Committed to Chicago. Connected to the World. Metropolitan Chicago. NAI Hiffman Industrial Market Report Third Quarter

Transcription

1 Committed to Chicago. Connected to the World. Metropolitan Chicago NAI Hiffman Industrial Market Report Third Quarter 211

2 To our valued customers, partners and future clients... Our family has a door jamb in our house with a row of tiny marks it has accumulated over the years. At every birthday we d make a new line showing how much each of our children had grown over the course of the year. It was impossible to see the changes from day to day, but gradually and inevitably, those marks crept higher. We ve all seen economic projections and heard predictions about how, when and if the recovery will take place. This market report is an opportunity to take stock of actual conditions as they exist at a moment in time and to realize that, although we may not feel it or see it from day to day, we are indeed experiencing change for the better. Of course we are all affected by the global economy and political back-and-forth, and we do not realistically anticipate a significant market upswing in the near future. However at NAI Hiffman, we have seen an encouraging increase in transactions, up 3 percent from this time last year which was up from the year prior. Corporations cash positions are healthy and many are poised for growth and expansion. These trends, supported by other statistics you will see in the following pages, suggest we are seeing a modest recovery in the making. The marks are moving in the right direction. My kids are grown now, and that door jamb is a reminder that the days and the cycles we live through can go by quickly. In addition to planning for and building toward recovery, it is invaluable to appreciate the growth we have now even if it s measured in inches. Many secondary and tertiary markets are still hoping to experience the positive signs we are beginning to see in our place of business. Chicago is a resilient and diverse market, plus we are fortunate to work in an industry that is on the front lines contributing to the economic health of our clients and communities. Thank you as always, for entrusting to us the opportunity to be a source of guidance related to your specific real estate needs. Regards, David A. Petersen, RPA CEO, NAI Hiffman CEO, NAI Hiffman Asset Management

3 Metropolitan Chicago NAI Hiffman Industrial Market Report Third Quarter 211 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 Northwest Indiana Submarket Map Methodology / Definitions NAI Hiffman / NAI Global NAI Hiffman understands that our success is the direct result of creating successful outcomes for our clients. We build lasting relationships with our clients and partners, engaging our individual initiative joined with collaboration and teamwork. Our unrelenting commitment to excellence and integrity forms the foundation of our guiding principles and shapes our strategies. Committed to Chicago. Connected to the World. Build on the power of our network. NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 211 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 4,798,649 TOTAL JOBS GAINED (2/1-2/11) 57,948 CHICAGO AREA UNEMPLOYMENT RATE 1.5% ILLINOIS UNEMPLOYMENT RATE 9.5% U.S. UNEMPLOMENT RATE 9.1% Local and National Unemployment Metro Chicago Illinois U.S. 21 Case-Shiller Home Price Indices ,2, 8, 4,, -4, -8, -1,2, 22 Chicago Case-Shiller Index U.S. National Case-Shiller Index Total U.S. Employment Percent Change in Jobs from Previous Year Monthly Net Change in Jobs Source: Standard & Poor s % 1% 8% 6% 4% 2% Source: Bureau of Labor Statistics 6% 4% 2% % -2% -4% -6% Source: Commodity Systems, Inc. (CSI) Local Economy Review The third largest metropolitan area in the U.S. after New York and Los Angeles, Chicago is the most influential economic region between the East and West Coasts. Foreign Policy Magazine recently ranked Chicago sixth among world competition, measuring econometrics from the number of Fortune 5 companies to the flow of goods and services through airports and ports. 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 with the Chicago Mercantile Exchange and Board of Trade. Quarter in Review Nearly nine million jobs were lost nationally during the economic downturn, more than the jobs lost in the previous four U.S. recessions combined. Now, more than two years after the official end of the recession and well into what has proven to be a complicated, uneven recovery, the unemployment numbers remain at staggering highs. Locally, in the Chicago-Joliet-Naperville metropolitan area, that rate stands at 1.4% as of August 211, far above historically normal levels, and hardly indicative of an economic recovery. Nationwide, the unemployment figure hasn t budged in months, still stuck above 9%. In 21, only about 9, of the 8.8 million jobs lost were recovered, with many of them being only temporary census positions. While the jobs report has been slightly more encouraging through the first nine months of 211, as job growth has been positive for 1 straight months, it hasn t been enough to drop the unemployment rate. Some are convinced the job situation is so bad that we re on the precipice of a double-dip recession; others will try to convince you we never pulled out of the first one. Without a doubt, jobs and job creation will be the number one issue in the upcoming presidential election.

