Metropolitan Chicago. NAI Hiffman Industrial Market Report Mid-Year Committed to Chicago. Connected to the World.

Transcription

1 Metropolitan Chicago NAI Hiffman Industrial Market Report Mid-Year 21 Committed to Chicago. Connected to the World.

2 To our valued clients and partners... I had mentioned last quarter our pride in reaching several milestones including being selected as NAI Global s Company of the Year and being listed as the Largest Property Management firm in Chicago as reported by Crain s Chicago Business. Since January 1st 21, we have continued to experience significant growth in our Property Management, Tenant Representation, Investment Sales, Product Leasing and Lender Solutions platforms. We remain cautious in our predictions of what our own significant growth this year represents in the long term market recovery; however, we have clearly seen evidence that our execution of successful outcomes on behalf of our customers suggests we are heading in the right direction. Today, more than ever, we must continuously focus on controlling costs, enhancing quality, seeking constant service improvements and making innovation the top priority and goal. Those are the key reasons for our success to date and they will continue to be the focus of our firm, our people, our planning and our executed strategy today, tomorrow and into the future. We have the distinct privilege of working with the greatest commercial real estate investors in our marketplace; they understand the strength of our platform and the power of the NAI Hiffman talent, which collectively creates value and executes business plans flawlessly. We remain extremely proud of our NAI Hiffman Team, who are a committed and focused group of experts dedicated to providing exceptional commercial real estate services and outcomes. I trust you will find the enclosed market report indicative of that dedication and focus, as well as find it to be informative in your business decision making. As always, we remain grateful for your business, appreciate your support, covet your trust and look forward to working with you in the days ahead. Regards, David A. Petersen, RPA COO NAI Hiffman CEO, NAI Hiffman Asset Management

3 Metropolitan Chicago NAI Hiffman Industrial Market Report Mid-Year 21 Table of Contents Local Economy Industrial Market Statistics Industrial Market Summary Industrial Submarket Overviews Lake County Southeast Wisconsin I-9/Northwest Northwest Cook North Cook Fox Valley Central DuPage O Hare West Cook I-88 Corridor I-55 Corridor South Cook I-8/Joliet Corridor 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. Submarket Map Methodology / Definitions NAI Hiffman / NAI Global Committed to Chicago. Connected to the World. Build on the power of our network. NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 3

4 Local Economy POPULATION (29 EST.) 9,84,845 POPULATION CHANGE (2-29 EST.) +5.3% NUMBER OF HOUSEHOLDS (28) 3,516,729 MEDIAN HOUSEHOLD INCOME (28 EST.) $67,234 GROSS METRO PRODUCT (28) $521 BILLION LABOR FORCE 4,876, TOTAL JOBS GAINED (6/9-6/1) -61,9 CHICAGO AREA UNEMPLOYMENT RATE 1.6% ILLINOIS UNEMPLOYMENT RATE 1.4% U.S. UNEMPLOMENT RATE 9.5% Local and National Unemployment 2 Case-Shiller Home Price Indices 1987 Metro Chicago Illinois U.S. 21 Chicago Case-Shiller Index U.S. National Case-Shiller Index Source: Bureau of Labor Statistics % 1% 8% 6% 4% 2% Local Economy Review Chicago, the third largest metropolitan area in the U.S. after New York and Los Angeles, is the most influential 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, financial, and derivative futures products. Quarter in Review The economic recovery continues, despite an overall negative sentiment following one of the most significant recessions since the Great Depression. Several positive economic indicators continue to point towards the recovery continuing, although a rebound to prerecession levels may be more prolonged and less robust than recovery periods following past recessions. Source: Standard & Poor s 1-Year Treasury Note Year Treasury Note Real GDP, when chained to the value of the 25 dollar, has been positive for the past three quarters. The most substantial gain occurred during the final quarter of 29, when 5.6% growth was achieved. This positive trend continued into the first quarter of 21, with 2.7% annualized GDP growth Source: Commodity Systems, Inc. (CSI) Although the national and local unemployment rates remain elevated at 9.5% and 1.6% respectively, rates have peaked and started to decline as job loss has ceased and some of the nearly 9 million jobs lost during the recession are beginning to be recovered. According to the Bureau of Labor Statistics, 993, of these jobs have been gained back nationally since the beginning of the year. Locally, job recovery figures

5 haven t been as promising yet, but job loss has stopped and companies are hiring. Employees are working 1.5% more hours weekly compared to a year ago, demand for temporary help has increased by 175, jobs since the first of the year, and more people are quitting their jobs as they now have better options to choose from all signs that the job market is recovering. Nearly all major industries, even those particularly hard hit during the recession including manufacturing and construction, have posted employment gains since the trough of the recession. Consumer Price Indices (CPI) 6% 4% 2% % -2% -4% 2 CPI 12-Month Percent Change Core CPI 12-Month Percent Change (excludes volatile food and energy prices) Source: Bureau of Labor Statistics Local Economy Review Looking Forward Despite positive signals for a robust recovery, it will take awhile to rebound from the effects of the recent recession, and fears of a weaker, prolonged recovery are plentiful. In the Federal Reserve s June 23rd forecast, predictions for unemployment and economic growth were revised, showing less optimism in the economic recovery. Crude Oil Prices 5% 3% 1% -1% -3% Crude Oil Price Monthly Percent Change $15 $12 $9 $6 $3 Many of the job losses that occurred during the recession were the result of hiring freezes instituted by panicked companies. Individuals left work due to maternity leave, a return to school or retirement. These jobs are now being filled again as panic has subsided and companies are again starting to turn a profit. With strong job growth of around 2 to 3 million jobs nationally per year (16, to 25, jobs per month about the rate we are currently adding jobs), it will take between 3 and 4.5 years to recover the nearly 9 million jobs lost during the recession. Even then, this would not represent a job expansion, instead only returning us to the number of jobs nationally in September 28, before the recession hit. In that time, the U.S. population will have grown by nearly 15 million people, leaving us with an employment rate near 7%, a rate higher than that experienced with the same number of jobs in % Source: WTRG Economics 6% 3% % -3% -6% U.S. Gross Domestic Product Source: Bureau of Economic Analysis Adjusted GDP Growth (based on 25 dollar) (%) GDP Value (Trillions of $) 21 $ $16 T $14 T $12 T $1 T $8 T Ongoing concerns such as a recent increase of consumer bankruptcy filings compared to the same period last year and high foreclosure rates may prove to slow the pace of the economic recovery, but there is no doubt that companies are hiring, lending has started to return, and company productivity is up. The speed and strength of the recovery is largely dependent on the public s perception of the economic situation. If positive economic indicators can make the news on a consistent basis, consumers and companies will begin to believe in the recovery, reinforcing the process. If a sense of fear and panic left over from the recession remains, the recovery will be weaker and more prolonged. U.S. Imports & Exports - Trade Balance May 7 U.S. Imports U.S. Exports Aug 7 May 21 Trade Deficit -$42.3 B Nov 7 Feb 8 Source: U.S. Census Bureau May 8 Aug 8 Nov 8 Feb 9 May 9 Aug 9 Nov 9 Trade Deficit Feb 1 May 1 $25 B $2 B $15 B $1 B NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 5

6 Geneva Beloit 1 2 Westosha Airport Wisconsin Industrial Submarket Overviews Illinois Pleasant Prairie Lake County Southeast Wisconsin I-9/Northwest Northwest Cook kford 5 Rockford North Cook Fox Valley Central DuPage O Hare West Cook I-88 Corridor Crystal Lake Lake Forest Lake Zurich Highland Park Buffalo Grove Northbrook Chicago Executive Airport 3 I-55 Corridor Arlington Heights 4 9 Elgin Schaumburg Des Plaines Evanston Niles Elk Grove Village Int'lOhare Airport Skokie Wood Dale8 I-8/Joliet Corridor DeKalb alb helle 94 Vernon Hills South Cook Waukegan Grayslake C y Cherry Valleyy 7 11 Waukegan Regional Airport 7 Addison 29 Dupage Airport 6 St Charles Carol Stream West Chicago North Aurora 1 9 Elmhurst Chicago 55 La Grange Downers Grove Burr Bedford Ridge Woodridge Park Willow Springs 88 Naperville Aurora Franklin Park Montgomery Bolingbrook Chicago Midway Airport 294 Romeoville 12 Plainfield Palos Heights 94 Gary/Chicago Airpo Hammond Tinley Park Monee Elwood Schererville Park Forest Minooka La Salle 8 94 Matteson New Lenox Indiana Joliet Munster 8 Illinois Mokena M

7 Industrial Market Statistics NAI Hiffman Industrial Market Report Mid-Year 21 Industrial Market Statistics Submarket # Bldgs. Total RBA Vacant Vacancy 2Q9 NET YTD Net New Supply Under Constr. (SF) (SF) Rate (%) Absorption (SF) Absorption(SF) (SF) (SF) Chicago North 1,129 66,236,745 5,319,647 8.% -156, ,325 Chicago South 1, ,98,528 15,524, % -54, ,223 91, North Cook ,527,58 3,84,36 8.2% -382, ,212 West Cook 742 6,428,35 7,432, % -335, ,738 Southwest Cook 49 39,226,488 3,66, % 121,45-157,384 South Cook 1,125 85,391,116 1,68, % -297,544-41, ,78 I-57/Will Corridor 8 12,351,467 2,891, % -194,94-547,236 Lake County 93 66,75,778 7,655, % -449,85-262,434 15, Northwest Cook ,431,27 3,411, % 68,22 213,193 O Hare 1,73 1,88,826 12,947, % -252,936-1,15,834 31,216 Central DuPage 1,98 67,28,163 6,977, % -137,21-76,477 I-55 Corridor 655 8,357,318 11,21, % -148,28-33,978 53, McHenry County ,562,283 3,41, % -31,18-93,759 42, I-9/Northwest 43 25,62,633 2,987, % 15, ,69 Fox Valley ,89,494 3,82, % 37,148-57,619 I-88 Corridor ,834,957 8,132, % 143, ,571 I-8/Joliet Corridor ,48,397 1,94, % 5, , ,712 DeKalb County 57 6,97, , % 57,274 57,274 I-39 Corridor ,53,891 4,339, % 123,995-1,63 Southeast Wisconsin ,614,814 5,318, % 46,58 99,981 1,58, Northwest Indiana ,72,37 3,527,46 9.9% 118, ,234 Flex Space Summary Total Flex Space 1,529 72,373,894 1,188, % -435,399-96,113 3, Total Market Summary 16,455 1,196,939, ,292, % -1,777,632-2,269,994 31,216 2,814,79 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. NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 7

