Suburban Office CHICAGO OFFICE MARKET OVERVIEW Q SUBURBAN OFFICE

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1 Q2 SUBURBAN OFFICE CHICAGO OFFICE MARKET OVERVIEW MARKET INDICATORS Suburban Office Q2 Q2 VACANCY 21.1% 21.0% YTD ABSORPTION 595,359 SF 244,556 SF RENTS $19.90 $ INVENTORY 120,106, ,106,309 - Suburban Office After a brief hiccup in the first quarter of, the Suburban Chicago Office market reached a three-year low in overall vacancy, indicating a continued, albeit slow, rise toward recovery. The Suburban Chicago office market regained some of the momentum it witnessed at the end of with the completion of several large transactions. More than 650,000 square feet of notable lease transactions (50,000 square feet or greater) were signed during the second quarter of, compared to approximately 200,000 square feet in the first quarter of. While some submarkets are bouncing back more quickly than others, landlords overall remain cautiously optimistic that the worst is over. TRENDS While the Suburban office market is on a path to recovery, it remains a tenant s market with landlords continuing to struggle to increase occupancy by offering aggressive incentive packages. Tenants are more willing to move if there are sufficient concessions to offset move costs. While some tenants are holding off on making long-term commitments until after this year s election, others are taking advantage of current concessions and making a flight to quality by moving into higher-end, Class A space without significantly increasing total cost. VACANCY Leasing volume in the suburban office market decreased to 21.0 percent in the second quarter of, down from 21.2 percent at the end of the first quarter. It was also a marginal decrease from the same time period of when vacancy measured 21.1 percent. While the O Hare market showed the greatest improvement over the last twelve months, the Lisle-Naperville market continued to have the lowest overall vacancy rate, ending the second quarter at 18.0 percent. Conversely, the Northwest market continued to have the highest vacancy, ending the quarter with 22.6 percent. While there was an increase in Class A sublease vacancy in the second quarter, the overall sublease vacancy rate remained relatively flat at 1.9 percent, compared to 1.8 percent at the end of first quarter. LEASE AND SALE ACTIVITY Notable lease transactions in the second quarter of include Capital One s 150,000-square-foot lease at Atrium Corporate Center in Schaumburg; Carefusion s 150,000-square-foot lease at Continental Executive Park in Vernon Hills; and Mondelez International s 105,000-square-foot lease at Three Parkway North in Deerfield. Top investment transactions of the second quarter include 6400 Shafer Court, a 179,000-square-foot property in Rosemont which sold to Crossroads Development Partners, LLC. for $10.8 million ($60.17 per square foot); Park of Northwest Point, a 176,844-square-foot property in Elk Grove Village that sold to Topco for $14.0 million ($79.00 per square foot); Four Parkway North, a 172,103-square-foot property in Deerfield purchased by Wells REIT for $40.9 million ($ per square foot); and Schaumburg Atrium Center, a four-building, 156,040-square-foot property in Schaumburg that sold

2 to Special Assets Acquisitions for $1.6 million ($10.00 per square foot). Several properties were recently added to the market including 25 Northwest Point Boulevard, a 207,136-square-foot building in Elk Grove Village; Woodland Corporate Tower, a 183,619-square-foot property in Downers Grove and Westings Corporate Center, a 175,000-square-foot property in Naperville. ABSORPTION Overall net absorption ended the second quarter with positive 282,909 square feet, compared to negative 38,353 square feet reported in the first quarter. This is also an improvement from second quarter of when absorption measured positive 161,127 square feet. With the exception of the North market, all the suburban office markets achieved positive overall absorption in the second quarter. Year-to-date absorption has reached a reasonably healthy positive 244,556 square feet, but is still a decline from the 595,359 square feet of positive absorption posted at mid-year. CONSTRUCTION