% 0 (500,000) (1,000,000) (131,996) 21.7% 23.5% 22.6% 21.2% 21.6% 21.4% 21.7% 697, % 66, % CONSTRUCTION (1,500,000) No new construction was delivered to the (2,000,000) suburban office market in the first quarter of (2,500,000) and no new developments for multi-tenant 18.9% (3,000,000) (3,064,006) properties are planned for completion. However, (3,500,000) build-to-suit activity continues throughout the market. Expected construction completions for Absorption Vacancy the third and fourth quarters include a 50,000-square-foot build-to-suit for Big Ten Conference s headquarters at 5440 Park Place in Rosemont; a campus expansion for Midwestern University in Downers Grove; and Hub Group s 130,000-square-foot build-tosuit headquarters in Oak Brook. In addition, SUBMARKET VACANCY RATES - AAOS is looking at a potential build-to-suit project at the northwest corner of River and 30.0% Higgins Roads in Rosemont. LARGE BLOCKS OF AVAILABILITY There are currently 38 properties in the suburban office market that can accommodate large (100,000 square feet and above) users with 26 of them being Class A. While large blocks of space in the O Hare market are rare, the Northwest market offers the majority of large block options. 916, % 19.5% 19.0% 18.3% 18.6% 18.2% 18.0% 195, % 22.1% 21.3% 21.8% 22.0% 21.5% 21.0% 20.5% 20.0% 19.5% 19.0% 18.5% Vacancy RENTS The average asking rent for all classes in suburban Chicago ended at $19.74 per square foot gross, down from $19.90 in. The average Class A asking rent ended at $27.26 per square foot gross, down slightly from $27.09 per square foot gross at year-end. -5.0% O'Hare Northwest North Lisle/Naperville Oak Brook COLLIERS INTERNATIONAL P. 2

3 RESEARCH REPORT Q1 SUBURBAN CHICAGO RESEARCH OFFICE REPORT Q1 SUBURBAN CHICAGO OFFICE O Hare Despite being the smallest of the suburban office markets, O Hare continues to attract corporate users with its convenient highway access and proximity to O Hare International Airport. When companies, particularly national firms, are faced with consolidating locations in the metropolitan Chicago area, they typically give strong consideration to the O Hare market as it is well suited for regional operations and its location is ideal for serving virtually any suburban market. MARKET INDICATORS O Hare Q4 Q1 VACANCY 21.2% 21.6% YTD ABSORPTION 208,838 (56,267) RENTS $20.63 $20.66 INVENTORY 14,327,321 14,327,321 - VACANCY The O Hare market lost some of its stamina in the first quarter of as overall vacancy increased to 21.6 percent, up from the 21.2 percent that it maintained throughout the second half of. While all three classes witnessed an increase, Class B properties continued to have the highest vacancy ending the first quarter with 30.7 percent versus 30.4 at the end of. Subsequently, Class A vacancy increased to 17.3 percent, up from 17.1 percent at year-end. Options for large space requirements in the O Hare market are limited with only four properties that can users above 100,000 square feet, three of which are Class A LARGE BLOCKS AVAILABLE TOP 10 BY SQUARE FOOTAGE 5450 N Cumberland Avenue 143,525 VACANT SPACE BY PROPERTY TYPE E Devon Avenue 8420 W Bryn Mawr Avenue 104, ,596 Class C 758,680 SF 3.9% Vacant 8750 W Bryn Mawr Avenue 5100 River Road 74, ,498 Class A 8,261,783 SF 17.3% Vacant 4825 N Scott Street 1350 E Touhy Avenue 74,656 71,367 Class B 5,306,858 SF 30.7% Vacant 9500 W Bryn Mawr Avenue W Higgins Road 8550 W Bryn Mawr Avenue 69,701 69,695 66,895 LEASE AND SALE ACTIVITY Significant first quarter lease transactions