8 Metropolitan Chicago NAI Hiffman Industrial Market Report Mid-Year 21 # INDUSTRIAL BUILDINGS 16,455 MARKET SIZE (SF) 1,196,939,538 VACANCY 144,292,332 SF (12.1%) 2Q1 NET ABSORPTION (SF) -1,777, YTD NET ABSORPTION (SF) -2,269,994 NEW SUPPLY (SF) 31,216 UNDER CONSTRUCTION (SF) 2,814,79 1,, 6,, 2,, -2,, -6,, -1,, 2Q7 3Q7 4Q7 1Q8 2Q8 Vacancy Rate (%) Historical Deliveries 3 MM 25 MM 2 MM 15 MM 1 MM 5 MM MM * total through 2Q1 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 Net Absorption (SF) Total Sale Transactions and Price PSF $1,,+ Transactions Total Sales Total Sales (Annualized) Average Price PSF 2Q1 Total Deliveries (SF) Average (SF) % 12% 9% 6% 3% % Source: CoStar 21* Source: CoStar $6. $5. $4. Market Summary Chicago is the second largest industrial market in the U.S. with over 1.15 billion SF of inventory. The Chicago industrial market remains the most influential in the Midwest, due to its growing prominence as an inland port and its diverse, comparatively low-cost labor force. 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-8, I-9 and I-94), Chicago also claims 7 percent of the nation s rail and intermodal activity. The metropolitan area sits at the convergence of all six class-one railways and within a day s drive of one-third of the country s population. Quarter in Review While the economy moves into a recovery phase, Chicago s industrial real estate market, which typically lags the general economy by about months, continued to experience the negative effects of the recent economic recession. For the tenth consecutive quarter, vacancy rates were up market-wide. Overall vacancy, constituting vacant space available directly through landlords combined with vacant space being listed for sublease through tenants, reached 12.1% at the end of June, up from 12.% last quarter. While overall vacancy for the market increased, several submarkets posted improvements in vacancy, including the Northwest Cook, I-88 Corridor, Fox Valley and Southeast Wisconsin submarkets, among others. Net absorption, used to measure demand in the market, was negative again during the second quarter for the eighth consecutive quarter. While absorption totaled nearly negative 1.8 million SF for the period between April and June, it was still an improvement over a year ago, when it totaled negative 8.3 million SF for the quarter * total through 2Q * $3. $2. Compared to last year, leasing activity has picked up substantially throughout the market. The recent trend of companies downsizing or renewing their leases to take advantage of attractive market rates and Pictured Above: 23 White Oak Circle in Aurora, where Peerless Industries, Inc. consolidated their two Melrose Park campuses into 37,813 SF, representing the largest new lease of the year

9 Industrial Market Trends Vacancy Rate Net Absorption Asking Rents Suburban Submarkets by Size I-8/Joliet Corridor I-88 Corridor West Cook 62,48,397 SF 61,834,957 SF 6,428,35 SF Industrial Market Summary North Cook 46,527,58 SF concessions being offered by landlord continues, but there have been several significant new leases and expansions signed during the past few months, a sign that companies are beginning to hire again and addressing expansion plans that had been sidelined during the economic recession. These companies have been able to secure low rental rates and attractive concession packages. O Hare South Cook I-55 Corridor 1,88,826 SF 85,391,116 SF 8,357,318 SF Southeast Wisconsin 43,614,814 SF Southwest Cook 39,226,488 SF Northwest Indiana 35,72,37 SF Fox Valley 32,89,494 SF Northwest Cook 28,431,27 SF McHenry County 25,562,283 SF I-9/Northwest 25,62,633 SF I-39 Corridor 24,53,891 SF Central DuPage 67,28,163 SF I-57/Will Corridor 12,351,467 SF Industrial sales, while currently on pace to match last year s total, increased during the second quarter, suggesting that the second half of the year could see more sales than the first half, especially as lending increases. The average sale price per square foot, while still depressed, has stopped falling. Lake County 66,75,778 SF DeKalb County Capitalization Rate and Properties Sold ,97,869 SF Cap Rate (%) # of Properties Sold 12% 11% 1% Looking Forward While market conditions continued to soften during the second quarter, they did so at a slower pace than during the heart of the recession, a sign that the industrial market is near the bottom. Increased industrial production, evidence of depleted warehouse industries, and a rise in port activity all point to robust industrial and transportational activity over the coming quarters, pushing companies to hire additional workers and expand their businesses Total Industrial Base 1.3 Billion Total Industrial Base (SF) 1.2 Billion 1.1 Billion % 8% 7% 6% Vacancy rates should peak by the end of the year as demand and transactional activity continue to increase, and should slowly begin to drop as over 144 million SF of vacant space starts to become absorbed. 1. Billion.9 Billion.8 Billion.7 Billion Significant New Industrial Lease Transactions 2nd Qtr. 21 Property Address Submarket City Leased (SF) Tenant Comments 153 Schmidt Rd. I-55 Corridor Romeoville 499,2 ALG Direct New lease 25 S. Gary Ave. Central DuPage Carol Stream 439,789 NACA Logistics (USA) Inc. New lease Mitchell Blvd. Northwest Cook Schaumburg 34,8 Just in Time Packaging New lease 18 W. Central Rd. Northwest Cook Mt. Prospect 175,86 Cloud Packaging Solutions New lease 1-13 Lakeview Pky. Lake County Vernon Hills 132,851 Hyper Microsystems Sublease from Focus Products Group Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 9

10 Lake County POPULATION 712,567 (est.) 2 29 POPULATION CHANGE +1.6% (est.) # INDUSTRIAL BUILDINGS 93 MARKET SIZE (SF) 66,75,778 VACANCY 7,655,492 SF (11.5%) 2Q1 NET ABSORPTION -449,85 YTD NET ABSORPTION -262,434 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 15, chenry Fox Lake Wisconsin Illinois 45 Grayslake Gurnee Waukegan Regional Airport 12 Zion Waukegan North Chicago Submarket Trends Vacancy Rate Net Absorption Asking Rents ake Lake Zurich 12 Libertyville Mundelein 6 Vernon Hills Buffalo Grove 176 Lake Forest 41 Highland Park Plti 294 4, 2, -2, -4, -6, -8, Inventory By City 33% 2Q7 3Q7 4Q7 1Q8 23% 7% 7% 9% 1% 2Q8 Vacancy Rate (%) 11% 3Q8 4Q8 1Q9 2Q9 3Q9 Waukegan Libertyville Gurnee 4Q9 Buffalo Grove Lake Zurich North Chicago 1Q1 Net Absorption (SF) 2Q1 12% 1% 8% 6% 4% 2% % Other Lake County Suburbs Under Construction & Recent Deliveries 1,, 8, 6, 4, 2, 2Q7 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 Deliveries (SF) Under Construction (SF) 2Q9 3Q9 4Q9 1Q1 2Q1 Lake County Overview 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 field. Following a brief reprieve last quarter, vacancy rates resumed their climb during the second quarter, reaching 11.5% at the end of June. Only two years ago, vacancy was near 8%, one of the lowest among the Chicago-area industrial submarkets. Six of the past seven quarters have recorded negative net absorption, and the most recent quarter followed this trend, totaling negative 449,85 SF. This is due to new vacancies coming online, such as ULINE vacating at least 562, SF in Lake County in anticipation of a Six of the past seven quarters have recorded negative net absorption, pushing the vacancy rate from 8% to 11.5%. Pictured Above: 1-13 Lakeview Parkway in Vernon Hills, where computer parts distributor Hyper Microsystems sublease 132,851 SF from Focus Products Group this quarter

11 move to their new headquarters facility in Southeast Wisconsin. Construction The most significant news in the county during the past quarter involved shipping company FedEx announcing plans to build a $37 million facility in Grayslake. The new 217, SF building is slated to open in late-211 and will eventually employ up to 5 part-time and full-time workers. Available Space Profile 1. MM 2.1 MM 2.4 MM 2.1 MM 2.4 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Lake County Overview Transaction Activity Snow removal contractor Ingram Enterprises, Inc. purchased a 26,5 SF building in Prairie View for $85, SF in May, a sign owner-user sales may be picking up again. Ingram will be relocating their operations from nearby Lincolnshire # of Buildings Computer parts supplier Hyper Microsystems subleased the 132,851 SF building located at 1-13 Lakeview Parkway in Vernon Hills from kitchen and bath products distributor Focus Products Group LLC. Focus has moved their warehouse operation to Wisconsin, but plans to keep their offices in Vernon Hills until later this year. Health care product manufacturer Medikmark renewed and expanded their lease at 36 Burwood Drive in Waukegan. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward Vacancy rates should remain elevated in Lake County until job growth and demand return in earnest, resulting in a sustained period of absorption. The worst is apparently over, but the time frame of the eventual recovery is still uncertain due to the sluggish economy. Significant Lake County Sale Transactions 2nd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 338 Grand Ave. Waukegan 46,156 $1,167, $25. Direct Metals Chicago Title Land Trust 1313 Ensell Rd. Lake Zurich 27,21 $2,155, $79. Zetta Medical Settings, Inc Old Weiland Rd. Prairie View 26,5 $85, $33. Ingram Enterprises Inc. Suburban Bank & Trust Significant Lake County Lease Transactions 2nd Qtr. 21 Property Address City Leased (SF) Tenant Comments Business Center Dr. Green Oaks 14,86 Valspar Corporation Lease renewal 1-13 Lakeview Pky. Vernon Hills 132,851 Hyper Microsystems Sublease from Focus Products Group 36 Burwood Dr. Waukegan 48,372 Medikmark Lease renewal/expansion S. Waukegan Rd. Waukegan 44, Comcast Lease renewal/expansion 6 Heathrow Dr. Lincolnshire 3,56 Unified Distributors Sublease from Woodward Governor 3-36 Terrace Dr. Mundelein 21,75 Premier Fulfillment & Distribution, Inc. Sublease from Contract Installations Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 11