5 One of the common reasons cited for the job situation is being called the the plight of American manufacturing, or the loss of U.S. manufacturing jobs to other countries, China in particular. China s manufacturing sector has grown faster than any other worldwide over the past several years, and depending on where the numbers are coming from will soon or already has surpassed the U.S. as the world s largest manufacturing sector. While the U.S. has certainly focused on growing service and financial industry jobs over the past decade to reduce reliance on lower-wage manufacturing jobs, the country still remains a manufacturing powerhouse, producing twice as much as Japan, three times as much as Germany, and 1 times as much as India. It is important to remember that despite the similar size of China s manufacturing sector to the U.S., and that China s economy may within a few years be the world s largest, China also has a population more than four times as large! While China s production of low-cost goods continues to increase, U.S. exports to China of high-quality machinery and other products made in the U.S. has increased nearly six-fold in the past ten years while imports from China have increased by only 3.5 times in the same time period. Despite the fear of a collapsing manufacturing industry, U.S. manufacturing levels are the highest levels in seven years according to the Institute for Supply Management, and U.S. exports have hit record levels. Jobs typically lag the economy, following in suit several months behind. The first two years of this ongoing economic recovery have been particularly uncertain and at times lackluster, and jobs have reacted with little growth. Some good news on the job front is that the number of people filing for unemployment continues to drop, dipping below the magic 4, per week figure that economists suggest is an important threshold to stay below to keep the unemployment rate from climbing further. Once this number drops below 35, per week, the unemployment rate should begin to drop. Other good news is that more jobs have been created during the first eight months of 211 than were created during all of 21 and many private companies are sitting on record profits and cash, ready to expand and hire once the future looks brighter. Looking Forward The economic recovery continues to plod along, confused by institutional gridlock and the uncertainty of whether U.S. policymakers can encourage job creation while managing debt and deficit levels. The recent debt ceiling debate, the S&P downgrade of U.S. debt and volatile financial markets have further obscured any progress being made. However, retail sales figures continue to surprise analysts, industrial production continues to grow, and exports are at record levels. While the recovery doesn t seem to be accelerating any time soon, another recession seems increasingly unlikely. Consumer Price Indices (CPI) 6% 4% 2% % -2% -4% Crude Oil Prices 5% 3% 1% -1% -3% -5% 1989 Core CPI 12-Month Percent Change (excludes volatile food and energy prices) CPI 12-Month Percent Change Crude Oil Price Monthly Percent Change Source: Bureau of Labor Statistics $15 $12 $9 $6 $3 $ Source: WTRG Economics Monthly Job Change vs. Consumer Sentiment Q7 Aug 8 2Q7 Nov 8 3Q7 4Q7 August 211 Trade Deficit -$45.6 B Feb 8 1Q8 May 9 2Q8 Monthly Job Change Consumer Sentiment Aug 9 3Q8 4Q8 U.S. Imports & Exports - Trade Balance Nov 9 1Q9 Feb 9 2Q9 May 1 Disconnect between job figures and consumer sentiment 3Q9 4Q9 Aug 1 1Q1 2Q1 Nov 1 3Q1 Trade Deficit U.S. Imports U.S. Exports Feb 1 4Q1 May 11 1Q11 2Q11 Aug 11 3Q11 5, 3, 1, -1, -3, -5, -7, -9, Source: Reis $25 B $2 B $15 B $1 B Source: U.S. Census Bureau Local Economy Review NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 211 5

6 Geneva Beloit 2 Westosha Airport Wisconsin Industrial Submarket Overviews Pleasant Prairie Illinois 1 2 Lake County Southeast Wisconsin I-9/Northwest Northwest Cook kford 5 Rockford North Cook Fox Valley Central DuPage Valleyy 8 O Hare West Cook I-88 Corridor I-55 Corridor Waukegan Regional Airport 1 Crystal Lake C y Cherry 14 helle 94 Lake Forest Vernon Hills Lake Zurich Highland Park Buffalo Grove Northbrook Chicago Executive Airport 3 Arlington Heights 4 9 Elgin Schaumburg 12 South Cook Waukegan Grayslake Des Plaines Niles Elk Grove Village Int'lOhare Airport I-8/Joliet Corridor Evanston Skokie Wood Dale8 alb DeKalb Northwest Indiana 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 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 14 M

7 Industrial Market Statistics NAI Hiffman Industrial Market Report Third Quarter 211 Industrial Market Statistics Submarket # Bldgs. Total RBA Vacant Vacancy 3Q11 NET 211 YTD Net New Supply Under Constr. (SF) (SF) Rate (%) Absorption (SF) Absorption(SF) (SF) (SF) Chicago North 1,19 64,246,448 4,92, % -23,55-473,23 Chicago South 1,77 15,67,444 14,954, % -425,99-552,95 North Cook 79 45,842,324 3,136, % 57,15 322,435 West Cook 741 6,48,738 7,36, % 237,64 269,734 Southwest Cook 49 39,226,488 3,91, % -16, ,864 South Cook 1,126 85,528,194 9,844, % 187,5 149,78 267, I-57/Will Corridor 8 12,351,467 3,29, % -5,13-96,62 Lake County ,965,523 6,865,17 1.3% 792,153 1,67,497 Northwest Cook ,431,27 2,477, % 225, ,177 O Hare 1,72 99,976,33 1,759, % 255,533 1,337,116 Central DuPage 1,96 66,974,146 6,54, % -413,733 36,129 I-55 Corridor 655 8,357,318 6,59,34 7.5% 49,861 3,29,25 McHenry County ,415,983 3,227, % -245,432-11,21 42, I-9/Northwest ,72,933 2,735, % 91,221 92,463 48,3 Fox Valley ,51,934 3,497, % 29, ,113 I-88 Corridor ,834,957 6,859, % -13,89 319,653 I-8/Joliet Corridor ,388,294 8,453, % 813,758 2,29, ,6 555,292 DeKalb County 57 6,97, ,56 6.8% 94,6 183,65 I-39 Corridor ,53,891 4,61, % 77,387 87,2 1, Southeast Wisconsin ,614,814 4,654, % 38,745 26,417 Northwest Indiana ,746,37 2,76, % 485,348 61,85 Flex Space Summary Total Flex Space 1,53 72,52,894 1,623, % -68,33-65, , Total Market Summary 16,395 1,193,36, ,577,49 1.6% 2,16,323 9,264, ,9 964,292 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 THIRD QUARTER 211 7