Astellas Pharmaceuticals 416,000-square-foot, build-to-suit headquarters development at the intersection of I-294 and Willow Road in Northbrook was completed in May. In addition, there are several medical office properties under construction throughout the market including DuPage Medical Group s threestory, 95,000-square-foot medical office which is scheduled for completion at the end of. NET ABSORPTION AND VACANCY SUBURBAN OFFICE MARKET Square Footage 1,500,000 1,000, ,000 0 (500,000) (1,000,000) (1,500,000) (2,000,000) (2,500,000) (3,000,000) (3,500,000) 899, % 627, % 516, % 21.0% 244,556 LARGE BLOCKS OF AVAILABILITY Source: Costar; Colliers International Research There are currently 31 properties in the suburban office market that can accommodate large (100,000 square feet and above) users, with 24 of them being Class A. While there are few available large blocks of space in the O Hare market, the Northwest market offers the majority of large block options. RENTS The average asking rent for all classes in suburban Chicago remained relatively flat at $19.91 per square foot gross at the end of second quarter compared to $19.94 at the end of first quarter and $19.90 during the same time period of. The average Class A asking rent ended the quarter at $27.14 per square foot gross, down from $27.30 per square foot gross at the end of the first quarter. The lower rates are due to the lagging effect of the recession. Rates are expected to rise slowly as the economy improves. (735,123) 19.3% Source: Costar; Colliers International Research (2,995,189) 22.0% Absorption SUBMARKET VACANCY RATES - Vacancy (%) 30.0% 25.0% 15.0% 10.0% 5.0% 0.0% -5.0% 25.3% 22.9% 23.3% 22.6% 21.7% 21.5% Vacancy 19.4% 19.4% 21.8% 22.2% 21.9% 21.9% 18.1% 18.0% O'Hare Northwest North Lisle/Naperville Oak Brook 25.0% 15.0% 10.0% 5.0% 0.0% Vacancy ASTELLAS PHARMACEUTICALS NORTHBROOK, IL COLLIERS INTERNATIONAL P. 2

3 RESEARCH REPORT Q2 SUBURBAN CHICAGO RESEARCH OFFICE REPORT Q2 SUBURBAN CHICAGO OFFICE The O Hare market continues to strengthen after Class A properties play a key role in the market s velocity over the past several quarters. MARKET INDICATORS O Hare Q2 Q2 VACANCY 24.2% 21.7% YTD ABSORPTION 155,791 SF 164,896 SF RENTS $19.29 $19.89 INVENTORY 14,307,435 14,307,435 - O Hare The O Hare market continued to rally in the second quarter of as vacancy rates fell for the fifth consecutive quarter, down 7.4 percent from its 29.1 percent high in the first quarter of. VACANCY Once the weakest suburban market, O Hare has rebounded over the past several quarters. Major contributors to the decrease in vacancy include the Rosemont expansions of Reyes Holdings at One O Hare Centre and US Foodservice at Riverway, along with significant leasing at Presidents Plaza, including GSA, Fidelity, Lafarge and Meritz, totaling over 300,000 square feet. In addition, Wintrust purchased Orchard Point in Rosemont and took over occupancy of all available space, approximately 140,000 square feet. O Hare continued to regain strength in the second quarter as overall vacancy rates fell to 21.7 percent compared to 24.2 percent during the same time period in. Performance of Class A properties showed the greatest improvement ending the second quarter at 17.3 percent, down from 21.6 percent at the end of second quarter. O Hare sublease vacancy remains low at 0.8 percent compared to 1.2 percent during the same time period in. LARGE BLOCKS AVAILABLE TOP 10 BY SQUARE FOOTAGE VACANT SPACE BY PROPERTY TYPE 9500 W Bryn Mawr Avenue E Devon Avenue 142, ,000 Class C 783,880 SF 5.5% Vacant Class B 5,272,997 SF 31.1% Vacant Class A 8,250,558 SF 17.3% Vacant 8420 W Bryn Mawr Avenue 4242 N Harlem Avenue 4825 N Scott Street W Higgins Road 9525 W Bryn Mawr Avenue 999 E Touhy Avenue 2400 E Devon Avenue 6400 Shafer Court 104,164 93,155 74,656 69,695 68,674 59,710 51,000 49,691 As the O Hare market continues to tighten, options for large space requirements have diminished. There are currently only three properties that can accommodate large users of 100,000 square feet and above, two of which are Class A. LEASE AND SALE ACTIVITY Significant second quarter lease transactions in the O Hare market include World Kitchen s 55,000-square-foot lease at Columbia Centre I in Rosemont and Stanley Consultants 16,000-squarefoot renewal at 8501 W. Higgins Road in Chicago. Notable investment sales in the O Hare market during the second quarter of include the $10.8 million sale of 6400 Shafer Court, a 179,000-square-foot property in Rosemont which was purchased by Crossroads Development Partners, LLC. COLLIERS INTERNATIONAL P. 3