12 Southeast Wisconsin POPULATION 252,24 (est.) 2 29 POPULATION CHANGE +5.9% (est.) # INDUSTRIAL BUILDINGS 521 Burlington 142 Racine Sturtevant MARKET SIZE (SF) 43,614,814 VACANCY 5,318,959 SF (12.2%) 2Q1 NET ABSORPTION 46,58 YTD NET ABSORPTION 99,981 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 1,58, 83 Westosha Airport 5 45 Wisconsin Illinois Kenosha Regional Airport Pleasant Prairie Kenosha 32 Zi Submarket Trends Vacancy Rate Net Absorption Asking Rents 1,5, 1,, 5, -5, -1,, Inventory By City 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 2Q8 1Q8 4Q7 3Q7 2Q7 Vacancy Rate (%) Net Absorption (SF) 15% 12% 9% 6% 3% % Southeast Wisconsin Overview 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. 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 1,5-acre business park boasts 25 million SF of industrial space and is home to an international roster of companies including S.C. Johnson, IRIS, Yamaha and Jelly Belly. 16% 17% 6% 27% 34% Racine Pleasant Prairie Sturtevant Kenosha Burlington Bucking the trend, the lower costs associated with doing business in Southeast Wisconsin have led to increased transaction velocity and a year of declining vacancy rates while many other submarkets have witnessed skyrocketing vacancies and little in the way of demand. Overall vacancy dipped to 12.2% during the second quarter, nearly Under Construction & Recent Deliveries 3,, Deliveries (SF) 2,5, Under Construction (SF) a full percentage point lower than the 13.1% recorded in March. Vacancy rates were driven down by tenants occupying their recently leased spaces and several sizeable sale transactions during the second 2,, quarter. Net absorption for the quarter was again positive, totaling 1,5, 1,, 46,58 SF, bringing the 21 first half total to 99,981 SF. 5, 2Q7 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 Vacancy rates continue to drop due to increased sale transactions and tenants occupying their recently leased spaces. Pictured Above: 98 72nd Avenue in Pleasant Prairie s Lakeview Corporate Park, a 891,567 SF distribution building which sold for $38.5 million during the second quarter

13 Construction Construction is nearing completion on ULINE s 196-acre headquarters facility in Pleasant Prairie. The campus will include a 1 million SF distribution center and a 2, SF office headquarters. The company has recently vacated 562, SF of warehouse space in Waukegan and 65, SF of single-story office space at Grand Tri-State Business Park in Gurnee. Transaction Activity Significant transactions were limited to sales during the second quarter, the most notable involving CenterPoint Properties purchasing a sprawling 891,567 SF distribution building in Pleasant Prairie s Lakeview Corporate Park. RREEF sold the building, built in 23 and occupied by SC Johnson at the time of sale, for $38.5 million, or $43 PSF. Local Christian bookseller Treasures Media purchased the 29,166 SF building located at 2745 Chicory Road in April. The building had previously been occupied by vacuum cleaner motor manufacturer Ametek Lamb Electric, but had sat vacant for several years since Ametek closed its doors. Treasures Media purchased the building for $2,975,, or about $14. PSF. Available Space Profile MM 2.2 MM 1, 19,999.3 MM.7 MM 1.1 MM 2, 49,999 5, 99,999 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ 1, 199,999 # of Buildings 2,+ Southeast Wisconsin Overview Looking Forward Lower taxes, utility costs, rental rates and land values found in Southeast Wisconsin will continue to draw companies from south of the border. Much of the industrial inventory in the submarket is modern, with high clear heights and excellent loading specifications. These high cube big-box properties will continue to make Southeast Wisconsin attractive to large distributors. Significant Southeast Wisconsin Sale Transactions 2nd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 98 72nd Ave. Pleasant Prairie 891,567 $38,5, $43. CenterPoint Properties RREEF America LLC 2745 Chicory Rd. Racine 29,166 $2,975, $14. Treasures Media Ametek Lamb Electric 11 88th Ave. Pleasant Prairie 56,642 $3,78, $67. Rolf s Patisserie Hubbell Special Products, Inc. 51 Sheridan Rd. Kenosha 23, $255, $11. William W. Koski Charles & Penny Amelotte Significant Southeast Wisconsin Lease Transactions 2nd Qtr. 21 Property Address City Leased (SF) Tenant Comments None to report NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 13

14 I-9/Northwest POPULATION 211,13 (est.) 2 29 POPULATION CHANGE +25.4% (est.) # INDUSTRIAL BUILDINGS 43 MARKET SIZE (SF) 25,62,633 VACANCY 2,987,933 SF (11.7%) 2Q1 NET ABSORPTION 15,889 YTD NET ABSORPTION -166,69 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) Hampshire Carpentersville East Dundee Elgin Submarket Trends 31 Vacancy Rate Net Absorption Asking Rents South Elgin 4, 2, -2, -4, 2Q7 3Q7 Inventory By City 9% 3% 5% 7% 1,, 8, 6, 4, 4Q7 1Q8 2Q8 Vacancy Rate (%) 76% 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 Net Absorption (SF) Elgin Carpentersville South Elgin East Dundee 2Q1 Dundee, Genoa, Marengo, Hampshire, etc. Under Construction & Recent Deliveries 12% 9% 6% 3% % Deliveries (SF) Under Construction (SF) I-9/Northwest Overview The I-9/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-9. This serves to make the I-9/Northwest submarket a good distribution point for companies that are serving the I-9/upper-midwest supply chain. Relatively low taxes are a benefit 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. More than 76% of the total submarket inventory is located in Elgin. The overall vacancy rate in the I-9 Northwest submarket barely budged during the second quarter, as net absorption was minimal due limited transaction activity, new vacancies, and tenants returning space to the market. Vacancy in June repeated last quarter s rate of 11.7%. Rates have held between 1% and 12% for the past two years. Net absorption for the quarter totaled only 15,889 SF, bringing the total for the first two quarters of 21 to negative 166,69 SF. 2, 2Q7 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 Vacancy barely budged during the second quarter due to limited transaction activity or new vacancies. Pictured Above: 1175 Jansen Farm Court in Elgin, which sold during the second quarter for $975,, or $78.63 PSF

15 Construction New development is at a standstill throughout the submarket and will likely remain limited until the recession is far behind us and demand returns in earnest. Several proposed projects remain in the pipeline and should begin construction when the market improves and developers begin to see the absorption of vacant space. I-9/Northwest Sublease Vacancy Rate Available Space Profile.5 MM.8 MM.4 MM.9 MM.9 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ I-9/Northwest Overview 1.% Sublease Vacancy (%) 5 # of Buildings 4.5% % 1, 19,999 2, 49,999 5, 99,999 2,+ Transaction Activity Few significant deals were recorded for the second quarter. Final Frontier Enterprise Inc. purchased the previously vacant 12,4 SF building located at 1175 Jansen Farm Court in Elgin for $975, in an owner/user sale. The seller, packaging equipment and machinery company M-TEK Inc. leased back 2, SF of warehouse for dry storage 1, 199,999 Looking Forward The I-9/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 find leasing opportunities such as incentives and aggressive rates. Significant I-9/Northwest Sale Transactions 2nd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 1175 Jansen Farm Ct. Elgin 12,4 $975, $78.63 Final Frontier Enterprise Inc. M-TEK, Inc. Significant I-9/Northwest Lease Transactions 2nd Qtr. 21 Property Address City Leased (SF) Tenant Comments 145 N. McLean Blvd. Elgin 11,52 AT&T New lease NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 15

16 Northwest Cook POPULATION 517,239 (est.) 2 29 POPULATION CHANGE +.3% (est.) # INDUSTRIAL BUILDINGS 525 MARKET SIZE (SF) 28,431,27 VACANCY 3,441,485 SF (12.%) 2Q1 NET ABSORPTION 68,22 YTD NET ABSORPTION 213,193 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) Submarket Trends Vacancy Rate Net Absorption Asking Rents East Dundee gin gin 2 19 Bartlett Streamwood Hoffman Estates Lake Zurich Barrington Palatine Arlington Heights Elk Grove Village Chicago Executive Airport Schaumburg Des Plaines Bloomingdale Wood Dale Buffalo Grove Mt. Prospect Ohare Int'l Airport F kli 75, 5, 25, -25, -5, -75, 2Q7 3Q7 4Q7 1Q8 Inventory By City 7% 7% 5, 4, 3, 2, 1% 14% 15% 2Q8 Vacancy Rate (%) 28% 19% 3Q8 4Q8 1Q8 2Q9 3Q9 4Q9 1Q1 Net Absorption (SF) Schaumburg Northlake Mt. Prospect Palatine Barrington Streamwood 2Q1 15% 12% 9% 6% 3% % Bartlett, Hoffman Estates, Roling Meadows, etc. Under Construction & Recent Deliveries Deliveries (SF) Under Construction (SF) Northwest Cook Overview The Northwest Cook submarket is a desirable business location for entrepreneurial owners and corporate managers who reside in the area s suburban communities. The submarket is conveniently located close to Chicago s O Hare International Airport and has excellent access to Chicago and the western suburbs using I-9, I-29 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. For the third straight quarter, vacancy declined in the Northwest Cook submarket. The overall vacancy rate dipped to 12% from 12.9% last quarter. The recent improvement in vacancy is due to increased demand and an uptick in both sale and leasing activity. Net absorption was positive for the quarter, totaling 68,22 SF, bringing the 1, 2Q7 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 Until demand returns, landlords will continue to push aggressive rental rates and signifi cant concession packages. Pictured Above: Mitchell Boulevard in Schuamburg, where packaging services company Just in Time Packaging leased 34,8 SF this quarter