8 Metropolitan Chicago NAI Hiffman Industrial Market Report Third Quarter 211 # INDUSTRIAL BUILDINGS 16,395 MARKET SIZE (SF) 1,193,36,476 VACANCY 121,577,49 SF (1.6%) 3Q11 NET ABSORPTION (SF) 2,16,323 YTD NET ABSORPTION (SF) 9,264,478 NEW SUPPLY (SF) 852,9 UNDER CONSTRUCTION (SF) 964,292 1,, 6,, 2,, -2,, -6,, -1,, 3Q8 4Q8 1Q9 2Q9 3Q9 Vacancy Rate (%) Historical Deliveries 3 MM 25 MM 2 MM 15 MM 1 MM 5 MM MM 4Q9 1Q1 2Q1 3Q1 4Q1 1Q11 2Q11 Net Absorption (SF) Total Sale Transactions and Price PSF $1,,+ Transactions 1 MM 8 MM 6 MM 4 MM 2 MM Total SF Sold # Total # of Sales Average Price PSF Total SF Sold (Annualized) Q11 Total Deliveries (SF) Average (SF) 15% 13% 11% 9% 7% 5% Source: CoStar $7. $6. $5. $4. $3. $2. Data: CoStar 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 The Chicago industrial market has now been in a recovery phase for more than a year, evidenced by the absorption of vacant space and a declining vacancy rate. The third quarter continued this trend, as nearly 2.2 million SF of vacant space was absorbed through new leases, expansions of existing leases and owner/user sale transactions. This positive absorption pushed the overall vacancy rate down 2 basis points during the three month period to 1.6% by the end of September. To put this improvement in perspective, the effects of the economic recession caused companies to contract, introducing 29.5 million SF of vacant space to the market between 28 and 21. Since the market recovery began a year ago, more than 14 million SF, nearly half, of that vacant space has been recovered. This represents a rate of nearly 3 million SF absorbed per quarter, suggesting that should this rate of absorption continue, the Chicago industrial market will return to a vacancy rate similar to pre-recession levels at the beginning of 213. Active submarkets catering to brand name companies who lease large distribution and warehouse spaces have led the recovery, specifically the I-55 Corridor, I-8/Joliet Corridor and I-88 Corridor. These companies have witnessed retail sales increase through the economic recovery, and with demand for goods likely to escalate into 212, have begun to address expansion plans in these accessible submarkets. Pictured Above: 11 58th Pl in the Business Park of Kenosha, Wisconsin, a 626,784 SF building leased by computer hardware retailer Systemax during the third quarter

9 Industrial Market Trends Vacancy Rate Net Absorption Asking Rents Due to vacancy concerns, construction has largely been limited to building expansion and build-to-suit projects, such as plastic food container and packaging material manufacturer Winpak Packaging s new 267, SF build-to-suit facility at the LogistiCenter at Sauk Village, which broke ground this quarter. However, the quick turnaround and impressive absorption witnessed in the I-55 Corridor submarket, where more than 3 million SF has been absorbed through the first three quarters of 211, has sparked conversation of new speculative construction in the area, and developers have started submitting proposals. Rental rates have also lifted off the bottom as the market continues its journey towards recovery. Net effective rents are 8-1% above where they were at the same time last year, and landlords, while still offering generous leasing concession packages, have started to strip back, particularly free rent and tenant improvement money. Leasing and investment sale activity continues to increase throughout the market, especially among the favored submarkets. Well-leased, core assets are still the favored target among investors, but buildings with substantial vacancy are beginning to trade as well, as the overall market outlook for the near term continues to improve. Suburban Submarkets by Size O Hare South Cook I-55 Corridor Central DuPage Lake County 99,976,33 SF 85,528,194 SF 8,357,318 SF 66,974,146 SF 66,965,523 SF I-8/Joliet Corridor I-88 Corridor West Cook North Cook Southeast Wisconsin 44,614,814 SF Southwest Cook 39,226,488 SF Northwest Indiana 35,746,37 SF Fox Valley 32,51,934 SF Northwest Cook 28,431,27 SF I-9/Northwest 25,72,933 SF McHenry County 25,415,983 SF I-39 Corridor I-57/Will Corridor DeKalb County Q3 211 Net Absorption (SF) by Submarket 1,, 6, 2, -2, -6, -1,, I-8/Joliet Corridor Lake County Fox Valley Northwest Indiana O Hare 3Q211 Total Net Absorption: 2,16,323 SF West Cook Northwest Cook South Cook DeKalb County I-9/Northwest I-39 Corridor North Cook I-55 Corridor Southeast Wisconsin I-57/Will Corridor Southwest Cook I-88 Corridor 62,388,294 SF 61,834,957 SF 6,48,738 SF 45,842,324 SF 24,53,891 SF 12,351,467 SF 6,97,869 SF Chicago North McHenry County Central DuPage Chicago SOuth Industrial Market Summary Looking Forward While many secondary and tertiary markets continue to patiently wait for things to improve, the Chicago industrial market s recovery is well underway. The diversity and importance of the market on the national stage are part of the reason the recovery has started earlier here than in other markets, but the advantageous location of Chicago near the center of the country, and the emergence of the intermodal facilities in Will County as the county s largest inland distribution port has played an important role as well. The recovery trend should continue to accelerate into 212 and beyond. Total Industrial Base 1.3 Billion 1.2 Billion 1.1 Billion 1. Billion.9 Billion.8 Billion.7 Billion Total Industrial Base (SF) Significant Industrial Lease Transactions 3rd Qtr. 211 Property Address Submarket City Leased (SF) Tenant Comments 291 W Walter Strawn Dr I-8/Joliet Corridor Elwood 415,8 Saddle Creek New lease 254 Internationale Dr I-55 Corridor Bolingbrook 261,544 Ricoh Americas Corp. New lease 65 Tri State Pky Lake County Gurnee 2, High Sierra New lease 777 W 71st St South Cook Bridgeview 156,683 M Block & Sons New lease 178 Wall St Northwest Cook Mt. Prospect 147,932 CVS Caremark New lease 1325 Mittel Blvd O Hare Wood Dale 137,42 Opto International Inc. New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 211 9