4 ABSORPTION Second quarter net absorption in the O Hare submarket reached positive 91,676 square feet, compared to negative 100,321 square feet in the quarter one year ago. This brings O Hare s year-to-date net absorption to positive 164,896 square feet. At mid-year, net absorption in O Hare totaled positive 155,791 square feet. Class A properties contributed to all of the positive absorption in the second quarter, while Class B and C properties remained flat. CONSTRUCTION While no new construction projects are currently in the works for the O Hare market, the Village of Rosemont is nearing completion of its 200,000-square-foot entertainment district with many of the venues already open. Meanwhile, construction of a 550,000-square-foot, upscale outlet mall has begun, just south of the new Balmoral Avenue Tri-State off-ramp in Rosemont. In addition, AAOS is looking at a potential build-to-suit project at the northwest corner of River and Higgins Roads in Rosemont. NET ABSORPTION AND VACANCY O HARE OFFICE MARKET Square Footage 800, , , % 400, , % 24.1% 22.9% 200, % 0-200,000 (117,502) -400,000 (375,348) -600,000 (660,171) -800,000 Source: Costar; Colliers International Research Absorption Vacancy ASKING GROSS RENTAL RATES O HARE OFFICE MARKET O'Hare Submarket $35.00 $ , % 35.0% 30.0% 25.0% 15.0% 10.0% 5.0% 0.0% 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. $25.00 $20.00 $15.00 RENTS Class A average asking rent for the O Hare market decreased to $30.26 per square foot gross in the second quarter of, down from $30.47 in the second quarter of. However, as the O Hare market continues to tighten, we may see an increase in Class A asking rates going into the third quarter. The average asking rate for all classes increased to $19.89 per square foot gross, compared to $19.29 during the same time period in. $10.00 $5.00 $0.00 Source: Costar; Colliers International Research Average THE PARK AT ROSEMONT ENTERTAINMENT DISTRICT ROSEMONT, IL COLLIERS INTERNATIONAL P. 4

5 RESEARCH REPORT Q2 SUBURBAN CHICAGO RESEARCH OFFICE REPORT Q2 SUBURBAN CHICAGO OFFICE The Northwest market can t seem to gain enough leverage to have a positive impact on its vacancy rate. MARKET INDICATORS Northwest Class C 1,288,489 SF 13.7% Vacant Q2 Q2 VACANCY 22.4% 22.6% YTD ABSORPTION (314,211) SF 232,281 SF RENTS $19.21 $18.69 INVENTORY 33,450,531 33,450,531 - VACANT SPACE BY PROPERTY TYPE Class B 11,999,132 SF 26.4% Vacant Class A 20,162,910 SF 20.9% Vacant Northwest Being home to a large base of financial institutions, the Northwest suburban office market was the hardest hit during the recession. While the downward trend appears to be over, the Northwest market continues to struggle as activity remains quiet. VACANCY While the Northwest market continues to be the weakest of all the submarkets, it has shown a slight decrease in vacancy for the second consecutive quarter with overall vacancy decreasing to 22.6 percent, down from 22.7 percent at the end of first quarter. However, this is a slight increase from 22.4 percent reported during the same time period in. Class B vacancy remains the highest of all the classes, ending the second quarter at 26.4 percent. As tenants continue to take advantage of current concessions and relocate to Class A buildings, vacancy is expected to remain high in Class B product. The Northwest market offers the most options for large space requirements with 14 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 *2000 W AT&T Drive 1701 Golf Road Lake Cook Road 1600 McConnor Parkway *2001 Lakewood Boulevard 1707 N Randal Road 1299 Algonquin Road 3501 Algonquin Road 390, , , , , , ,432 1,207,245 1 Salem Lake Drive 150, N Martingale Road 137,518 *Sublease LEASE AND SALE ACTIVITY Top Northwest lease transactions in the first quarter include Capital One s 150,000-square-foot