17 total for the first half of the year to 213,193 SF. 12 blocks of more than 1, SF are available in the submarket, and 22 blocks can accommodate 5, SF or more. Construction Largely a developed infill market, the majority of construction projects are building additions, but these have been few and far between due to the ongoing economic situation. Available Space Profile.5 MM 1.3 MM 1.1 MM 1.4 MM.9 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Northwest Cook Overview Transaction Activity In the largest sale of the second quarter, Willow Lake Tech Center, a multi-unit flex property in Schaumburg, sold to investor D&D Management in June for $6.6 million, or $63 PSF # of Buildings The most significant lease of the quarter involved Just in Time Packaging leasing the entire 34,8 SF building located at Mitchell Boulevard in Schaumburg. Another packaging services company, Cloud Packaging Solutions, leased 175,86 SF at 18 W. Central Road in Mt. Prospect, expanding their local operations. 15 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward Although improvements have been witnessed in the Northwest Cook submarket during recent quarters, vacancy will remain in the double-digits for the foreseeable future until job growth and consumer buying power increase demand market-wide. Until demand returns, landlords will continue to push aggressive rental rates and significant concession packages for tenants. Significant Northwest Cook Sale Transactions 2nd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller E. State Pky. Schaumburg 14,25 $6,6, $63. D&D Management Finch & Barry Properties, LLC 5655 Meadowbrook Ct. Rolling Meadows 52,42 $4,9, $94. Unlisted Mori Seiki USA, Inc. Significant Northwest Cook Lease Transactions 2nd Qtr. 21 Property Address City Leased (SF) Tenant Comments Mitchell Blvd. Schaumburg 34,8 Just in Time Packaging New lease 18 W. Central Rd. Mt. Prospect 175,86 Cloud Packaging Solutions New lease 165 N. Penny Ln. Schuamburg 27,742 Sodick Lease renewal 1261 Wiley Rd. Schaumburg 16,216 New Horizon Distribution System New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 17

18 North Cook POPULATION 415,646 (est.) 2 29 POPULATION CHANGE +2.1% (est.) # INDUSTRIAL BUILDINGS 716 Grove MARKET SIZE (SF) 46,527,58 VACANCY 3,84,36 SF (8.2%) 2Q1 NET ABSORPTION -382,133 YTD NET ABSORPTION -795,212 Wheeling 21 ago Executive Airport Northbrook Glencoe NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) n s Morton Grove 94 Evanston Submarket Trends Vacancy Rate Net Absorption Asking Rents e Des Plaines Ohare Int'l Airport 14 Niles Park Ridge 9 41 Skokie Lincolnwood Chicago 5, 3, 1, -1, -3, -5, 4Q8 3Q8 2Q8 1Q8 4Q7 3Q7 2Q7 Inventory By City Vacancy Rate (%) 14% 28% 8% 13% 2% 17% 1Q9 2Q9 3Q9 4Q9 1Q1 Net Absorption (SF) Wheeling Niles Skokie Northbrook Morton Grove 2Q1 1% 8% 6% 4% 2% % Evanston, Glenview, Lincolnwood, Northfield, etc. North Cook Overview Desirable for users seeking quick access to Chicago, major area expressways, and the northern suburbs, the North Cook Submarket is also attractive to long-term Chicago-based users looking to stay close to the city while escaping Chicago congestion. The area has the advantage of an inventory of buildings with better specifications than many of the antiquated buildings found in the city of Chicago. It tends to be a primarily user/buyer market, with limited leasing opportunities. The user base generally consists of service providers and light manufacturers 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 196s 197sera buildings with lower ceilings and low parking ratios. Higher taxes may be a deterrent for some users, while others are willing to pay the price for the location. Vacancy has been climbing for nearly two years in the historically stable North Cook submarket, reaching 8.2% in June. While vacancy rates are low relative to many neighboring submarkets and the overall Chicago industrial market, they have risen nearly 3% in less than two years due to seven consecutive quarters of negative net absorption. Vacancy has climbed nearly 3 basis points in less than two years in the historically stable North Cook submarket Pictured Above: Linder Avenue in Skokie, where Tech Lighting renewed their lease for 192,483 SF during the second quarter

19 Construction The North Cook submarket has experienced very little new development in recent years due to its status as a mature market. North Cook Sublease Vacancy Rate 1.% Sublease Vacancy (%) Available Space Profile.5 MM.8 MM 1.8 MM 1.1 MM 1.2 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ North Cook Overview.5% 1 # of Buildings 8.% Transaction Activity Premium and low-voltage lighting manufacturer Tech Lighting renewed their lease for 192,483 SF in Skokie during the second quarter. Lab equipment supplier American Science & Surplus signed a long-term extension of their existing lease at 741 N. Lehigh Avenue in Niles, keeping their functional distribution center centrally located to retail stores. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward Vacancy should continue to edge upward in the submarket until the confidence in the economy improves, driving industrial production and demand. Historically an owner-user submarket, vacancy rates will not reach levels experienced in neighboring submarkets where large institutionally-owned multi-tenant buildings prevail. Significant North Cook Sale Transactions 2nd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller None to report Significant North Cook Lease Transactions 2nd Qtr. 21 Property Address City Leased (SF) Tenant Comments Linder Ave. Skokie 192,483 Tech Lighting Lease renewal 741 N. Lehigh Ave. Niles 69,56 American Science & Surplus Lease extension 74 N. Croname Rd. Niles 16,19 Cyberus New lease 45 E. Hintz Rd. Wheeling 9,59 Forever Young Day Care Services New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 19

20 Fox Valley POPULATION 115,494 (est.) 2 29 POPULATION CHANGE +37.8% (est.) # INDUSTRIAL BUILDINGS 495 Elgin MARKET SIZE (SF) 32,89,494 VACANCY 3,82,67 SF (11.8%) South Elgin Streamwoo 2Q1 NET ABSORPTION 37,148 YTD NET ABSORPTION -57,619 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) Dupage 59 Airport St Charles 64 Geneva West Chicago Ca Submarket Trends Batavia 38 Vacancy Rate Net Absorption Asking Rents Sugar 3 Grove North Aurora Aurora 88 Naperville 4, 2, -2, -4, -6, -8, 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 2Q8 1Q8 4Q7 3Q7 2Q7 Inventory By City Vacancy Rate (%) Net Absorption (SF) 11% 35% West Chicago 26% St. Charles Batavia Geneva 28% Under Construction & Recent Deliveries 12% 1% 8% 6% 4% 2% % 5, Deliveries (SF) 4, Under Construction (SF) Fox Valley Overview The Fox Valley submarket lies between the I-9/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 small to mid-size range. The user base generally consists of manufacturing companies that serve the area within close proximity to users homes. Much of the inventory is composed of mid-198s buildings in contrast to the modern bigbox distribution warehouses of neighboring submarkets. Many users choose to be in the Fox Valley submarket due to need and remain in the submarket long-term, resulting in limited transaction velocity. The Fox Valley s vacancy rate improved slightly during the second quarter, dipping to 11.85% from 11.96% last quarter. Vacancy has held between 11% and 12% for the past five quarters and has likely peaked due to increased transaction volume. Net absorption for the quarter totaled positive 37,148 SF, bringing the total for the first half of the year to negative 57,619 SF. Demand is typically limited in the Fox Valley submarket, and large swings in net absorption aren t common. 3, 2, 1, 2Q7 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q9 Vacancy has held between 11% and 12% for the past fi ve quarters and has likely peaked due to increased transaction volume Pictured Above: 69 S. Kirk Road in St. Charles, a former Pier 1 Imports distribution facility, was purchased by RR Donnelley & Sons Company during the second quarter