10 Lake County POPULATION 712,567 (est.) 2 29 POPULATION CHANGE +1.6% (est.) # INDUSTRIAL BUILDINGS 931 MARKET SIZE (SF) 66,965,523 VACANCY 6,865,17 SF (1.3%) 3Q11 NET ABSORPTION 792,153 YTD NET ABSORPTION 1,67,497 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 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 8, 4, -4, -8, Inventory By City 33% 3Q8 4Q8 1Q9 2Q9 23% 7% 7% 9% 1% 3Q9 Vacancy Rate (%) 11% 4Q9 1Q1 2Q1 3Q1 4Q1 Waukegan Libertyville Gurnee 1Q11 Buffalo Grove Lake Zurich North Chicago 2Q11 Net Absorption (SF) Construction Deliveries ,2, 1,, 8, 6, 4, 3Q11 12% 1% 8% 6% 4% 2% % Other Lake County Suburbs 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. The submarket experienced a significant adjustment during the third quarter, as 792,153 SF of vacant space was absorbed, the greatest quarterly positive absorption tally in several years in an area where changes are typically more gradual. Several sizeable new leases were signed during the past three months and combined with owner/ user sales to result in significant absorption and to push the vacancy rate down more than a full percentage point to 1.3% by the end of September, a rate similar to what was seen two years ago. 2, The Lake County submarket experienced its greatest quarterly absorption tally in several years, pushing vacancy down to 1.3%. Pictured Above: 18 Industrial Dr in Libertville, a 265,21 SF building that was purchased by Gemstone Real Estate then sold to Trammel Crow Company in a single day during the third quarter

11 Construction Following the delivery last quarter of FedEx s new 214,745 SF distribution center in Grayslake, new construction is at a standstill throughout the submarket. Transaction Activity The 265,21 SF industrial building located at 18 Industrial Dr near the intersection of Route 45 and Buckley Rd in Libertyville was first purchased by Northbrook-based real estate investment and asset management firm Gemstone Real Estate, then flipped the same day to Trammel Crow Company for an undisclosed price. The building was fully leased at the time of the sale. Available Space Profile 1.6 MM 1.1 MM 2.3 MM 1.5 MM 2.4 MM , 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ # of Buildings Lake County Overview Several large new leases were signed in Lake County during the third quarter. Travel gear manufacturer High Sierra leased 2, SF at 65 Tri State Pky in Gurnee s CenterPoint Business Center. Used auto parts reseller DC Tricore Inc. leased 11, SF at 3145 Central Ave in Waukegan, a 314,755 SF industrial manufacturing building near the intersection of Washington St and Green Bay Rd. Plasma cutter & tool manufacturer C&G Systems leased 85,47 SF at 32 E Main St in Lake Zurich. The company is currently located at 19 W Winchester Rd in Libertyville, an 83,944 SF manufacturing building , 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward While the spike in activity and significant absorption witnessed during the third quarter is likely an exception to the rule, additional space should be absorbed over the coming quarters, as elevated demand for space in Lake County continues. Significant Lake County Sale Transactions 3rd Qtr Property Address City Size (SF) Sale Price Price PSF Buyer Seller 18 Industrial Dr Libertyville 265,21 $Undisclosed $Undisclosed Trammell Crow Company Gemstone Real Estate 18 Industrial Dr Libertyville 265,21 $6,668,987 $25.15 Gemstone Real Estate Manulife Financial Northwestern Ave Gurnee 122,712 Transfer^ Transfer^ KTR Capital Partners LP Mirvac Industrial Trust 61 Schelter Rd Lincolnshire 98,735 $9,251,47* $94. LaSalle Investment Management Panattoni Development Company W Laurel Dr Lake Forest 6,96 $2,1, $35. RV Imports, LLC Duke Realty Corporation Significant Lake County Lease Transactions 3rd Qtr. 211 Property Address City Leased (SF) Tenant Comments 65 Tri State Pky Gurnee 2, High Sierra New lease 3145 Central Ave Waukegan 11, DC Tricore Inc. New lease 32 E Main St Lake Zurich 85,47 C&G Systems New lease 917 N Shore Dr Lake Bluff 52,278 Lake Forest Sportscars New lease 333 W Washington Blvd Mundelein 32,783 Contract Installations New lease *Allocated price based on full value of portfolio transaction ^Property acquired in deed-in-lieu of foreclosure Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

12 Southeast Wisconsin POPULATION 252,24 (est.) 2 29 POPULATION CHANGE +5.9% (est.) # INDUSTRIAL BUILDINGS 522 Burlington 142 Racine Sturtevant MARKET SIZE (SF) 44,614,814 VACANCY 4,654,443 SF (1.4%) 3Q11 NET ABSORPTION 38,745 YTD NET ABSORPTION 26,417 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 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 2,5, 2,, 1,5, 1,, 3Q11 2Q11 1Q11 4Q1 3Q1 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 Vacancy Rate (%) Net Absorption (SF) 6% 16% 34% Racine Pleasant Prairie Sturtevant 17% Kenosha Burlington 27% Construction Deliveries % 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. The Southeast Wisconsin submarket experienced little change in the vacancy rate during the third quarter, as transaction activity was limited throughout the area. The vacancy rate declined to 1.4% by the end of September, down only slightly from last quarter s 1.5% rate. Net absorption was positive, totaling 38,745 SF due to a few smaller transactions and tenants taking occupancy of recently leased space. This quarter s limited activity demonstrated that the area is subject to periods of inactivity and flat conditions which can be followed with a several thousand SF swing in absorption the following quarter due to the large size of many transactions in the submarket. 5, The area is subject to periods of inactivity followed by a signifi cant adjustment due to the large size of many transactions in Southeast Wisconsin. Pictured Above: S Memorial Dr in Racine, a 78,4 SF building purchased by Cumberland Packaging Corporation during the third quarter