lease at Atrium Corporate Center in Rolling Meadows, Interactive Health Solutions 26,500-square-foot lease at Two Century Centre in Schaumburg and Mueller & Company s 22,000-square-foot lease at 1707 N. Randall Road in Elgin. Second quarter investment sales in the Northwest market include Schaumburg Atrium Center, a fourbuilding, 156,040-square-foot office complex in Schaumburg that sold to RMS Properties Acquisitions for $1.6 million ($10.00 per square foot) and North Arlington Atrium, a three-building, 103,673-squarefoot office complex in Arlington Heights that sold to EFN Dundee Property, LLC. for $6.4 million ($48.98 per square foot). In addition, Park of Northwest Point, a 176,844-square-foot property in Elk Grove Village, sold to Topco for $14.0 million ($79.00 per square foot). Topco will occupy 90,000 square feet when it relocates from Skokie in early Buildings in the Northwest market recently put up for sale include: 25 Northwest Point Boulevard, a 207,136-square-foot property in Elk Grove Village; Platinum Office Park, a 68,500-square-foot, fourbuilding complex in Rolling Meadows; and Arlington Executive Plaza, a 62,567-square-foot, sixbuilding complex in Schaumburg. Non-traditional sales continue in the Northwest market, as properties, mostly Class B and C, are being purchased at an extremely low basis by well-known and locally based private investment groups. COLLIERS INTERNATIONAL P. 5

6 ABSORPTION The Northwest market ended the second quarter of with a total of 41,882 square feet of positive absorption, bringing the year-to-date absorption total to 232,281 square feet. This is an improvement from a year ago when quarterly absorption measured negative 136,900 square feet and the mid-year cumulative figure totaled negative 314,211 square feet. CONSTRUCTION No new construction was completed in Northwest market during the second quarter of and no notable construction is planned or underway. RENTS The Northwest suburban Class A average asking rate measured $24.00 per square foot gross, down from second quarter rate of $ NET ABSORPTION AND VACANCY NORTHWEST OFFICE MARKET Square Footage 400, , % 300, % 232, % 21.5% 200, % 19.2% 100, ,000 (59,944) -200,000 (181,900) -300, , , ,000 (588,261) (621,854) -700,000 Source: Costar; Colliers International Research Absorption Vacancy ASKING GROSS RENTAL RATES NORTHWEST OFFICE MARKET 25.0% 15.0% 10.0% 5.0% 0.0% Vacancy The average asking rate for all classes was $18.69 per square foot gross, down from $19.21 during the same time period in. $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Source: Costar; Colliers International Research Average 25 NORTHWEST POINT ELK GROVE VILLAGE, IL COLLIERS INTERNATIONAL P. 6

7 RESEARCH REPORT Q2 SUBURBAN CHICAGO RESEARCH OFFICE REPORT Q2 SUBURBAN CHICAGO OFFICE No longer the most predictably strong submarket, the North market is the only area to have negative mid-year absorption. MARKET INDICATORS North Q2 Q2 VACANCY 19.2% YTD ABSORPTION 38,679 SF (173,161) SF RENTS $21.01 $20.85 INVENTORY 29,216,116 29,216,116 - North Prior to the recession, the North market had the lowest vacancy in the Chicago suburbs. But, as corporate users continue to consolidate, it has taken a toll on the once prominent submarket. VACANCY The North market ended the second quarter of with 20.0 percent vacancy, up from 19.6 percent at the end of the first quarter. During the same time period in, vacancy was 19.2 percent. A significant portion of this increase came from Astellas Pharmaceuticals relocation to its build-to-suit property in Northbrook. We may continue to see an increase in vacancy in the North market as Google is considering a relocation of its recently purchased Motorola Mobility business from Libertyville to downtown Chicago and Kraft plans to close its Glenview operations within the next year. There are currently eight blocks of space available for large-sized tenants (100,000 square feet and above), with seven of them being Class A. LARGE BLOCKS AVAILABLE TOP 10 BY SQUARE FOOTAGE VACANT SPACE BY PROPERTY TYPE 1 Kraft Court 488,396 *3 Overlook Point 290,143 *3 Parkway Boulevard North 232,836 Class C 2,066,174SF 16.4% Vacant Class A 18,034,660 SF 20.9% Vacant Tri State