in the O Hare market include AIU Online s 65,000-square-foot renewal at Presidents Plaza and Association Management Center s 47,500-square foot lease at O Hare Plaza. Both properties are located in Chicago. Notable investment sales in the O Hare market during the first quarter of include 2300 E. Devon Avenue, a 239,331-square-foot property in Des Plaines which sold to Saban Capital Group, Inc. for $39 million ($ per square foot). The property is currently home to FAA Regional Headquarters. ABSORPTION All three classes reported negative absorption in the first quarter of, bringing O Hare s overall net absorption total to negative 56,267 square feet compared to fourth quarter s total of positive 4,119 square feet. COLLIERS INTERNATIONAL P. 3

4 RESEARCH REPORT Q1 SUBURBAN CHICAGO OFFICE CONSTRUCTION No new construction was completed in the O Hare market in the first quarter of. However, construction on a 50,000-square-foot build-to-suit for Big Ten Conference s headquarters continues at 5440 Park Place in Rosemont with delivery expected September. In addition, AAOS is looking at a potential build-to-suit project for approximately 150,000 square feet at the northwest corner of River and Higgins Roads in Rosemont. NET ABSORPTION AND VACANCY O HARE OFFICE MARKET Square Footage 800, % 600, , % 23.9% 351, , % 208, % 200, ,000 (56,267) 21.6% 30.0% 25.0% 20.0% 15.0% 10.0% Vacancy Proposed projects include Pointe O Hare II and O Hare Corporate Campus, both in Rosemont. If completed, these projects could add 1.4 million square feet to the O Hare market. -400, , ,000 (358,055) (663,476) 5.0% 0.0% RENTS The O Hare market s lack of inventory caused Class A average asking rents to increase slightly to $30.68 per square foot gross in the first quarter compared to $30.31 at year-end. The average asking rate for all classes remained virtually flat, rising to $20.66 per square foot gross, up from fourth quarter s $20.63 average. Absorption Vacancy ASKING GROSS RENTAL RATES O HARE OFFICE MARKET $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $ RIVER ROAD SCHILLER PARK, IL COLLIERS INTERNATIONAL P. 4

5 RESEARCH REPORT Q1 SUBURBAN CHICAGO RESEARCH OFFICE REPORT Q1 SUBURBAN CHICAGO OFFICE Northwest Over the years, the Northwest suburban office market has been home to an array of financial services, technology and communications companies. As a result, it was the hardest hit suburban market during the recession as firms began consolidating or altogether closing. After seeing a decrease in vacancy throughout, the Northwest market s inflated vacancy continues to be the highest in the suburbs. MARKET INDICATORS Northwest Q4 Q1 VACANCY 21.4% 21.7% YTD ABSORPTION 707,833 (77,908) RENTS $18.14 $18.04 INVENTORY 33,350,070 33,350,070 - VACANCY The Northwest market got off to a sluggish start in with overall vacancy ending the first quarter at 21.7 percent, up from 21.4 percent at year-end. Class A properties witnessed a decrease in vacancy ending the first quarter at 19.1 percent, down from the year-end total of 19.3 percent. However, Class B properties showed an increase ending the first quarter with 27.1 percent vacancy verses 25.8 percent in the fourth quarter of. The Northwest market continues to offer the most options for large space requirements with 17 properties that can accommodate large (100,000 square feet and above) users, 10 of them being Class A. LARGE BLOCKS AVAILABLE TOP 10 BY SQUARE FOOTAGE VACANT SPACE BY PROPERTY TYPE Class C 1,290,258 SF 14.8% Vacant Class A 20,449,271 SF 19.1% Vacant *2000 *2000 W AT&T W AT&T Drive Drive Lake Cook Road Lake Cook Road *2001 Lakewood 1701 Boulevard Golf Road *2001 Lakewood Boulevard * Lakewood N Randall Boulevard Road 1707 N Randall Road Algonquin N Randal Road 200 N Martingale Road 5550 Prairie 1299 Stone Algonquin Parkway Road Prairie 1299 Algonquin Stone Algonquin Parkway Road Road 5550 Prairie Algonquin Stone Golf Road Parkway 351, , , , , , , , , , , , , , , , , , ,601 1,207,245 1,207,245 Class B 11,610,541 SF 27.1% Vacant E E Algonquin 1701 Golf Road Road Road Greenspoint Parkway 3501 Algonquin Road 2895 Greenspoint Parkway 131, , , , ,941 *Sublease LEASE AND SALE ACTIVITY First quarter investment sales in the Northwest include Greenspoint Office Park, a three-building, 498,635-square foot property in Hoffman Estates that sold to Teachers Retirement System of Illinois for $23.5 million ($47.13 per square foot). Several properties were recently added to the market including Continental Towers, a three-building, 910,796-square-foot property in Rolling Meadows; 955 American Lane, a 109,373-square-foot property in Schaumburg; and 300 Bauman Court, a 104,518-square-foot property in Wood Dale. ABSORPTION The Northwest market ended the first quarter of with negative 77,908 square feet of net absorption, down from positive 257,717 square feet measured in the fourth quarter of. Class A space continued to thrive, ending the first quarter with 83,272 square feet of positive absorption, while the flight to quality from continued to impact Class B space as it ended the first quarter with 153,524 square feet of negative absorption. COLLIERS INTERNATIONAL P. 5

6 RESEARCH REPORT Q1 SUBURBAN CHICAGO OFFICE CONSTRUCTION No new construction was completed in Northwest market during the first quarter of and no notable construction is planned or underway. Any new construction added will be medical office or build-to-suit office space. NET ABSORPTION AND VACANCY NORTHWEST OFFICE MARKET Northwest Submarket 800, , , % 24.0% 23.5% RENTS The Northwest suburban Class A average asking rate measured $23.28 per square foot gross, down from the year-end rate of $ The average asking rate for all classes was $18.04 per square foot gross, down slightly from $18.14 at year-end. Square Footage 400, , , , , , , % (56,771) 21.7% 21.6% 21.4% (77,908) 20.3% (589,561) (650,541) 23.0% 22.5% 22.0% 21.5% 21.0% 20.5% 20.0% Vacancy Absorption Vacancy ASKING GROSS RENTAL RATES NORTHWEST OFFICE MARKET $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 CONTINENTAL TOWERS ROLLING MEADOWS, IL COLLIERS INTERNATIONAL P. 6

7 RESEARCH REPORT Q1 SUBURBAN CHICAGO RESEARCH OFFICE REPORT Q1 SUBURBAN CHICAGO OFFICE North The North market has primarily attracted tenants for its low Lake County tax rate to the north and its proximity to Downtown Chicago to the south. Home to many large corporate users, the market has struggled over the past two years, but is slowly working towards recovery. MARKET INDICATORS North Q4 Q1 VACANCY 19.0% 18.3% YTD ABSORPTION 122, ,359 RENTS $20.90 $20.82 INVENTORY 28,794,963 28,794,963 - VACANT SPACE BY PROPERTY TYPE VACANCY The North market ended the first quarter of with 18.3 percent vacancy, an improvement from 19.0 percent reported at year-end. While the North market still has a way to go to get back to its pre-recession low of 13.0 percent vacancy, this is a significant improvement from its two-year high of 20.4 percent. Class A properties are solely responsible for the decrease in vacancy, dropping to 18.5 percent in the first quarter from 19.6 percent