21 Construction Due to the relatively large amount of vacant space on the market, negative absorption trends and limited access to the area, new development projects have been nonexistent. As the market begins to turn around and vacant space is gradually absorbed, construction activity will eventually pick up in and around communities west of the Fox River, as few industrial-zoned land sites remain near the river. Available Space Profile.8 MM.6 MM 1. MM 1.4 MM.8 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Fox Valley Overview Transaction Activity Several sale transactions topped the charts during the second quarter, the most significant involving integrated communications provider RR Donnelley & Sons purchasing the 513,973 SF distribution building located at 69 S. Kirk Road in St. Charles. The building, previously owned by Pier 1 Imports had been occupied by the furniture company until the economic downtown forced them to close the distribution center in early 29. In another sale, solutions provider Rubicon Technology purchased the vacant 134,4 SF building at 95 Douglas Road in Batavia for about $52 PSF and plans to take occupancy this fall , 19,999 2, 49,999 5, 99,999 1, 199,999 # of Buildings 2,+ Publishing company Houghton Mifflin renewed their lease of 17,462 SF at 95 N. Raddant Road in Batavia. Looking Forward Vacancy rates should remain high throughout 21, as transaction velocity is typically low in the Fox Valley submarket. Eventually, increased demand should reverse recent trends of elevated vacancy and negative absorption in the submarket. Significant Fox Valley Sale Transactions 2nd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 69 S. Kirk Rd. St. Charles 513,973 $11,8, $23. RR Donnelley & Sons Company Pier 1 Imports, Inc. 95 Douglas Rd. Batavia 134,4 $7,, $52. Rubicon Technology, Inc. Panattoni Development Company 375 Swenson Ave. St. Charles 2,1 $1,412,5 $7. Eaglestone Inc. Gaffney s Protective Maintenance Inc. 163 Pierson Dr. Batavia 17,528 $1,175, $67. Russell Richmond John Powers Significant Fox Valley Lease Transactions 2nd Qtr. 21 Property Address City Leased (SF) Tenant Comments 95 N. Raddant Rd. Batavia 17,462 Houghton Mifflin Company Lease renewal 3575 Stern Ave. St. Charles 69,814 Manufactured Specialties New lease NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 21

22 Central DuPage POPULATION 393,753 (est.) 2 29 POPULATION CHANGE +1.1% (est.) # INDUSTRIAL BUILDINGS 1,98 Schaumburg MARKET SIZE (SF) 67,28,163 VACANCY 6,977,583 SF (1.4%) 2Q1 NET ABSORPTION -137,21 YTD NET ABSORPTION -76,477 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 2 19 Bloomingdale Glendale Heights Addison Elk Grove Village Ohare Int'l Airport 294 Submarket Trends est Chicago 64 Carol Stream 355 Elmhurst 83 Vacancy Rate Net Absorption Asking Rents Glen Ellyn Lombard 88 W 1,2, 8, 4, -4, -8, Inventory By City 7% 9% 6, 5, 4, 3, 2, 1, 2Q7 18% 3Q7 4Q7 1Q8 2Q8 Vacancy Rate (%) 1% 29% 2Q7 3Q7 4Q7 27% 1Q8 2Q8 3Q8 3Q8 4Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 Net Absorption (SF) Addison Carol Stream Glendale Heights Elmhurst Hanover Park Under Construction & Recent Deliveries 1Q9 2Q9 3Q9 4Q9 2Q1 1Q1 2Q1 12% 9% 6% 3% % Bloomingdale, Lombard, Roselle, Vill Park, Wheaton Deliveries (SF) Under Construction (SF) Central DuPage Overview The well-positioned Central DuPage industrial submarket benefits 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 increased slightly during the second quarter due to limited leasing during the first quarter, reaching 1.4% in June, up from 1.2% in March. Leasing activity increased during the second quarter, suggesting vacancy rates have likely peaked. Vacancy in the Central DuPage market continues to be lower than neighboring submarkets, and the overall Chicago Industrial Market. Net absorption for the quarter totaled negative 137,21 SF. Construction New development will be limited as very little land remains for new speculative construciton in the submarket. Construction projects are limited to building renovations and expansions. Leasing activity continued to increase during the second quarter, suggesting vacancy rates have likely peaked. Pictured Above: 25 S. Gary Avenue in Carol Stream, where NACA Logistics leased the entire 44, SF building during the second quarter.

23 Transaction Activity CenterPoint Properties purchased a truck terminal property at 9 County Line Road in Elmhurst for nearly $338 PSF. The relatively new 38,31 SF building sits on a 1.3-acre site and is fully leased to FedEx Freight Inc. Several significant leases were signed during the second quarter, the largest involved California-based NACA Logistics. The logistics company leased about 44, SF and plans to relocate into the facility in the fall from their current location in Itasca. Extending their existing lease, lighting solutions company Acuity Brands reduced their occupancy costs at their 262, SF space at Central Avenue in Hanover Park. Food equipment parts supplier Parts Town is expanding their operations with a 64,49 SF lease at 115 N. Swift Road in Addison and plans to move this fall. Available Space Profile MM 1.1 MM 2.6 MM 1, 19, MM 1.7 MM 2, 49,999 5, 99,999 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ 1, 199,999 # of Buildings 2,+ Central DuPage Overview Looking Forward Despite vacancy concerns and a difficult real estate market during the past two years, the Central DuPage submarket will be one of the first segments of the Chicago industrial real estate market to rebound as demand increases and transactional activity continues to pick up. An eventual recovery is inevitable, but the timing depends on the pace of job growth over the coming years, the level of consumer confidence and an increase of industrial production. The advantageous location of the Central DuPage submarket, combined with its variety of industrial product, ensure the submarket will be quick respond to improving economic conditions and industry expansion, and one of the first to recover. Significant Central DuPage Sale Transactions 2nd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 9 County Line Rd. Elmhurst 38,31 $12,85, $ CenterPoint Properties Finch & Barry Properties, LLC 1225 W. National Ave. Addison 15, $1,57,5 $7.5 Govind Sanghani Rothbart Realty Company Significant Central DuPage Lease Transactions 2nd Qtr. 21 Property Address City Leased (SF) Tenant Comments 25 S. Gary Ave. Carol Stream 439,789 NACA Logistics (USA) Inc. New lease Central Ave. Hanover Park 262, Acuity Brands Lighting, Inc. Lease renewal 115 N. Swift Rd. Addison 64,49 Parts Town New lease 335 Eisenhower Ln. S. Lombard 3,65 RehabTECH New lease S. Westwood Ave. Addison 26,74 Bridgestone Firestone New lease 747 Church Rd. Elmhurst 18,244 Integra Healthcare Equipment New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 23

24 O Hare POPULATION 136,517 (est.) 2 29 POPULATION CHANGE -2.6% (est.) # INDUSTRIAL BUILDINGS 1,73 MARKET SIZE (SF) 1,88,826 VACANCY 12,947,256 SF (12.8%) 2Q1 NET ABSORPTION -252,936 mburg 72 Heights 9 Des Plaines Morto Grov N YTD NET ABSORPTION -1,15,834 NEW SUPPLY (SF) 31,216 UNDER CONSTRUCTION (SF) Itasca Elk Grove Village Ohare Int'l Airport Park Ridge Submarket Trends Vacancy Rate Net Absorption Asking Rents ngdale dale ghts Bensenville Addison Wood Dale Franklin Park Elmhurst Melrose 2,, 1,3, 6, -1, -8, -1,5, Inventory By City 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 2Q8 1Q8 4Q7 3Q7 2Q7 Vacancy Rate (%) Net Absorption (SF) 15% 12% 9% 6% 3% % O Hare Overview 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 4 million SF of industrial and flex space. Many of the buildings in the submarket are older and functionally obsolete. Redevelopment and construction has slowed dramatically. 9% 1% Elk Grove Village 11% Des Plaines 42% Bensenville Itasca 18% Wood Dale Rosemont 18% Under Construction & Recent Deliveries 8, Deliveries (SF) Under Construction (SF) 6, 4, Despite increased transaction velocity, the O Hare vacancy rate increased again during the second quarter, influenced by the introduction of significant new vacancies to the market, such as the entire 439,35 SF distribution and warehouse building located at 855 N. Wood Dale Road in Wood Dale. Sublease vacancy has been on the rise as well during recent quarters, accounting for 1.2 million SF, or 1.2% of the entire O Hare submarket as of June. Net absorption, used to measure demand, totaled negative 252,936 SF for the quarter, bringing the tally for the first half of 21 to more than one million SF of negative net absorption. 2, 2Q7 3Q7 4Q7 1Q8 2Q9 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 Signifi cant new vacancies continue to offset the effects of increased transaction activity, keeping vacancy rates high. Pictured Above: Arthur Avenue in Elk Grove Village, where Veterans Distribution of Chicago leased 15, SF during the second quarter

25 Construction Development activity, so prevalent a few years ago, has come to standstill in the submarket. Many of the projects completed during recent years were speculative facilities, and they still sit vacant today due to limited demand and low rental rates. Transaction Activity A flurry of new deals occurred during the second quarter, likely resulting in positive absorption and an improvement in vacancy as tenants take occupancy of space leased this quarter. Metal and plastic products supplier Trend Technologies, LLC renewed their lease for 159,383 SF at Fargo Avenue in Elk Grove Village. Also renewing their lease, transportation solutions provider Veterans Distribution of Chicago plans to stay in their 15, SF space at Arthur Avenue in Elk Grove Village. Pactrans Air and Sea signed a lease for nearly 121, SF during the second quarter. The air and freight company has experienced substantial growth over recent years and needed to expand their operations. Available Space Profile MM 2.9 MM 4.7 MM 1, 19, MM 3.7 MM 2, 49,999 5, 99,999 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ 1, 199,999 # of Buildings 2,+ O Hare Overview Venture One Real Estate purchased the vacant 62,597 SF building located at 115 Lively Boulevard in Elk Grove Village from Flextronics International. Looking Forward Despite an increase in transactional activity and construction remaining minimal, vacancy will remain elevated in the O Hare submarket until demand picks up, industrial production increases, and consumer spending returns in earnest. Significant O Hare Sale Transactions 2nd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 115 Lively Blvd. Elk Grove Village 62,597 $1,663, $27. Venture One Real Estate, LLC Flextronics International 226 Lively Blvd. Elk Grove Village 1, $78, $71. Trust Air Cargo USA TDC Holding Inc. Significant O Hare Lease Transactions 2nd Qtr. 21 Property Address City Leased (SF) Tenant Comments Fargo Ave. Elk Grove Village 159,383 Trend Technologies, LLC Lease renewal Arthur Ave. Elk Grove VIllage 15, Veterans Distribution of Chicago Lease renewal Thorndale Ave. Bensenville 12,985 Pactrans Air and Sea New lease N. Third Ave. Des Plaines 94,357 Dulin Metals/Versatile Processing New lease 121 Kirk St. Elk Grove Village 93,38 Color Concepts New lease N. Third Ave. Des Plaines 8,73 Midland Paper Company New lease 751 Expressway Dr. Itasca 63,35 Door Systems Lease renewal NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 25