International 1 Overlook Point 544 Lakeview Parkway 2355 Waukegan Road 156, , , , Corporate Drive 104,637 Class B 9,115,282 SF 19.2% Vacant 6 Parkway Boulevard North *5202 Old Orchard Road 95,854 76,149 *Sublease LEASE AND SALE ACTIVITY Top North market lease transactions in the second quarter of include Carefusions 150,000-square-foot lease at Continental Executive Park in Vernon Hills; Mondelez International s 105,000-square-foot lease at Three Parkway North in Deerfield and Potash s 74,000-square-foot renewal at Corporate Center of Northbrook in Northbrook. Four Parkway North, a 172,103-square-foot property in Deerfield was recently purchased by Wells REIT for $40.9 million ($ per square foot). In addition, 950 Technology Way, a 90,258-square-foot property in Libertyville was recently added to the market. ABSORPTION The North market ended the second quarter of with net absorption totaling negative 117,053 square feet, bringing the year-to-date net absorption total to negative 173,161 square feet. During the same time period in, year-to date absorption totaled positive 38,679 square feet. While the Milwaukee Avenue Corridor of the North market remains soft, the Lake-Cook Corridor has been seeing activity. COLLIERS INTERNATIONAL P. 7

8 CONSTRUCTION Astellas Pharmaceutical s 416,000-square-foot, build-to-suit headquarters development in Northbrook was completed in May. Highland Park Medical Center, a three-story, 40,000-square-foot property at 55 Skokie Valley Road in Highland Park is currently under construction with completion scheduled for fall. 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; Skodun, LLC s 330,000-square-foot project in Northbrook; and Duke Realty Corporation s 400,000-square-foot project in Gurnee. NET ABSORPTION AND VACANCY NORTH OFFICE MARKET Square Footage North Submarket 1,000, , , % 19.4% 19.4% 99,176 24, % % (16,694) -500,000-1,000,000 (977,489) -1,500,000 Source: Costar; Colliers International Research Absorption Vacancy (173,161) 25.0% 15.0% 10.0% 5.0% 0.0% Vacancy RENTS Average Class A asking rent remained relatively flat in the North market during the second quarter of at $28.20 compared to $28.21 per square foot gross during the second quarter of. The average asking rate for all classes decreased to $20.85 per square foot gross, down from $21.01 per square foot gross during the same time period in. ASKING GROSS RENTAL RATES NORTH OFFICE MARKET North Submarket $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Source: Costar; Colliers International Research Average PARKWAY NORTH CENTER DEERFIELD, IL COLLIERS INTERNATIONAL P. 8

9 Despite the fact that no significant leases were signed in the second quarter, vacancy in the Lisle-Naperville submarket continues to diminish. MARKET INDICATORS Lisle/Naperville Q2 Q2 VACANCY 18.3% 18.0% ABSORPTION (SF) 674,073 16,736 RENTS $20.54 $20.80 INVENTORY 19,227,467 19,227,467 - Lisle-Naperville The Lisle-Naperville market, known for attracting technology tenants with newer construction, bigger floor plates and low DuPage County taxes, continues to be desirable as it maintained the lowest vacancy of all the markets for the fifth consecutive quarter. VACANCY Lisle-Naperville continues to have the lowest overall vacancy of all of the suburban markets, ending the second quarter of with 18.0 percent compared to 18.3 percent during the same time period in. While direct vacancy is strong in the Lisle-Naperville market, sublease vacancy is the highest of all the markets, ending the second quarter with 3.4 percent vacancy compared to 2.8 percent during the same time period in. Navistar s 250,000-square-foot sublease which came on the market earlier this year was a large factor in the increase. Four 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 249, Cabot Drive 217,718 Class C 2,567,970 SF 5.5% Vacant Class A 8,702,841 SF 16.3% Vacant Torch Parkway * Warrenville Road 4343 Commerce Court 2245 Sequoia Drive 535 E Diehl Road 85,532 81,097 76,126 67, ,842 Class B 7,956,656 SF 23.9% Vacant 701 Warrenville Road 1245 Corporate Boulevard 67,233 64,960 *Sublease LEASE AND SALE ACTIVITY There were no significant leases signed in the second quarter of. However, there has been an increase