at year-end. A contributing factor has been the growing leasing momentum at Kemper Lakes Business Center, a 1.2 million-square-foot property in Long Grove that has gone from 62 percent leased to over 90 percent leased in the past year with over 400,000 square feet of transactions completed. There are currently nine blocks of space available for large-sized tenants (100,000 square feet and above) in the Northwest market with eight of them being Class A. LARGE BLOCKS AVAILABLE TOP 10 BY SQUARE FOOTAGE Class C 1,813,754 SF 18.0% Vacant Class A 17,984,087 SF 18.5% Vacant *3 Overlook Point 1 Kraft Court *1000 Milwaukee Avenue 290, , , Tri State International 208,808 Class B 8,997,122 SF 18.0% Vacant **1200 Lakeside Drive 300 Tower Parkway 180, ,545 1 Overlook Point 3 Parkway Boulevard North 2355 Waukegan Road 544 Lakeview Parkway *Sublease ** Direct/Sublet Combined 111, , ,495 84,237 LEASE AND SALE ACTIVITY Top North market lease transactions in the first quarter of include Hospira s 137,500-squarefoot renewal at Conway Park in Lake Forest; Blue Chip Marketing s 30,000-square-foot renewal and expansion at Eden s Corporate Center in Northbrook; and Command Transportation s 19,000-squarefoot lease at Eden s Gateway in Skokie. First quarter investment sales in the North market include Saban Capital Group s $9.5 million purchase of 11 Pfingsten Road, a 120,927-square foot property in Deerfield. Additionally, Bannockburn Lake Office I, II & IV (composed of 315,738 square feet), are currently in receivership. The former 1.1 million-square-foot Motorola Mobility Headquarters in Libertyville was recently added to the market and Orrington Plaza, a 307,499-square-foot property in Evanston, is expected to be up for sale shortly. COLLIERS INTERNATIONAL P. 7

8 RESEARCH REPORT Q1 SUBURBAN CHICAGO OFFICE ABSORPTION Net absorption in the North market totaled positive 201,359 square feet in the first quarter of, compared to 343,905 square feet in the fourth quarter of. This is a significant improvement given s year-end total of positive 122,890 square feet. Class A properties were the sole source of the positive absorption as Class B and C properties remained flat. CONSTRUCTION No new construction was completed in the first quarter of in the North market and no new projects are currently underway. NET ABSORPTION AND VACANCY NORTH OFFICE MARKET Square Footage North Submarket 400, ,000 97,869 61, , % 19.4% 19.5% 19.0% (16,677) -200, % -400, , ,000-1,000,000 (979,330) -1,200,000 Absorption Vacancy 201, % 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Vacancy There are several sites available for future buildto-suit projects in the North market, including an 800,000-square-foot opportunity at International Corporate Park in Vernon Hills; The John Buck Company s 320,000-square-foot, two-building project in Deerfield; Skodun, LLC. s 330,000-square-foot project in Northbrook; and Duke Realty Corporation s projects in Gurnee and Lake Forest totaling nearly 600,000 square feet. ASKING GROSS RENTAL RATES NORTH OFFICE MARKET $35.00 $30.00 $25.00 $20.00 $15.00 RENTS Average Class A asking rent increased in the North market in the first quarter of to $28.42 per square foot gross, up from $28.17 at year-end. However, the average asking rate for all classes decreased slightly, dropping to $20.82 per square foot gross, compared to year-end s overall rate of $20.90 per square foot gross. $10.00 $5.00 $0.00 KEMPER LAKES BUSINESS CENTER LONG GROVE, IL COLLIERS INTERNATIONAL P. 8