26 West Cook POPULATION 244,228 (est.) 2 29 POPULATION CHANGE -4.4% (est.) # INDUSTRIAL BUILDINGS 742 MARKET SIZE (SF) 6,428,35 VACANCY 7,432,219 SF (12.3%) 2Q1 NET ABSORPTION -335,663 YTD NET ABSORPTION -255,738 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) Submarket Trends Vacancy Rate Net Absorption Asking Rents k Grove Village Bensenville 29 Elmhurst Ohare Int'l Airport Franklin Park Melrose Park Bellwood Schiller Park Niles 43 Oak Park Skokie 9 94 Chicago 1,, 5, -5, -1,, -1,5, 2Q7 3Q7 4Q7 Inventory By City 8, 6, 4, 12% 5% 8% 9% 29% 1Q8 2Q8 Vacancy Rate (%) 37% 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 2Q1 Net Absorption (SF) Franklin Park Melrose Park Bellwood Schiller Park Berkeley 2Q1 15% 12% 9% 6% 3% % Harwood Heights, Hillside, Maywood, Norridge, River Grove Under Construction & Recent Deliveries Deliveries (SF) Under Construction (SF) West Cook Overview 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 benefits 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 has generally been on the rise in the West Cook submarket since the end of 27, and the trend continued this quarter. The overall vacancy rate reached 12.3% at the end of June, up from 11.7% in March, and up significantly from the 7.13% recorded when market conditions were at their peak in 27. Net absorption totaled negative 335,663 SF for the quarter, suggesting that demand has still not returned in earnest. New vacancies continue to come online as companies give back space and fail to renew their leases. 2, 2Q7 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 Vacancy has generally been on the rise since the end of 27, reaching 12.3% at the end of June. Pictured Above: 55 N. Railroad Avenue in Northlake, purchased by Ascent Corporation for $11.5 million during the second quarter

27 Construction As an effort to sell their 25-acre property in Franklin Park after moving operations to Joliet, Central Grocers demolished the 8, SF building on the property. The property was purchased by Molto Capital LLC in June and can accommodate a redevelopment up to 7, SF. Transaction Activity After multiple failed deals, the former Central Grocers sites in Franklin Park sold this June for a combined $2.3 million. Molto Capital purchased the recently razed 25-acre site near the intersection of Mannheim Road and Seymour Avenue for $12.4 million, while the 19-acre site at Belmont Road and Wolf Road sold to Hill Mechanical Group for $7.9 million, to expand and provide truck parking for their adjacent facility. Data center solutions provider Ascent Corporation purchased the 284,165 SF manufacturing building located at 55 N. Railroad Avenue in Northlake from CenterPoint Properties in May. The building was vacant prior to the sale and sold for $11.5 million, or $4 PSF. Available Space Profile MM 3.4 MM.5 MM 1, 19, MM 2.3 MM 2, 49,999 5, 99,999 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ 1, 199,999 # of Buildings 2,+ West Cook Overview Several significant leases also occurred during the second quarter, with the largest involving Jewel Food Stores renewing their 19, SF lease at 3781 Centrella Street in Franklin Park. Looking Forward Plagued by high vacancy, the West Cook and O Hare submarkets will continue to experience the same vacancy concerns until demand picks up and institutional owners respond to the market by leasing spaces in their buildings at a discount. Significant West Cook Sale Transactions 2nd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 371 Centrella St. Franklin Park 25 acres $12,4, $11. Molto Capital LLC Central Grocers, Inc. 55 N. Railroad Ave. Northlake 284,165 $11,5, $4. Ascent Corporation CenterPoint Properties 3 building complex Franklin Park 183,95 $7,9, $43. Hill Mechanical Group Central Grocers, Inc Irving Park Rd. Franklin Park 26,633 $8,2, $38. CenterPoint Properties Finch & Barry Properties, LLC 9522 Winona Ave. Schiller Park 75,475 $3,2, $42.4 TransWorld Merchandise Center, Inc. Schneider Electric Industries Significant West Cook Lease Transactions 2nd Qtr. 21 Property Address City Leased (SF) Tenant Comments 33 Cullerton Ave. Franklin Park 19, Jewel Food Stores Lease extension 247 W. North Ave. Melrose Park 71,883 FHC Marketing Sublease from Peerless Industries W. Lake St. Melrose Park 4,338 Spirit Delivery and Distribution Service Lease renewal Belmont Ave. Franklin Park 23, K2 Express, Inc. Lease expansion Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 27

28 3 59 I-88 Corridor POPULATION 557,546 (est.) 2 29 POPULATION CHANGE +21.2% (est.) # INDUSTRIAL BUILDINGS 771 MARKET SIZE (SF) 61,834,957 VACANCY 8,132,575 SF (13.2%) 2Q1 NET ABSORPTION 143,848 YTD NET ABSORPTION 626,571 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) St Charles 29 Dupage Carol Stream Airport Elmhurst West Chicago 355 Batavia Oak Brook North Aurora Lisle Downers Naperville Grove Sugar Grove 53 Aurora 34 Woodridge Montgomery 55 3 Bolingbrook Submarket Trends Vacancy Rate Net Absorption Asking Rents 1,, 6, 2, -2, -6, -1,, Inventory By City 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 2Q8 1Q8 4Q7 3Q7 2Q7 Vacancy Rate (%) Net Absorption (SF) 15% 12% 9% 6% 3% % I-88 Corridor Overview 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 financing has become difficult, vacancy has increased and demand has been limited. 7% 15% 1,5, 1,25, 1,, 75, 5, 25, 17% 18% 2Q7 3Q7 4Q7 43% Under Construction & Recent Deliveries 1Q8 Deliveries (SF) 2Q8 3Q8 4Q8 Aurora Naperville Montgomery Downers Grove Oswego, Westmont, North Aurora, Hinsdale, Lisle, etc. 1Q9 Under Construction (SF) 2Q9 3Q9 4Q9 1Q1 2Q1 Vacancy improved for the second consecutive quarter in the I-88 Corridor, dropping slightly to 13.2%, down from 13.4% last quarter and 14.2% at its peak last December. Increased transaction velocity, companies retaining their existing space and fewer new vacancies contributed to another quarter of positive net absorption, bringing the total for the first two quarters of the year to 626,571 SF. Construction New development is on hold in the submarket until the market recovers and steady absorption of some of the more than 8 million SF of vacant space is realized. Vacancy improved for the second consecutive quarter due to an increase in deals and fewer new vacancies pushing absorption positive. Pictured Above: 2188 Diehl Road in Aurora s Prairie Point West Business Park, purchased by tenant Freudenberg Household Products for $25 million during the second quarter

29 Transaction Activity In comparison o the high frequency of lease renewal last quarter, the largest leases this quarter we new leases. This will result in continued absorption when the companies leasing these sizeable spaces take occupancy in the coming quarters. Lamination stamping and motor lamination manufacturer Laser Technologies signed a long-term lease for 159, SF at 112 Frontenac Road in Naperville. Leasing 13, SF in Aurora s White Oak Business Park, motor controller manufacturer Control Solutions, LLC consolidated operations into one building while expanding in their move from three separate buildings in the park to the class A building located at 252 Diehl Road. Available Space Profile.6 MM 3.7 MM 2.7 MM MM 1.7 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ # of Buildings I-88 Corridor Overview 2 German-based Freudenberg Household Products, who had leased their recently constructed 525, SF build-to-suit in Aurora, purchased the facility for $25 million in May. IDI is still under contract to expand the building by 11, SF. Also sold during the second quarter, the owner of PTS Fulfillment Services Inc. purchased the vacant 64,755 SF building at 3615 E. Exchange Street in Aurora to expand his business. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward Activity and interest in the I-88 Corridor submarket will continue to grow as companies look to take advantage of the current market by addressing their real estate discussions that had been shelved over the past few years. Excellent expressway access, augmented by the recently opened Eola Road interchange at I-88, combined with a plethora of quality product, will help the I-88 Corridor continue to attract tenants and rebound. Significant I-88 Corridor Sale Transactions 2nd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 2188 Diehl Rd. Aurora 525, $25,, $48. Freudenberg Household Products IDI 3615 E. Exchange St. Aurora 64,755 $2,49,5 $38. PTS Fulfillment Services Inc. Duke Realty Corporation 419 E. Ogden Ave. Clarendon Hills 15,68 $2,2, $14. Horst Kollarus George Cibula Significant I-88 Corridor Lease Transactions 2nd Qtr. 21 Property Address City Leased (SF) Tenant Comments 112 Frontenac Rd. Naperville 159, Laser Technologies Inc. New lease 252 Diehl Rd. Aurora 13, Control Solutions, LLC New lease 88 N. Enterprise St. Aurora 82,762 Demand One, Inc. New lease 256 White Oak Cir. Aurora 36,666 Premio, Inc. Lease renewal 88 N. Enterprise St. Aurora 28,5 Hanchette Paper Co. Lease renewal Janes Ave. Downers Grove 2, Dryco, LLC New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 29