13 Construction HSA Commercial Real Estate is considering building a 1, SF speculative industrial building at the Park 94 development in Mt. Pleasant. The recent success of the business park has HSA considering the next phase of the development, which would be the first new speculative construction project in the Chicago industrial market since the heart of the recession. Transaction Activity The submarket experienced few significant transactions during the third quarter compared to recent quarters. Cumberland Packaging Corporation, based out of Brooklyn, New York, purchased the 78,4 SF manufacturing building located at S Memorial Dr in Racine. The company, who produces the Sweet N Low sweetener, owns Butter Buds Food Ingredients, a manufacturer of dairy concentrates in Racine. Available Space Profile MM.3 MM.6 MM 1.2 MM 1, 19, 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 Conditions in the Southeast Wisconsin submarket have been improving for more than two years. During this time, the vacancy rate has decreased by nearly four percentage points and just shy of three million SF has been absorbed. This has been due to an increase in new deals, both large and small. While the past couple quarters have seen fewer deals completed in the submarket, interest remains high and several deals should be completed over coming quarters. The location, business incentives and modern product will continue to attract companies from south of the border. Significant Southeast Wisconsin Sale Transactions 3rd Qtr. 211 Property Address City Size (SF) Sale Price Price PSF Buyer Seller S Memorial Dr Racine 78,4 $Undisclosed $Undisclosed Cumberland Packaging Corporation David Kelley Significant Southeast Wisconsin Lease Transactions 3rd Qtr. 211 Property Address City Leased (SF) Tenant Comments None to report NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

14 I-9/Northwest POPULATION 211,13 (est.) 2 29 POPULATION CHANGE +25.4% (est.) # INDUSTRIAL BUILDINGS 432 MARKET SIZE (SF) 25,72,933 VACANCY 2,735,263 SF (1.6%) 3Q11 NET ABSORPTION 91,221 YTD NET ABSORPTION 92,463 NEW SUPPLY (SF) 48,3 UNDER CONSTRUCTION (SF) Hampshire Carpentersville East Dundee Elgin Submarket Trends 31 Vacancy Rate Net Absorption Asking Rents South Elgin 4, 2, -2, -4, 3Q8 4Q8 Inventory By City 9% 3% 5% 7% 1,5, 1,2, 9, 6, 1Q9 2Q9 3Q9 Vacancy Rate (%) 76% 4Q9 1Q1 2Q1 3Q1 4Q1 1Q11 2Q11 Net Absorption (SF) Elgin Carpentersville South Elgin East Dundee Construction Deliveries Q11 Dundee, Genoa, Marengo, Hampshire, etc. 12% 9% 6% 3% % 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 third quarter saw improving conditions in the I-9/Northwest submarket, as the vacancy rate declined slightly to 1.6% from last quarter s 1.8% rate due the absorption of 91,221 SF of vacant space. Vacancy peaked during the second quarter 21 at 11.7%, and has declined more than a full percentage point during the five quarters since. Net absorption for the first nine months of the year now totals 92,463 SF, still positive despite a brief setback during the first quarter. 3, The I-9/Northwest vacancy rate has declined more than a full percentage point during the past fi ve quarters since it peaked at 11.7%. Pictured Above: 875 Tollgate Rd in Elgin, a 67,157 SF visible from I-9, leased by Best Restoration during the third quarter

15 Construction Sheet metal laser cutting supplier Bystronic Inc. s new 48,3 SF build-to-suit facility on Airport Road in Elgin s Fox River Business Center was completed during the second quarter. Construction in the I-9/Northwest submarket will remain limited to these type of build-to-suit projects until more vacant space is absorbed. Transaction Activity The 144,578 SF manufacturing building located at 1111 Bowes Rd in Elgin s Fox Bluff Corporate Center was acquired through a deed-in-lieu of foreclosure by KTR Capital Partners during the second quarter. It was part of a 2-property industrial portfolio transfer comprised of buildings in the Chicago and Milwaukee markets from Australia-based Mirvac Industrial Properties. Available Space Profile.3 MM.4 MM 1. MM.8 MM 1. MM , 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ # of Buildings I-9/Northwest Overview The most significant new lease of the quarter involved emergency response, mitigation and restoration company Best Restorations leasing the 67,157 SF building located adjacent to I-9 at 875 Tollgate Rd in Elgin. High-performance wheel distributor Wheel Pros leased 32,122 SF of industrial space at Northwest Pky in Elgin, and plans to move their operations to the building from their current location at 1329 Gateway Dr in Elgin. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward The I-9/Northwest area has witnessed improving conditions for five of the past six quarters. While the submarket wasn t as hard hit as others by the economic recession, nearly 2.75 million SF remains vacant. As demand continues to return to the area, leasing activity should pick up and the vacancy rate will decrease over coming quarters. Significant I-9/Northwest Sale Transactions 3rd Qtr. 211 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 1111 Bowes Rd Elgin 144,578 $9,324,46^ $64.^ KTR Capital Partners Mirvac Industrial Trust David Rd Elgin 67,279 $1,45, $22. GIS Rolling LLC Ramdi Corp & Pacific Midwest Corp 169 Cambridge Dr Elgin 41,7 $2,26, $55. The Realty Associates Fund IX Darwin Realty & Development Corp. 832 S Il Route 23 Marengo 38,913 $2,7, $69. Unilock, Ltd Paveloc Industries, LLC Significant I-9/Northwest Lease Transactions 3rd Qtr. 211 Property Address City Leased (SF) Tenant Comments 875 Tollgate Rd Elgin 67,157 Best Restorations New lease Northwest Pky Elgin 32,122 Wheel Pros New lease Gateway Dr Elgin 3,734 Continental Packaging Solutions, Inc New lease Church Rd Elgin 7,865 Geneva Chair Rentals New lease 2531 Technology Dr Elgin 7,8 Linear Industries Lease renewal/expansion ^property acquired in deed-in-lieu of foreclosure NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