9 RESEARCH REPORT Q1 SUBURBAN CHICAGO OFFICE RESEARCH REPORT Q1 SUBURBAN CHICAGO OFFICE Lisle-Naperville The Lisle-Naperville market, known for attracting technology tenants with newer construction, bigger floor plates and its low DuPage County tax rate, continues to be desirable as it maintained the lowest vacancy of all the markets for the eighth consecutive quarter. MARKET INDICATORS Lisle/Naperville Q4 Q1 VACANCY 18.2% 18.0% ABSORPTION (SF) 59,169 53,793 RENTS $20.50 $20.03 INVENTORY 18,521,846 18,521,846 - VACANCY Overall vacancy in the Lisle-Naperville decreased in the first quarter of to 18.0 percent, down from 18.2 percent at the end of. While direct vacancy of 14.5 percent continues to be the lowest of all the suburban markets, sublease vacancy in the Lisle-Naperville market is the highest of the suburbs, ending the first quarter at 3.4 percent compared to 3.5 percent at year-end. Navistar s 250,000-square-foot sublease which came on the market in early along with Westell s 110,000-square-foot sublease are contributors to the increase. Five buildings in the Lisle-Naperville market can accommodate large (100,000 square feet and above) users, two of which are Class A properties. LARGE BLOCKS AVAILABLE TOP 10 BY SQUARE FOOTAGE *6200 S Route ,000 VACANT SPACE BY PROPERTY TYPE *4201 Winfield Road 2400 Cabot Drive 217, ,996 *750 N Commons Boulevard 112,605 Class C 1,659,708 SF 6.4% Vacant Class A 8,665,459 SF 15.6% Vacant *2441 Warrenville Road * Warrenville Road 535 E Diehl Road 2245 Sequoia Drive 103,347 85,532 83,792 76,126 Class B 8,196,679 SF 22.8% Vacant *Sublease 4343 Commerce Court 2135 CityGate Lane 74,855 70,537 LEASE AND SALE ACTIVITY The largest lease transaction completed in the first quarter of occurred when Patterson Medical committed to 53,000 square feet at Cantera Meadows West in Warrenville. Significant investments sales completed in the Lisle-Naperville market during the first quarter of include Agellan Commercial REIT s purchase of Naperville Woods Office Center, a two-building 486,979-square-foot property in Naperville for $83.4 million ($ per square foot). ABSORPTION The Lisle-Naperville market ended the first quarter of with 53,793 square feet of positive net absorption, compared to positive 59,169 square feet witnessed in the fourth quarter of. Class A properties produced the largest amount of positive absorption in the Lisle-Naperville market, ending the quarter with 26,485 square feet compared to 73,075 square feet in the prior quarter. CONSTRUCTION No notable construction is planned or underway in the Lisle-Naperville market. COLLIERS INTERNATIONAL P. 9

10 RESEARCH REPORT Q1 SUBURBAN CHICAGO OFFICE RENTS The average Class A asking rent in the Lisle- Naperville market measured $26.90 per square foot gross at the end of the first quarter, up from $26.46 per square foot at the end of. The average asking rate for all classes decreased to $20.03 per square foot gross, down from $20.50 at the end of. NET ABSORPTION AND VACANCY LISLE-NAPERVILLE OFFICE MARKET Square Footage Lisle/Naperville Submarket 700, % 627, , % 19.5% 500, , % 300, , % 200, % 18.4% 59, , % 53, % 18.0% 0 Vacancy (100,000) (200,000) (300,000) 17.4% (192,190) (144,231) 17.5% 17.0% Absorption Vacancy ASKING GROSS RENTAL RATES LISLE-NAPERVILLE OFFICE MARKET $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 NAPERVILLE WOODS OFFICE CENTER NAPERVILLE, IL COLLIERS INTERNATIONAL P. 10