in activity of smaller transactions. There were no significant investments sales completed in the Lisle-Naperville market during the second quarter of. However, Westings Corporate Center, a 175,000-square-foot property in Naperville; One Energy Center, a 163,080-square-foot property in Naperville; and Corporate Lakes IV, a 94,375-square-foot property in Lisle are currently on the market for sale. ABSORPTION The Lisle-Naperville market ended the second quarter of with 169,576 square feet of positive net absorption, compared to positive 477,057 square feet in the second quarter of. The yearto-date total is 16,736 square feet, far beow the 674,073 measured at mid-year. While all classes measured positive absorption in the second quarter, Class A was the most substantial with 99,628 square feet of positive absorption. COLLIERS INTERNATIONAL P. 9

10 CONSTRUCTION No new construction was completed in the Lisle-Naperville market during the second quarter of. However, DuPage Medical Group s three-story, 95,000-square-foot medical office in Lisle is currently under construction with completion scheduled for the end of. Opus recently broke ground on a 230,000-square-foot multi-family project adjacent to the medical facility. RENTS The average Class A asking rent in the Lisle- Naperville market measured $26.65 per square foot gross at the end of second quarter, up from $25.89 per square foot during the same time period one year ago. The average asking rate for all classes increased to $20.80 per square foot gross from $20.54 at the end of second quarter. NET ABSORPTION AND VACANCY LISLE-NAPERVILLE OFFICE MARKET Square Footage 800, % 706, , % 600, % 20.5% 500, % 18.1% 18.0% 400, , % 300, , % 100,000 41,117 16,736 0 (100,000) 5.0% (200,000) (140,810) (177,013) (300,000) 0.0% Source: Costar; Colliers International Research Absorption Vacancy ASKING GROSS RENTAL RATES LISLE-NAPERVILLE OFFICE MARKET $35.00 Vacancy $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Source: Costar; Colliers International Research Average WESTING CORPORATE CENTER NAPERVILLE, IL COLLIERS INTERNATIONAL P. 10

11 RESEARCH REPORT Q2 SUBURBAN CHICAGO RESEARCH OFFICE REPORT Q2 SUBURBAN CHICAGO OFFICE Leasing activity remains slow in Oak Brook, but the submarket is still witnessing velocity from smaller tenants. MARKET INDICATORS Oak Brook Q2 Q2 Oak Brook The Oak Brook market, which typically benefits from steady leasing velocity among tenants smaller than 15,000 square feet, witnessed an increase of activity at the end of the second quarter of. VACANCY The Oak Brook market ended the second quarter of with an overall vacancy rate of 21.9 percent, down from second quarter s overall rate of 22.2 percent. The overall sublease vacancy rate measured 2.1 percent in the second quarter. While this is an increase from second quarter when sublease vacancy measured 1.3 percent, it is down from 2.3 percent in the first quarter of. VACANCY 22.2% 21.9% YTD ABSORPTION 41,027 SF 3,804 SF RENTS $19.45 $19.35 LARGE BLOCKS AVAILABLE TOP 10 BY SQUARE FOOTAGE INVENTORY 23,904,760 23,904,760 - VACANT SPACE BY PROPERTY TYPE Class C 994,781 SF 22.8% Vacant Class A 13,511,160 SF 21.4% Vacant 700 Oakmont Lane 3075 Highland Parkway 3500 Lacey Rd 1333 Butterfield Road 500 Joliet Road 2000 S Finley Road 2655 Warrenville Road *3333 Finley Road 814 Commerce Drive 1520 Kensington Road *Sublease 98,520 78,400 78,300 76,691 70,613 66,882 64, , , ,767 Class B 9,398,819 SF 22.5% Vacant Three buildings in the Oak Brook market can accommodate large (100,000 square feet and above) users, all of them being Class A. LEASE AND SALE ACTIVITY Top second quarter Oak Brook market leases include Invesco s 88,000-square-foot lease at Esplanade II in Downers Grove and Kemper Corporation s 30,500-square-foot lease extension at Oakbrook Terrace Tower in Oakbrook Terrace. No significant investment sales were completed in the Oak Brook market during the second quarter. However, 747 E. 22nd Street, a 209,557-square-foot property in Lombard; Woodland Corporate Tower, a 183,619-square-foot property in Downers Grove; and Jorie Plaza, a 193,689-square-foot office campus in Oak Brook are all on the market for sale. ABSORPTION The Oak Brook market ended the second quarter of with 96,828 square feet of positive net absorption, an improvement from the first quarter total of negative 93,024 square feet. Year-todate absorption in the Oak Brook market barely remains positive with a total of 3,804 square feet. This is down from the cumulative mid-year total of positive 41,027 square feet. While all classes measured positive absorption in the second quarter, Class A was the most significant COLLIERS INTERNATIONAL P. 11