16 Northwest Cook POPULATION 517,239 (est.) 2 29 POPULATION CHANGE +.3% (est.) # INDUSTRIAL BUILDINGS 524 MARKET SIZE (SF) 28,431,27 VACANCY 2,477,417 SF (8.7%) 3Q11 NET ABSORPTION 225,278 YTD NET ABSORPTION 365,177 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, 3Q8 4Q8 1Q8 2Q9 Inventory By City 11% 8% 8% 8% 1,, 8, 6, 4, 12% 19% 3Q9 Vacancy Rate (%) 35% 4Q9 1Q1 2Q1 3Q1 4Q1 1Q11 2Q11 Net Absorption (SF) Schaumburg Mt. Prospect Palatine Barrington Bartlett Rolling Meadows Hoffman Estates, Streamwood, etc. Construction Deliveries Q11 15% 12% 9% 6% 3% % 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. The Northwest Cook submarket has experienced eight consecutive quarters of improving conditions. During this time, the vacancy rate has dropped from a 13.8% peak two years ago, to 8.7% by the end of September, a 5.1% decrease due to more than 1.2 million SF of vacant space being absorbed through new leases, expansions of existing 2, The Northwest Cook submarket has seen two years of improvement, more than 1.2 million SF has been absorbed, pushing vacancy down by 5.1% Pictured Above: A rendering of 178 Wall St in Mt. Prospect, a 147,932 SF building leased by Caremark LLC during the third quarter

17 leases, and sales activity. The third quarter witnessed 225,278 SF of absorption, sustaining the ongoing improvement trend. Construction Largely a developed infill market, the majority of construction projects are building additions. Transaction Activity Part of Northbrook-based Gemstone Real Estate Partners LLC s portfolio purchase of seven suburban industrial buildings, three buildings totaling 233,372 SF in Mt. Prospect s Kensington Business Center were purchased during the third quarter. All three building were fully leased, and included the 12,71 SF building at 799 Biermann Ct, the 87,38 SF manufacturing building at 699 N Wheeling Rd and the 43,282 SF building at 9-95 N Business Center Dr. Available Space Profile MM.7 MM.9 MM 1, 19,999.6 MM 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,+ Northwest Cook Overview Representing absorption of 147,932 SF, drug benefits manager Caremark LLC, owned by drugstore company CVS Caremark Corp., leased the entire building located at 178 Wall St in Mt. Prospect that had been sitting vacant since it was completed in 29, and plans to move in sometime during 212. Looking Forward Boasting one of the lower vacancy rates of all of the submarkets in the Chicago Industrial Market, the Northwest Cook submarket began to experience the effects of the recovery before many neighboring areas. Vacancy should remain low over the coming quarters as companies look to expand their operations. Significant Northwest Cook Sale Transactions 3rd Qtr. 211 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 799 Biermann Ct Mt. Prospect 12,71 $2,88,5 $2. Gemstone Real Estate Partners Manulife Financial 699 N Wheeling Rd Mt. Prospect 87,38 $1,776,78 $2. Gemstone Real Estate Partners Manulife Financial 9 W University Dr Arlington Heights 86,254 Transfer^ Transfer^ KTR Capital Partners LP Mirvac Industrial Trust Hicks Rd Palatine 71,1 Transfer^ Transfer^ KTR Capital Partners LP Mirvac Industrial Trust 131 Tower Rd Schaumburg 5,4 Transfer^ Transfer^ KTR Capital Partners LP Mirvac Industrial Trust 9-95 N Business Center Dr Mt. Prospect 43,282 $1,378,63 $32. Gemstone Real Estate Partners Manulife Financial 115 Feehanville Dr Mt. Prospect 33,6 $2,45, $73. SNK America Inc. First Industrial Realty Trust Significant Northwest Cook Lease Transactions 3rd Qtr. 211 Property Address City Leased (SF) Tenant Comments 178 Wall St Mt. Prospect 147,932 Caremark LLC New lease Estes Ave Schaumburg 7,82 Factory Motor Parts New lease 362 Edison Pl Rolling Meadows 5, Full Potential Fitness New lease ^Property acquired in deed-in-lieu of foreclosure Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

18 North Cook POPULATION 415,646 (est.) 2 29 POPULATION CHANGE +2.1% (est.) # INDUSTRIAL BUILDINGS 79 Grove MARKET SIZE (SF) 45,842,324 VACANCY 3,136,617 SF (6.8%) 3Q11 NET ABSORPTION 57,15 YTD NET ABSORPTION 322,435 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, 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 Inventory By City Vacancy Rate (%) 14% 28% 8% 13% 2% 17% 2Q1 3Q1 4Q1 1Q11 2Q11 Net Absorption (SF) Wheeling Niles Skokie Northbrook Morton Grove 3Q11 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 owner/user 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. Construction Deliveries , 4, 2, For the third period in a row, conditions improved in the North Cook submarket, as vacant space was absorbed during the third quarter, pushing the vacancy rate down 2 basis points to 6.8% by the end of September. This rate is about a full percentage point lower than at the same time last year, when vacancy was near its peak level The North Cook submarket has experienced prolonged impacts from the recession. The road to recovery will likely be similarly long. Pictured Above: 555 Huehl Rd in Northbrook, one of the three Northbrook properties comprising 27,38 SF purchased by Gemstone Real Estate Partners, then flipped to Zilber Limited during the third quarter