30 I-55 Corridor POPULATION 239,267 (est.) 2 29 POPULATION CHANGE +34.8% (est.) # INDUSTRIAL BUILDINGS 655 MARKET SIZE (SF) 8,357,318 VACANCY 11,21,51 SF (13.9%) 2Q1 NET ABSORPTION -148,28 YTD NET ABSORPTION -33,978 a Naperville 53 Downers Grove Woodridge Hinsdale Burr Ridge 294 Wi Spr NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 53, 59 Bolingbrook Submarket Trends 3 55 Romeoville Vacancy Rate Net Absorption Asking Rents Plainfield ,, 3,, 2,, 1,,, -1,, 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 2Q8 1Q8 4Q7 3Q7 2Q7 Vacancy Rate (%) Net Absorption (SF) 2Q1 2% 16% 12% 8% 4% % I-55 Corridor Overview Of all of the Chicago area industrial submarkets, the I-55 Corridor has seen the most activity and development interest over the past several years. As a result, the majority of the available land parcels are either already developed or are controlled by developers, rendering the I-55 Corridor an infill market with little additional land available for significant new development. Inventory By City 5% 5% 1% 9% 34% 37% Bolingbrook Romeoville Woodridge Lemont Plainfield Burr Ridge, Forest View, Willowbrook Up slightly during the second quarter, vacancy rates in the I-55 Corridor have been relatively stable for the past 2 years, generally maintaining a rate between 13% and 14%. At the end of June, vacancy increased to 13.9%, the same rate as a year ago. Net absorption totaled negative 148,28 SF, an insignificant adjustment for such a large submarket. The I-55 Corridor contains more than 8 million SF of industrial inventory, making it one of Chicago s most prominent industrial submarkets. Under Construction & Recent Deliveries 4,5, Deliveries (SF) 3,75, Under Construction (SF) 3,, 2,25, Construction New construction in the submarket remains limited to expansions such as 53, SF being added to the partially completed building at 51 Woodcreek Drive in Bolingbrook. 1,5, 75, 2Q7 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 Increased demand will eventually outweigh new vacancies and downsizing companies, resulting in absorption and improving vacancy. Pictured Above: 153 Schmidt Road in Romeoville s Crossroads Business Park, where logistics company ALG Direct leased 499,2 SF during the second quarter

31 Transaction Activity Best known for manufacturing and distributing WeatherTech heavy-duty car floor mats, MacNeil Automotive Products purchased a 7,553 SF manufacturing building located in Bolingbrook s Remington Lakes Industrial Park as part of an effort to move several of its Downers Grove facilities to Bolingbrook. Available Space Profile.5 MM 1. MM 2. MM 7.9 MM 2.7 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ I-55 Corridor Overview As the largest lease transaction of the year so far in the I-55 Corridor, logistics company ALG Direct leased the entire 499,2 SF building located at 153 Schmidt Road in Romeoville s Crossroads Business Park. Since the building was previously vacant, the deal will boost absorption when ALG Direct takes occupancy during the fourth quarter. Smartwire and cable manufacturer Windy City Wire renewed their lease for 11,51 SF at their headquarters in Bolingbrook and expanded into the adjacent 52,613 SF portion of the building. Similarly, Ashley Furniture parent company Rockledge Furniture extended their existing lease and expanded into an additional 25,5 SF at 75 Veterans Parkway in Bolingbrook. The furniture company now occupies more than 152, SF in the class A distribution building located in the Remington Lakes Industrial Park , 19,999 2, 49,999 5, 99,999 1, 199,999 # of Buildings 2,+ Looking Forward As transaction activity accelerates, demand should eventually outweigh new vacancies and downsizing companies, resulting in positive absorption and decreasing vacancy in the submarket. Meanwhile, institutional ownership will continue to offer competitive rental rates and generous concession packages to attract tenants. Significant I-55 Corridor Sale Transactions 2nd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 4 Sammons Ct. Bolingbrook 7,553 $5,6, $79.37 MacNeil Automotive Products Private trust Significant I-55 Corridor Lease Transactions 2nd Qtr. 21 Property Address City Leased (SF) Tenant Comments 153 Schmidt Rd. Romeoville 499,2 ALG Direct New lease 386 Internationale Dr. Bolingbrook 163,123 Windy City Wire Lease renewal/expansion 75 Veterans Pky. Bolingbrook 152,456 Ashley Furniture Lease extension/expansion 1 Davey Rd. Woodridge 79,12 Dwyer Products New lease 34 Remington Blvd. Bolingbrook 76,677 Windy City Baldor New lease 4 Crossroads Pky. Bolingbrook 57,447 Product Development Corporation Lease renewal 1441 N. Beaudin Blvd. Woodridge 37,659 Mark Shale Lease renewal 32 Forestwood Dr. Romeoville 35, Worldwide Material Handling New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 31

32 South Cook POPULATION 675,579 (est.) 2 29 POPULATION CHANGE -5.2% (est.) # INDUSTRIAL BUILDINGS 1,125 MARKET SIZE (SF) 85,391,116 VACANCY 1,68,172 SF (12.5%) 2Q1 NET ABSORPTION -297,544 YTD NET ABSORPTION -41,127 NEW SUPPLY (SF) 23,4 UNDER CONSTRUCTION (SF) 651,78 Submarket Trends Vacancy Rate Net Absorption Asking Rents Woodridge le Tinley Park Mokena Bedford Park Bridgeview Alsip Palos Heights Chicago Midway Airport 5 Matteson 57 Blue Island 1 1 Park Forest 83 South Holland Sauk Village Gary/Chi Hammond 8 94 Schererville Monee is n a 1,, 4, -2, -8, -1,4, -2,, Inventory By City 35% 2Q7 3Q7 4Q7 1Q8 2Q8 Vacancy Rate (%) 26% 5% 8% 11% 14% 3Q8 4Q8 1Q9 2Q9 3Q9 Bedford Park Alsip Chicago Heights Bridgeview 1Q1 Net Absorption (SF) South Holland Other Southern Cook Communities Under Construction & Recent Deliveries 1,5, 1,2, 9, 4Q9 2Q1 15% 12% 9% 6% 3% % Deliveries (SF) Under Construction (SF) South Cook Overview The South Cook submarket is one of the Chicago metropolitan area s largest in terms of geographic size and total square footage. The area benefits from a good mix of manufacturing and distribution facilities due to an abundance of skilled, educated labor, and excellent access to several major expressways, train lines and public transportation. The submarket consists of primarily older product with scattered modern infill developments of around 2 million SF in Bedford Park and additional projects in Alsip and Sauk Village. Ownership is mixed, including institutional, owner/user and both national and local private owners. While its location close to Chicago is key, Cook County taxes can be a financial burden. The overall vacancy rate bounced around a bit during recent quarters, but has more or less held between 12% and 13% over the course of the economic downturn. It increased slightly in June, finishing the quarter at 12.5%, up from 12.2% last quarter. Net absorption totaled negative 297,544 SF. Vacancy and net absorption were both negatively impacted by significant new vacancies being introduced to the market and little demand to offset their effect. 6, 3, 2Q7 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 Vacancy and net absorption were negatively impacted by new vacancies being introduced and little demand to offset their effect. Pictured Above: 66 W. 73rd Street in Bedford Park, where Northstar Aerospace renewed their lease for the entire 24, SF building during the second quarter

33 Construction To be delivered in July, the submarket s newest building is a 137,78 SF precast industrial warehouse building close to the 95th Street/I-294 interchange in Bridgeview. Other ongoing projects include building expansions, such as the doubling of 161 Lathrop Ave. in Harvey. The building was expanded to roughly 1 million SF in order to accommodate tenants Allied Tube & Conduit Corp. and Tyco Electrical & Metal Products. Available Space Profile 1.2 MM 4.9 MM 2.9 MM 1.9 MM 1.9 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ South Cook Overview Transaction Activity Contract manufacturer and packaging company Apco Packaging Inc. purchased the 81, SF building located at 991 S. 76th Avenue in Bridgeview for $3.7 million, about $46 PSF, during the second quarter # of Buildings Aerospace component and transmission manufacturer Northstar Aerospace renewed their lease for the entire 24, SF industrial building located at 66 W. 73rd Street in Bedford Park. Signing a new lease, freight forwarder Master Shipping Inc. plans to move next quarter into 4,762 SF, about half the 86,2 SF industrial warehouse building located at S. Lombard Lane in Alsip. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward Landlords continue to offer low lease rates and substantial concession packages to attract tenants. Vacancy rates in the South Cook submarket are likely near their peak and will remain high until demand increases and some of the more than 1 million SF of vacancy space in the submarket begins to be steadily absorbed. South Cook Sale Transactions 2nd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 991 S. 76th Ave. Bridgeview 81, $3,7, $46. Apco Packaging Inc. Chicago Metallic Corporation 9725 Industrial Dr. Bridgeview 38,5 $1,2, $26. KB Building LLC PAF Investments LLC 1581 Van Drunen Rd. South Holland 4,82 $552, $14. American Piping Products, Inc. Shelco Steel Works, Inc S. Ashland Ave. Homewood 3, $5, $18. B-Line Trucking Inc. Fastener Equipment Corporation South Cook Lease Transactions 2nd Qtr. 21 Property Address City Leased (SF) Tenant Comments 66 W. 73rd St. Bedford Park 24, Northstar Aerospace Lease renewal 51 W. 123rd St. Alsip 72,2 Lighthouse Trucking Lease renewal W. 122nd St. Alsip 46,534 InStone New lease S. Lombard Ln. Alsip 4,762 Masters Shipping Inc. New lease S. Lathrop Ave. Harvey 29,131 Corsican Bedding Inc. New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 33