12 with 50,046 square feet of positive absorption. NET ABSORPTION AND VACANCY OAK BROOK OFFICE MARKET CONSTRUCTION No new construction was completed in Oak Brook market during the second quarter of. However, construction is underway at Midwestern University s campus expansion in Downers Grove. Completion is scheduled for RENTS The current Class A average asking rent in the Oak Brook market measured $26.60 per square foot gross at the end of second quarter, up from $27.04 per square foot gross during the same time period of. Square Footage Oak Brook Submarket 200, , % (100,000) 16.6% (47,469) (200,000) (300,000) (400,000) (440,124) (500,000) (600,000) (700,000) Source: Costar; Colliers International Research 21.9% (628,458) Absorption 22.2% (69,525) Vacancy 105, % 21.9% 3, % 15.0% 10.0% 5.0% 0.0% Vacancy The average asking rate for all classes totaled $19.35 per square foot gross, down from $19.45 per square foot gross in second quarter of. ASKING GROSS RENTAL RATES OAK BROOK OFFICE MARKET $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Source: Costar; Colliers International Research Average ESPLANADE I DOWNERS GROVE, IL COLLIERS INTERNATIONAL P. 12

13 2Q LARGE OFFICE LEASE TRANSACTIONS - SUBURBAN CHICAGO TENANT ADDRESS SUBMARKET SIZE (SF) TYPE QUARTER Capital One Atrium Corporate Center, Rolling Meadows Northwest 150,000 New 2Q Carefusion Continental Executive Park, Vernon Hills North 150,000 New 2Q Mondelez International Three Parkway, North Deerfield North 105,000 New 2Q Invesco* Esplanade II, Downers Grove Oak Brook 88,000 New 2Q Barilla* Bannockburn Centre at College Pk, Bannockburn North 76,000 Extension 1Q Potash Corporate Center of Northbrook, Northbrook North 74,000 Renewal 2Q Donlen 2315 Sanders, Northbrook North 73,500 Renewal 1Q Walgreens 1000 Lakeside Dr., Bannockburn North 57,000 New 1Q World Kitchen Columbia Centre I, Rosemont O Hare 55,000 New 2Q PHH Mortgage Bannockburn Lake Office I, Bannockburn North 52,000 New 2Q Brightstar Pine Meadows Corp Center II, Libertyville North 50,000 New 2Q Kaufman Hall Old Orchard Towers, Skokie North 50,000 Renewal 2Q PLS Financial Services 800 Jorie Blvd, Oak Brook Oak Brook 47,000 New 1Q Bank of America Corporate Center of Northbrook, Northbrook North 43,000 Renewal 2Q Crawford & Company* Kemper Lakes Business Center, Long Grove North 42,000 Renewal 2Q Silgan White Cap st St., Downers Grove Oak Brook 42,000 Extension 1Q Reyes Holdings One O Hare Centre, Rosemont O Hare 39,000 Expansion 1Q Cambium Corporation Atrium Corporate Center, Schaumburg Northwest 34,000 New 1Q Founders Insurance Commerce Center at O Hare, Des Plaines O Hare 32,000 Renewal/Expansion 1Q NCIB Commerce Center at O Hare, Des Plaines O Hare 31,500 Renewal 1Q Kemper Corporation Oakbrook terrace Tower, Oakbrook Terrace Oak Brook 30,500 Extension 2Q Bimbo Bakeries International Tower, Chicago O Hare 27,500 New 1Q Interactive Health Solutions One Century Centre, Schaumburg Northwest 26,500 New 2Q JPMorgan Chase 601 Oakmont Ln., Westmont Oak Brook 26,000 Renewal 1Q Automated Health Systems Woodfield Financial Centre, Schaumburg Northwest 25,000 Renewal 1Q CVS/Caremark Riverwalk II, Buffalo Grove North 23,000 Expansion 1Q Mather Lifeways 1603 Orrington Ave. Evanston North 22,000 Renewal 1Q Mueller & Company* 1707 N Randall Rd., Elgin Northwest 22,000 New 2Q New York Life* Corporate 500, Deerfield North 21,500 Renewal 1Q Benefit Express One Century Centre, Schaumburg Northwest 21,000 New 2Q Kapstone Paper & Packaging* 1101 Skokie Blvd., Northbrook North 19,500 New 1Q Regus* Landmark of Lake Forest, Lake Forest North 19,000 New 2Q Dyson Parkway Place at Meridian, Aurora Lisle/Naperville 18,000 New 1Q Wells Fargo* Corporate 500 Centre, Deerfield North 18,000 Renewal 2Q Netgear Naperville Woods, Naperville Lisle/Naperville 16,000 New 1Q Stanley Consultants 8501 W. Higgins Rd., Chicago O Hare 16,000 Renewal 2Q Medivation Oakbrook Terrace Tower, Oakbrook Terrace Oak Brook 15,500 New 1Q Ridgestone Financial* Woodfield Preserve, Schaumburg Northwest 15,000 Renewal 1Q *Colliers International Transaction COLLIERS INTERNATIONAL P. 13