19 Net absorption was positive for the quarter, totaling 57,15 SF, bringing the 211 tally through September to 322,435 SF. Construction The North Cook submarket has experienced very little new development in recent years due to its status as a mature market. Transaction Activity Northbrook-based Gemstone Real Estate Partners LLC purchased a 7-building portfolio of suburban industrial buildings during the third quarter, and flipped four of them, including the three Northbrook buildings in the portfolio on the same day. Of the 757,14 SF portfolio, the three Northbrook buildings totaled 27,38 SF and were sold to Milwaukee-based real estate investment and asset management firm Zilber Limited, along with a 254,324 SF facility located at 18 Industrial Dr in Libertyville. Available Space Profile MM.9 MM 1, 19,999.8 MM 1.4 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,+ North Cook Overview The largest new lease during the third quarter involved aluminum foil product manufacturer Durable Packaging International leasing the 1,47 SF industrial warehouse building located just west of Chicago Executive Airport at 311 Gilman Ave in Wheeling. The company currently leases space at 75 Northgate Pky, about two miles away in Wheeling. Looking Forward The North Cook vacancy rate has dipped about a full percentage point over the past three quarters, and the submarket boasts one of the lowest vacancy rates in the Chicago industrial market. However, this rate remains well above historical lows for the submarket and more than 3 million SF still sits vacant in the area. Significant North Cook Sale Transactions 3rd Qtr. 211 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 3-Property Portfolio Northbrook 27,38 $9,337, $35. Zilber Limited Gemstone Real Estate Partners 3-Property Portfolio Northbrook 27,38 $7,87,67 $26. Gemstone Real Estate Partners Manulife Financial W Pratt Ave Lincolnwood 24,92 $3,1, $15. Joseph Matuschka First Industrial Realty Trust 744 N Natchez Ave Niles 51,4 $1,6, $31. Hair & Beauty LLC Colliers International Significant North Cook Lease Transactions 3rd Qtr. 211 Property Address City Leased (SF) Tenant Comments 311 Gilman Ave Wheeling 1,47 Durable Packaging International New lease 515 Huehl Rd Northbrook 84,87 Prinz, Ltd. Lease extension Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

20 Fox Valley POPULATION 115,494 (est.) 2 29 POPULATION CHANGE +37.8% (est.) # INDUSTRIAL BUILDINGS 495 Elgin MARKET SIZE (SF) 32,51,934 VACANCY 3,497,467 SF (1.9%) South Elgin Streamwoo 3Q11 NET ABSORPTION 29,831 YTD NET ABSORPTION 194,113 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 5, 3, 1, -1, -3, -5, 3Q11 2Q11 1Q11 4Q1 3Q1 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 Inventory By City 1,5, 1,2, 9, Vacancy Rate (%) Net Absorption (SF) 11% 35% West Chicago 26% St. Charles Batavia Geneva 28% Construction Deliveries % 12% 9% 6% 3% % 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 vacancy rate experienced a significant adjustment during the third quarter, decreasing by a full percentage point to 1.9% over last quarter s 11.9% rate. The past two years had experienced little in the way of demand when measured by absorption, but an impressive 29,831 SF of vacant space was absorbed during the third quarter, primarily through the signing of new leases. The last time the Fox Valley experienced an adjustment this large was during the second quarter of 29, when several new vacancies combined to push the 6, 3, The vacancy rate experienced a signifi cant adjustment during the third quarter due to the substantial absorption of vacant space. Pictured Above: 1111 Harvester Rd in West Chicago, where trucking and logistics company Inifinity Logistics leased 78,944 SF during the third quarter

21 vacancy rate more than a full percentage point higher. Time will tell if this flurry of activity is the beginning of a trend for the Fox Valley submarket or not. Companies in the area tend to own their building and stick around long-term, suggesting it will take some time for conditions to significantly improve. Available Space Profile.5 MM.6 MM 1.1 MM.8 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 Fox Valley Overview Construction Once 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 MM 2,+ # of Buildings Transaction Activity St. Joseph, Minnesota-based Trucking company Kings Express Inc., and their brokerage company Infinity Logistics leased 78,944 SF at 1111 Harvester Rd in West Chicago, a 22,991 SF industrial building just East of DuPage Airport. 2 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ SIMS Recycling Solutions, the world s largest electronics recycling company, with operations on five continents, leased 55, SF at 18 W Hawthorne in West Chicago. The company boasts a wide and growing presence across North America. Looking Forward The absorption of vacant space witnessed during the third quarter is a promising sign that interest and demand is returning to the Fox Valley submarket. However, significant market adjustments are typically slow to evolve here when compared to the ideallylocated active submarkets. Significant Fox Valley Sale Transactions 3rd Qtr. 211 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 3555 Legacy Blvd St. Charles 13,623 $1,135, $84. Enterprise Court LLC Bank of America NA Significant Fox Valley Lease Transactions 3rd Qtr. 211 Property Address City Leased (SF) Tenant Comments 1111 Harvester Rd West Chicago 78,944 Infinity Logistics Inc New lease 18 W Hawthorne Ln West Chicago 55, SIMS Recycling Solutions New lease 375 Stern Ave St. Charles 2,182 R.W. Rogers Sublease W Washington St West Chicago 17,482 Eagle Flexible Packaging, Inc Lease renewal 154 Louis Bork Dr Batavia 17,463 Green Ladder Technologies New lease N Raddant Rd Batavia 12, Premier Pottery Imports New lease 375 Stern Ave St. Charles 11,598 IGM Resins New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

22 Central DuPage POPULATION 393,753 (est.) 2 29 POPULATION CHANGE +1.1% (est.) # INDUSTRIAL BUILDINGS 1,96 Schaumburg MARKET SIZE (SF) 66,947,146 VACANCY 6,54,459 SF (9.7%) 3Q11 NET ABSORPTION -413,733 YTD NET ABSORPTION 36,129 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 8, 4, -4, -8, Inventory By City 7% 9% 2,5, 2,, 1,5, 1,, 3Q8 18% 4Q8 1Q9 2Q9 3Q9 Vacancy Rate (%) 1% 29% 27% 4Q9 1Q1 2Q1 3Q1 4Q1 1Q11 2Q11 Net Absorption (SF) Addison Carol Stream Glendale Heights Elmhurst Hanover Park Construction Deliveries Q11 12% 9% 6% 3% % Bloomingdale, Lombard, Roselle, Villa Park, Wheaton 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. Following two quarters of relatively strong absorption and a vacancy rate that dropped to 9.1% last quarter, the improvement trend proved to be short-lived, as absorption turned negative during the third quarter, pushing the vacancy rate up 6 basis points to 9.7% by the end of September. Net absorption for the three month period totaled negative 413,733 SF, bringing the tally for the year-to-date down to 36,129 SF. Although several new lease transactions were signed during the third quarter, a number of new vacancies were introduced to the market during the quarter, outweighing the positive effects of the elevated leasing activity on the absorption figures. Despite the negative news during the third quarter, the Central DuPage submarket remains one of only a few with a vacancy rate in the single digits. 5, Vacancy continues to react to the changing conditions in the market, resulting in alternating periods of improvement and declining conditions. Pictured Above: 5 Wall St in Glendale Height s High Grove West Campus, a 221,14 SF warehouse building purchased by Universal Beauty Products during the third quarter