34 59 I-8/Joliet Corridor POPULATION 43,23 (est.) 2 29 POPULATION CHANGE +39.9% (est.) # INDUSTRIAL BUILDINGS 614 MARKET SIZE (SF) 62,48,397 VACANCY 1,94,143 SF (17.5%) 2Q1 NET ABSORPTION 5,415 YTD NET ABSORPTION 417,338 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 217,712 Submarket Trends Vacancy Rate Net Absorption Asking Rents le Ottawa Seneca 47 North Aurora 113 Aurora Plainfield Tinley Park 3 6 Shorewood Joliet Mokena 3 New Lenox 53 Minooka Channahon Elwood Downers 55 Grove Bolingbrook A Kankakee 2,, 1,5, 1,, 5,, -5, 2Q7 3Q7 4Q7 Inventory By City 6,, 5,, 4,, 25% 5% 1% 16% 1Q8 2Q8 Vacancy Rate (%) 44% 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 Net Absorption (SF) Joliet Elwood Minooka Ottawa 2Q1 22% 19% 16% 13% 1% 7% Mokena, New Lenox, Shorewood, Frankfort, etc. Under Construction & Recent Deliveries Deliveries (SF) Under Construction (SF) I-8/Joliet Corridor Overview The I-8/Joliet Corridor submarket has historically catered to multistate big box distribution. Its access to I-8 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 CenterPoint Intermodal Center, 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 do not have intermodal traffic. The vacancy rate remained virtually unchanged during the second quarter, ending June at 17.5%, a sign that demand and tenants taking occupancy of their recently leased space offset the effects of new vacancies being added to the market. Vacancy is down significantly from the beginning of 29, when the overall rate was over 2%. 3,, 2,, 1,,, 2Q7 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 Recent deals have centered around the anticipated opening of Joliet s new intermodal center this August. Pictured Above: An artist s rendering of Union Pacific s new Joliet Intermodal Terminal, expected to begin operations this August

35 However, the submarket is subject to significant swings in vacancy and absorption due to the large size of the transactions that typically take place. Construction A 217,712 SF build-to-suit building is still under construction at the new 8-acre intermodal facility in Joliet. This new intermodal operation will eventually have the ability to hold around 2 million SF, and will position CenterPoint Intermodal Center with both the BNSF & Union Pacific rail lines. Available Space Profile MM.7 MM.9 MM.6 MM 2.1 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ # of Buildings I-8/Joliet Corridor Overview Transaction Activity Recent deals have centered around the anticipated opening of Union Pacific s new Joliet Intermodal Terminal, which is quickly moving towards opening on August 1st. Trucking companies are looking to locate close to the new development for the opening. An example of this involves transportation services provider Adrian Carriers Inc. leasing just over 3 acres of land at 1955 Patterson Road in Joliet for truck parking. Similarly, Buckley Transportation, Inc. purchased a 2.8 acre property with a 6,28 SF building onsite for $8, SF to provide service to the new intermodal , 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward The submarket s intermodal developments play a key role in the future of the I-8/Joliet Corridor. Increased interest in the costsaving locational advantages of these facilities will continue to drive demand in the submarket. I-8/Joliet Corridor Sale Transactions 2nd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller st St. Mokena 51,4 $2,75, $54. Schilling Brothers Lumber First American Bank 78 N. Highland Dr. Morris 15,53 $46, $3. Southwest Oil Private trust 1217 Channahon Rd. Rockdale 6,28 $8, $127. Buckley Transporation, Inc. Private trust I-8/Joliet Corridor Lease Transactions 2nd Qtr. 21 Property Address City Leased (SF) Tenant Comments 3252 S. Route 45 Peotone 18, Hawkins Inc. New lease 1955 Patterson Rd. Joliet 3.8 acres Adrian Carriers Land lease for truck parking Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 35

36 Industrial Submarket Map Beloit Westosha Airport Wisconsin Illinois 1 Chicago North Pleasant Prairie 2 Chicago South 3 North Cook Zion Fox Lake 76 4 West Cook Waukegan Regional Airport 9 5 Southwest Cook 83 6 South Cook 14 Waukegan McHenry 23 Grayslake I-57/Will Corridor Rockford 8 Lake County 94 9 Northwest Cook 23 Belvidere Cherry Valley 2 19 Mundelein O Hare 6 Crystal Lake Lake Forest Vernon Hills 6 11 Central DuPage 45 Lake Zurich I-55 Corridor Buffalo Grove 9 12 Highland Park 13 McHenry County Hampshire Northbrook Dundee South Elgin 15 Fox Valley 3 Morton Grove Des Plaines Schaumburg I-9 Northwest Arlington Heights 72 Elgin 64 Chicago Executive Airport 53 Glencoe Niles Streamwood Elk Grove Village 16 I-88 Corridor Evanston vvans nnston Skokie Park Ridge Ohare 1 Wood Dale 29 Bensenville Bloomingdale DeKalb elle Geneva West Chicago 38 Carol Stream 11 Elmhurst Sugar Grove Naperville 16 Aurora 3 Hinsdale Downers Grove Woodridge Burr Ridge Montgomery 3 Westchester 31 Bolingbrook Bedford Park Willow Springs 51 Plainfield Palos Heights 9 94 Blue Island East Chicago Gary/Chicago Airp Hammond Hazel Crest Tinley Park Chicago Midway Airport Oak Lawn 83 Romeoville 39 Chicago Cicero La Grange Northwest Indiana North Aurora 2 Southeast Wisconsin 4 Melrose Park Batavia 19 1 Franklin Park Dupage St CharlesAirport DeKalb County 19 I-39 Corridor I-8/Joliet Corridor 3 52 Joliet 3 Munster 1 8 Mokena Matteson 21 New Lenox 52 3 Park Forest Minooka La Salle 6 Ottawa NAI Hiffman Monee Elwood Seneca Indiana 52 Illinois

37 Methodology & Defi nitions Methodology 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 office and industrial properties located in the metropolitan Chicago area defined by the submarket map on page 36. NAI Hiffman obtained the information from property representatives, CoStar Group, RealCapital Analytics, industry periodicals and magazines, our in-house property database, and other sources. NAI Hiffman greatly appreciates the participation of all individuals, companies and resources, whose contributions helped make this report possible. All of the information detailed throughout this report is saved and organized in our own in-house database and is regularly updated. By utilizing this database, we can analyze, calculate and report demographic information, inventory, vacancy, availability, net absorption, and transactional information. Definitions The 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 defined below according to NAIOP Terms & Definitions. 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 defined as total square footage and/or number of buildings that has completed construction and received a certificate of occupancy during a stated period. Under Construction. Buildings where either: a) actual ground breaking has occurred (site excavation or foundation work) and construction is ongoing (not abandoned or discontinued) but for which a certificate of occupancy has not yet been issued; or b) properties undergoing conversion to office 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 certificate of occupancy to be made available for lease. Submarket Map / Methodology / Definitions Total Inventory (Market Size). The total square footage of gross rentable area in a specific market. It includes the gross rentable area in buildings that have received a certificate of occupancy. Total inventory increases when a new building is delivered and decreases when an existing building is destroyed, demolished or its use changes. 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. 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. Shadow Space. That portion of leased space which is vacant but not available space. Shadow space is difficult to measure. (Synonym: phantom space) NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 37

38 NAI Hiffman & NAI Global The Power of Local Knowledge. NAI Hiffman is the largest full service, privately-owned commercial real estate brokerage and management company in the Chicago region. With over 15 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, office, industrial, retail, and investment brokerage and management services including: Acquisition & Dispositions Leasing & Subleasing Tenant Representation Property Management Sale/Leaseback Build-to-Suit Investment Services Site Selection Due Diligence Market Research Consulting & Strategic Planning Receivership & REO Disposition The Power of Global Reach. NAI Global is the premier network of independent commercial real estate firms 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 offices in 55 countries around the world to deliver results for our clients. As the world s only managed network of commercial real estate firms, we conclude over $45 billion in business annually by working together to help our clients strategically optimize their assets. We also manage over 2 million SF of commercial space. For more information, visit NAI Global has 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, provides technology, marketing and corporate services support to NAI Global s network of real estate offices.

39 NAI Hiffman Dennis Hiffman Jeff Fischer Chairman & C.E.O. Vice President David Peterson, RPA Larry Goldwasser C.O.O. Vice President Michael Robbins Associate Adam Roth, CCIM, SIOR Vice President Research Craig Hurvitz Director of Statistics and Market Information Marketing NAI Hiffman / NAI Global Industrial Services John Cash, SIOR Exec. V.P./Managing Director jcash@hiffman.com Duke Botthof Executive Vice President botthof@hiffman.com Brian Colson Executive Vice President bcolson@hiffman.com Steve Connolly, SIOR Executive Vice President sconnolly@hiffman.com Benjamin Cremer Vice President bcremer@hiffman.com Kelly Disser Associate kdisser@hiffman.com Eric Fischer Senior Associate David Haigh Associate dhaigh@hiffman.com Daniel Leahy, SIOR Executive Vice President dleahy@hiffman.com Jay Maher, III Associate jmaher@hiffman.com Irvin Malik Senior Associate imalik@hiffman.com Adam Marshall Senior Associate amarshall@hiffman.com Mark Moran Executive Vice President mmoran@hiffman.com Lawrence Much, SIOR Executive Vice President lmuch@hiffman.com Stephen Sullivan Vice President ssullivan@hiffman.com Eric Tresslar Executive Vice President etresslar@hiffman.com John Whitehead Associate jwhitehead@hiffman.com Daniel Wilkins Associate dwilkins@hiffman.com Investment Services Arthur Burrows Senior Vice President aburrows@hiffman.com Mike Tenteris Senior Vice President mtenteris@hiffman.com William Montana Senior V.P./Managing Director Julia Sutherland Marketing Director jsutherland@hiffman.com Jonathan Skaggs Art Director jskaggs@hiffman.com Jennifer Burke Catherine DeBoer Elsa Gaztambide Karen Kirian Alison O Connell Melody Palese Denise Racana efischer@hiffman.com wmontana@hiffman.com NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT MID-YEAR 21 39

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