11 RESEARCH REPORT Q1 SUBURBAN CHICAGO RESEARCH OFFICE REPORT Q1 SUBURBAN CHICAGO OFFICE Oak Brook The Oak Brook market, which typically attracts smaller tenants less than 15,000 square feet and benefits from steady leasing velocity, witnessed an increase of activity in the first quarter of. MARKET INDICATORS Oak Brook Q4 Q1 VACANCY 22.1% 21.8% YTD ABSORPTION (182,268) 74,303 RENTS $19.30 $19.15 VACANCY While the Oak Brook market still maintains the highest vacancy of all the submarkets, it showed a decreased in vacancy during the first quarter of, dropping to 21.8 percent overall vacancy compared to 22.1 percent at the end of. Class A properties had the most significant change, dropping to 21.1 percent compared to 20.9 percent in. Three buildings in the Oak Brook market can accommodate large (100,000 square feet and above) users, all of them being Class A. LARGE BLOCKS AVAILABLE TOP 10 BY SQUARE FOOTAGE INVENTORY 24,057,461 24,057, Oakmont Lane *3500 Lacey Road 156, ,767 VACANT SPACE BY PROPERTY TYPE 3075 Highland Parkway 3 Westbrook Corporate Center Oakmont Lane 701 E 22nd Street 500 Joliet Road 2000 S Finley Road 106,823 90,741 89,634 84,579 78,400 78,300 Class C 998,426 SF 19.3% Vacant Class A 13,779,559 SF 21.1% Vacant 2655 Warrenville Road 3050 Highland Parkway *Sublease 76,691 74,319 Class B 9,279,476 SF 23.0% Vacant LEASE AND SALE ACTIVITY Top first quarter Oak Brook market leases include Codilis & Associates 38,500-square-foot sublease and Brookfield Global Relocation s 30,000-square-foot lease, both at Estancia Corporate Centre in Burr Ridge. Additionally, Molina Healthcare s leased 37,000 square feet at The Crossings in Oak Brook. Significant investment sales in the Oak Brook market include Oak Brook Office Center, a four-building, 312,262-square-foot property in Oak Brook which sold for an undisclosed amount to Adventus Realty Services. Corridors I & II, a 299,792-square-foot property in Downers Grove, is out for auction by LNR Property Corporation. ABSORPTION The Oak Brook market witnessed 74,303 square feet of positive net absorption in the first quarter of, an improvement from the negative 178,458 square feet measured in the fourth quarter of. After posting negative net absorption of 201,208 square feet in the fourth quarter of, Class A properties were the sole contributor to positive absorption, ending the first quarter with positive 114,741 square feet of absorption. COLLIERS INTERNATIONAL P. 11

12 RESEARCH REPORT Q1 SUBURBAN CHICAGO OFFICE CONSTRUCTION No new construction was completed in the Oak Brook market during the first quarter of. However, construction is underway at Midwestern University s campus expansion in Downers Grove with completion scheduled for later this year. Additionally, Hub Group s 130,000-square-foot build-to-suit headquarters in Oak Brook is scheduled for completion in late-. RENTS The Class A average asking rent in the Oak Brook market measured $27.03 per square foot gross at the end of first quarter, up from $26.86 per square foot gross at year-end. NET ABSORPTION AND VACANCY OAK BROOK OFFICE MARKET Square Footage 300, , , % 22.0% 74, , % 21.8% % (100,000) (58,376) (200,000) (182,268) (300,000) (400,000) (500,000) (442,578) 19.1% (600,000) (639,449) (700,000) Absorption Vacancy 22.5% 22.0% 21.5% 21.0% 20.5% 20.0% 19.5% 19.0% 18.5% Vacancy The average asking rate for all classes totaled $19.15 per square foot gross, down from $19.30 per square foot gross at year-end. ASKING GROSS RENTAL RATES OAK BROOK OFFICE MARKET $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $ OAK BROOK OFFICE CENTER OAK BROOK, IL COLLIERS INTERNATIONAL P. 12