14 SECOND QUARTER MARKET STATISTICS LOCAL STANDARDS Class Bldgs Total Inventory SF O'HARE Direct Vacancy Rate Sublease Vacancy Rate Vacancy Rate Current Qtr Vacancy Rate Prior Qtr Net Absorption 1st Qtr - SF Net Absorption YTD - SF Completions 1st Qtr - SF Under Construction - SF Class A 36 8,250, % 1.1% 17.3% 18.4% 93, , $30.26 Class B 58 5,272, % 0.4% 31.1% 31.1% (2,108) 8, $18.43 Class C , % 0.0% 5.5% 5.5% (45) 42, $10.97 Subtotal ,307, % 0.8% 21.7% 22.4% 91, , $19.89 Asking Gross Direct Rent - PSF NORTHWEST Class A 87 20,162, % 0.8% 20.9% 20.7% (42,140) 95, $24.00 Class B ,999, % 0.9% 26.4% 27.1% 82, , $17.35 Class C 29 1,288, % 0.3% 13.7% 13.9% 1,671 4, $14.72 Subtotal ,450, % 0.8% 22.6% 22.7% 41, , $18.69 NORTH Class A ,034, % 3.9% 20.9% 20.5% (71,102) (146,292) 0 0 $28.21 Class B 157 9,115, % 0.9% 19.2% 18.9% (26,260) (10,556) 0 0 $19.24 Class C 42 2,066, % 0.9% 16.4% 15.5% (19,691) (16,313) 0 0 $15.09 Subtotal ,216, % 2.7% 19.6% (117,053) (173,161) 0 0 $20.85 LISLE/NAPERVILLE Class A 48 8,702, % 3.2% 16.3% 17.5% 99,628 (33,389) 0 0 $26.65 Class B 130 7,956, % 4.8% 23.9% 24.8% 65,234 48, $19.07 Class C 30 2,567, % 0.0% 5.5% 5.7% 4,714 1, $16.67 Subtotal ,227, % 3.4% 18.0% 18.9% 169,576 16, $20.80 OAK BROOK Class A 69 13,511, % 3.4% 21.4% 21.8% 50,046 (11,499) 0 0 $26.60 Class B 153 9,398, % 0.4% 22.5% 22.9% 35,306 1, $17.35 Class C , % 0.0% 22.8% 23.9% 11,476 13, $14.09 Subtotal ,904, % 2.1% 21.9% 22.3% 96,828 3, $19.35 TOTAL SUBURBAN OFFICE Class A ,662, % 2.5% 20.2% 130,261 18, $27.14 Class B ,742, % 1.4% 24.1% 24.5% 154, , $18.29 Class C 132 7,701, % 0.3% 12.1% 12.0% (1,875) 46, $14.31 Subtotal 1, ,106, % 1.9% 21.0% 21.2% 282, , $19.91 QUARTERLY COMPARISONS Q2-12 1, ,106, % 1.9% 21.0% 21.2% 282, , $19.91 Q1-12 1, ,106, % 1.8% 21.2% 21.2% (38,353) (38,353) 0 0 $19.94 Q4-11 1, ,106, % 1.7% 21.2% 21.3% 164, , $19.94 Q3-11 1, ,106, % 1.6% 21.3% 21.1% (243,815) 351, $19.88 Q2-11 1, ,106, % 1.8% 21.1% 21.3% 161, , $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 SECOND QUARTER MARKET STATISTICS (INCLUDES OWNER OCCUPIED PROPERTIES) Class Bldgs Total Inventory SF O'HARE Direct Vacancy Rate Sublease Vacancy Rate Vacancy Rate Current Qtr Vacancy Rate Prior Qtr Net Absorption 1st Qtr - SF Net Absorption YTD - SF A 36 8,250, % 1.1% 17.2% 18.4% 95, ,884 - Completions 1st Qtr - SF B 69 6,072, % 0.4% 25.6% 26.2% 39,149 78, C , % 0.0% 3.8% 7.0% 24,163 66, Total ,064, % 0.8% 19.9% 21.0% 158, , Under Construction - SF NORTHWEST A 92 21,150, % 0.7% 19.9% 3, ,923 - B ,160, % 0.4% 19.0% 19.7% 129, ,801 - C 68 2,265, % 1.9% 15.7% 16.0% 6,505 2, Total ,575, % 0.6% 19.3% 19.6% 139, , NORTH A ,077, % 2.1% 16.0% 16.3% 416, , ,000 - B ,222, % 0.3% 10.3% 10.4% 22,588 39,259 - C 67 2,782, % 0.6% 15.7% 15.2% (14,824) (17,996) - - Total ,081, % 1.2% 13.5% 13.7% 423, , ,000 - LISLE/NAPERVILLE A 51 9,693, % 3.0% 14.5% 15.8% 124,896 (8,122) B ,372, % 3.3% 19.4% 71,660 50,663 C 56 3,219, % 0.0% 5.9% 6.1% 5,703 5, Total ,285, % 2.7% 15.6% 16.5% 202,259 47, OAK BROOK A 72 14,194, % 3.1% 20.1% 20.7% 87,875 26,330 B ,611, % 0.3% 18.2% 18.2% 2,875 (6,264) - C 50 2,020, % 0.0% 14.9% 16.5% 31,204 31, Total ,826, % 1.7% 18.9% 19.3% 121,954 51, SUBURBAN TOTAL A ,366, % 1.9% 17.8% 18.3% 727, , ,000 - B 1,078 68,438, % 0.8% 17.1% 17.4% 265, , C ,028, % 0.6% 11.9% 12.4% 52,751 87, Total 1, ,833, % 1.3% 17.0% 17.5% 1,045,880 1,149, ,000 - QUARTERLY COMPARISON AND TOTALS Q2-12 1, ,833, % 1.3% 17.0% 17.5% 1,045,880 1,149, ,000 - Q1-12 1, ,417, % 1.4% 17.5% 17.6% 103, , ,000 Q4-11 1, ,417, % 1.3% 17.6% 17.7% 200,044 1,539, ,000 Q3-11 1, ,417, % 1.3% 17.7% 18.5% 1,194,658 1,339, ,000 Q2-11 1, ,417, % 1.5% 18.5% 18.5% 51, , ,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 Q2 SUBURBAN CHICAGO RESEARCH OFFICE REPORT Q2 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 world) 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.