13 RESEARCH REPORT Q1 SUBURBAN CHICAGO OFFICE TOP OFFICE LEASE TRANSACTIONS Q1 - SUBURBAN CHICAGO TENANT ADDRESS SUBMARKET SIZE (SF) TYPE Hospira Conway Park, Lake Forest North 137,500 Renewal AIU Online Presidents Plaza, Chicago O Hare 65,000 Renewal Patterson Medical Cantera Meadows West, Warrenville Lisle-Naperville 53,000 New Association Management Center O Hare Plaza, Chicago O Hare 47,500 New Codilis & Associates Estancia Corporate Centre, Burr Ridge Oak Brook 38,500 Sublease Molina Healthcare The Crossings, Oak Brook Oak Brook 37,000 New Blue Chip Marketing* Eden s Corporate Center, Northbrook North 30,000 Renewal / Expansion Brookfield Global Relocation Estancia Corporate Centre, Burr Ridge Oak Brook 30,000 New Network Services* Two Woodfield Lake, Schaumburg Northwest 27,000 Renewal Midwest Health Northwest Plaza, Rosemont O Hare 21,000 New Command Transportation Eden s Gateway, Skokie North 19,000 New Merichem Gas* Schaumburg Atrium, Schaumburg Northwest 19,000 Extension Regus Orrington Plaza, Evanston North 15,000 New Syntellect Enghouse Oak Brook Pointe, Oak Brook Oak Brook 15,000 Renewal *Colliers International Transaction COLLIERS INTERNATIONAL P. 13

14 RESEARCH REPORT Q1 SUBURBAN CHICAGO OFFICE FIRST QUARTER MARKET STATISTICS LOCAL STANDARDS INVENTORY VACANCY ABSORPTION CONSTRUCTION RENTS Class Bldgs Total Inventory SF Direct Vacancy Rate Sublease Vacancy Rate Vacancy Rate Current Qtr Vacancy Rate Prior Qtr Net Absorption 1st Qtr - SF Net Absorption YTD - SF Completions Current Qtr - SF Under Construction - SF O'HARE A 36 8,261, % 1.7% 17.3% 17.0% (26,423) (26,423) 0 0 $30.68 B 57 5,306, % 0.7% 30.7% 30.4% (17,915) (17,915) 0 0 $18.14 C , % 0.0% 3.9% 2.4% (11,929) (11,929) 0 0 $13.16 Total ,327, % 1.2% 21.6% 21.2% (56,267) (56,267) 0 0 $20.66 Rents NORTHWEST A 88 20,449, % 0.6% 19.1% 19.3% 83,272 83, $23.28 B ,610, % 0.8% 27.1% 25.8% (153,524) (153,524) 0 0 $16.59 C 29 1,290, % 0.3% 14.8% 14.2% (7,656) (7,656) 0 0 $14.25 Total ,350, % 0.7% 21.7% 21.4% (77,908) (77,908) 0 0 $18.04 NORTH A ,984, % 2.3% 18.5% 19.6% 198, , $28.42 B 155 8,997, % 0.3% 18.0% 18.0% 2,842 2, $18.73 C 42 1,813, % 1.0% 18.0% 18.0% (371) (371) 0 0 $15.30 Total ,794, % 1.6% 18.3% 19.0% 201, , $20.82 LISLE/NAPERVILLE A 48 8,665, % 3.0% 15.6% 16.0% 36,485 36, $26.90 B 132 8,196, % 4.6% 22.8% 23.0% 18,093 18, $18.02 C 25 1,659, % 0.0% 6.4% 6.4% (785) (785) 0 0 $15.18 Total ,521, % 3.4% 18.0% 18.2% 53,793 53, $20.03 OAK BROOK A 70 13,779, % 2.7% 21.1% 22.0% 114, , $27.03 B 151 9,279, % 0.1% 23.0% 22.6% (38,768) (38,768) 0 0 $17.26 C , % 0.0% 19.3% 19.1% (1,670) (1,670) 0 0 $13.16 Total ,057, % 1.6% 21.8% 22.1% 74,303 74, $19.15 SUBURBAN TOTAL A ,140, % 1.9% 18.7% 19.2% 406, , $27.26 B ,390, % 1.3% 24.0% 23.6% (189,272) (189,272) 0 0 $17.75 C 126 6,520, % 0.3% 13.0% 12.6% (22,411) (22,411) 0 0 $14.21 Total 1, ,051, % 1.6% 20.3% 20.4% 195, , $19.74 QUARTERLY COMPARISON AND TOTALS Q1-13 1, ,051, % 1.6% 20.3% 20.4% 195, , $19.74 Q4-12 1, ,051, % 1.6% 20.4% 20.8% 480, , $19.90 Q3-12 1, ,051, % 1.6% 20.8% 20.9% 8, , $19.76 Q2-12 1, ,051, % 1.8% 20.9% 21.2% 436, , $19.87 Q1-12 1, ,051, % 1.6% 21.2% 21.2% (8,782) (8,782) 0 0 $19.90 The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability. As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports. COLLIERS INTERNATIONAL P. 14

15 RESEARCH REPORT Q1 SUBURBAN CHICAGO OFFICE FIRST QUARTER MARKET STATISTICS INCLUDES OWNER OCCUPIED PROPERTIES Class Bldgs Total Inventory SF Direct Vacancy Rate Sublease Vacancy Rate Total Vacancy Current Qtr Total Vacancy Prior Qtr Quarterly Net Absorption - SF Net Absorption YTD - SF Completions - Current Qtr Under Construction - SF O'HARE Class A 36 8,261, % 1.7% 17.3% 17.0% (27,367) (27,367) - 50,000 Class B 70 6,272, % 0.7% 25.4% 25.2% (12,266) (12,266) - - Class C , % 0.0% 9.1% 4.7% (33,107) (33,107) - - Subtotal ,290, % 1.2% 20.2% 19.8% (72,740) (72,740) - 50,000 NORTHWEST Class A 94 21,290, % 0.6% 18.7% 19.4% 135, , Class B ,648, % 0.5% 19.4% 19.1% (39,362) (39,362) - - Class C 71 2,215, % 2.0% 18.7% 17.7% 29,391 29, Subtotal ,154, % 0.6% 19.0% 19.2% 125, , NORTH Class A ,267, % 1.7% 13.8% 14.6% 203, , Class B ,498, % 0.1% 9.6% 9.7% 72,483 72, Class C 69 2,626, % 0.7% 16.9% 16.8% (2,656) (2,656) - - Subtotal ,392, % 1.0% 12.2% 12.7% 273, , LISLE/NAPERVILLE Class A 55 10,093, % 2.7% 14.3% 14.1% (20,769) (20,769) - - Class B ,801, % 3.2% 18.7% 18.9% 26,608 26, Class C 54 2,460, % 0.1% 6.7% 7.1% 9,896 9, Subtotal ,355, % 2.7% 15.6% 15.7% 15,735 15, OAK BROOK Class A 72 14,338, % 2.6% 20.2% 21.1% 128, , Class B ,852, % 0.1% 17.9% 17.8% 137, , Class C 51 2,044, % 0.0% 14.4% 13.9% (9,494) (9,494) - - Subtotal ,235, % 1.3% 18.7% 19.1% 256, , TOTAL SUBURBAN OFFICE Class A ,251, % 1.7% 16.7% 17.3% 419, ,976-50,000 Class B 1,091 69,072, % 0.8% 16.8% 16.7% 184, , Class C ,104, % 0.6% 13.7% 13.1% (5,970) (5,970) - - Subtotal 1, ,428, % 1.2% 16.6% 16.8% 598, ,931-50,000 QUARTERLY COMPARISONS Q1-13 1, ,428, % 1.2% 16.6% 16.7% 270, ,608-50,000 Q4-12 1, ,428, % 1.3% 16.7% 17.0% 466,571 1,986, Q3-12 1, ,428, % 1.3% 17.0% 17.0% 16,544 1,519, Q2-12 1, ,428, % 1.4% 17.0% 17.4% 972,214 1,503, ,000 - Q1-12 1, ,925, % 1.3% 17.4% 17.5% 530, , ,000 The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability. As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports. COLLIERS INTERNATIONAL P. 15

16 RESEARCH REPORT Q1 SUBURBAN CHICAGO RESEARCH OFFICE REPORT Q1 SUBURBAN CHICAGO OFFICE SUBURBAN OFFICE SUBMARKET MAP HARVARD MCHENRY CRYSTAL LAKE 12 WAUCONDA MARENGO 2 LAKE ZURICH CARY BARRINGTON LAKE CO. HUNTLEY COOK CO PALWAUKEE NORTHBROOK 12 FIELD SLEEPY ROLLING HOLLOW 62 MEADOWS ARLINGTON 53 HEIGHTS GLENVIEW HOFFMAN MOUNT ELGIN ESTATES PROSPECT SCHAUMBURG 58 ELK GROVE VILLAGE 20 COOK CO. DuPAGE CO ITASCA O'HARE ROSEMONT HANOVER PARK INTERNATIONAL AIRPORT CAROL STREAM 290 FRANKLIN PARK ADDISON ST. CHARLES Elgin-O'Hare Expy. WEST CHICAGO 83 MELROSE PARK BATAVIA OAK PARK ELMHURST KANE CO. DuPAGE CO. KANE CO. McHENRY CO McCOOK AURORA NAPERVILLE LISLE DOWNERS GROVE HINSDALE 55 BURR RIDGE East-West Tollway 3 GURNEE NORTH WAUKEGAN miles NORTH CHICAGO GRAYSLAKE 45 LIBERTYVILLE LAKE FOREST VERNON HILLS LINCOLNSHIRE HIGHLAND PARK DEERFIELD BUFFALO GROVE Lake Cook Rd. OAKBROOK BROADVIEW 43 CICERO LOMBARD MIDWAY AIRPORT BEDFORD PARK WINNETKA WILMETTE SKOKIE EVANSTON CHICAGO KANE CO KENDALL CO. WILL CO DuPAGE CO. COOK CO. 1. O HARE 2. NORTHWEST 3. NORTH 4. LISLE/NAPERVILLE 5. OAK BROOK Lake Michigan 522 offices in 62 countries on 6 continents United States: 147 Canada: 37 Asia: 13 Australia/New Zealand: 165 Latin Ameria: 19 EMEA: 118 > $1.8 billion in annual revenue > 1.25 billion square feet under management* > 12,300 professionals * The combination of Colliers International and FirstService results in 2.5 billion under management (2nd largest in the WOODRIDGE KENDALL CO. WILL CO. PLAINFIELD BOLINGBROOK WILL CO. ROMEOVILLE COOK CO. COOK CO. WILL CO. ILL CO. OOK CO. ORLAND PARK ALSIP LLINOIS NDIANA HAMMOND GAR RESEARCHER: Suburban Chicago Ronna Larsen Research Manager Colliers International 6250 N. River Road, Suite Rosemont, IL TEL ronna.larsen@colliers.com Accelerating success.