23 Construction New development will be limited as very little land remains for new speculative construction in the submarket. Construction projects are limited to building renovations and expansions. Transaction Activity The most significant investment activity during the third quarter was the sale of a four property portfolio for $57.25 million. Boston, Massachusets-based investor TA Associates Realty purchased the portfolio, consisting of a 321,378 SF distribution building at 85 Central Ave and a 146,537 SF warehouse building at 6325 Muirfield Dr in Hanover Park, as well as two warehouse buildings on Gary Ave in Roselle totaling 9,24 SF and 75,335 SF from Atlanta-based IDI. All properties were fully leased. Universal Beauty Products, who has leased about 87, SF in Elk Grove Village, purchased the 221,14 SF building located at 5 Wall St in Glendale Heights. Looking to take advantage of the current market, they purchased the building for just under $7.5 million to use as their new long-term headquarters location. Available Space Profile MM 1.8 MM 2.3 MM 1, 19, MM 1.9 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 The largest new lease during the third quarter involved German drive and automation technology company Lenze S.E. leasing the 1,377 SF building at 125 W Wall St in Glendale Heights. Looking Forward The vacancy rate continues to react to the changing conditions in the market, as new vacancies come online and space is absorbed through new leases and expansions, resulting in alternating periods of improvement and declining conditions. Eventually as demand picks up, the vacancy rate should decrease. Significant Central DuPage Sale Transactions 3rd Qtr. 211 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 4 Property Portfolio Hanover Park/Roselle 633,49 $57,25, $9. TA Associates Realty IDI 5 Wall St Glendale Heights 221,14 $7,492,536 $34. Universal Beauty Products ML Realty Partners LLC 164 Fullerton Ct Glendale Heights 149,219 $8,165, $55. TA Associates Realty Northcoast Roofing 25 Kehoe Blvd Carol Stream 112,11 $Undisclosed $Undisclosed Duke Realty Corporation Seefried Properties, Inc. Significant Central DuPage Lease Transactions 3rd Qtr. 211 Property Address City Leased (SF) Tenant Comments 125 W Wall St Glendale Heights 1,377 Lenze S.E. New lease 164 Fullerton Ct Glendale Heights 91,381 Northcoast Roofing Sale/leaseback Internationale Blvd Glendale Heights 79,722 Specialty Moving Systems Inc. Lease renewal 359 Longview Dr Bloomingdale 74,678 Christian Art Gifts, Inc. New lease 71 W Belden Ave Addison 46,96 NEC Display Solutions New lease 45 S Lombard Rd Addison 34, M1 Distribution New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

24 O Hare POPULATION 136,517 (est.) 2 29 POPULATION CHANGE -2.6% (est.) # INDUSTRIAL BUILDINGS 1,72 MARKET SIZE (SF) 99,976,33 VACANCY 1,759,249 SF (1.8%) 3Q11 NET ABSORPTION 255,533 mburg 72 Heights 9 Des Plaines Morto Grov N YTD NET ABSORPTION 1,337,116 NEW SUPPLY (SF) 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 1,5, 9, 3, -3, -9, -1,5, Inventory By City 1,2, 9, 6, 3Q11 2Q11 1Q11 4Q1 3Q1 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 Vacancy Rate (%) Net Absorption (SF) 9% 1% Elk Grove Village 11% Des Plaines 42% Bensenville Itasca 18% Wood Dale Rosemont 18% Construction Deliveries % 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 since the economic downturn took hold in 28. Conditions continue to improve in the O Hare submarket, as more than 1.3 million SF of space has been absorbed in the area through the first three quarters of the year. The vacancy rate decreased by 2 basis points during the past three months to 1.8%. A year ago this rate was at its 12.8% peak, an improvement of 2 basis points in a relatively short period of time to a level not seen since 28. Net absorption for the third quarter totaled 255,533 SF, pushed positive by sizeable new leases being signed and fewer significant vacancies being introduced to the market. Asking rental rates in the submarket have stabilized. 3, More than 1.3 million SF of space has been absorbed during the fi rst three quarters of the year, pushing the vacancy down to 1.8% in September. Pictured Above: A rendering of the 253, SF warehouse building located at 1717 Busse Rd in Elk Grove Village, part of the 3-property portfolio purchased by Duke Realty Corporation during the third quarter

25 Construction Development activity is still limited to building expansions and will likely remain in a holding pattern until the overall market absorbs a majority of the vacant space added during the recession and rental rates begin to rise. Available Space Profile 2.2 MM 5.1 MM 2. MM 3.2 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 O Hare Overview Transaction Activity 4.3 MM 2,+ Investment sales activity during the quarter was headed up by Indianapolis-based Duke Realty Corp. buying a three-property portfolio that included a 253, warehouse building located at 1717 Busse Rd in Elk Grove Village, as well as a 112,11 SF building in Carol Stream and a 328,828 SF building in Fort Worth, Texas. The self-managed REIT purchased the portfolio for $51.8 million, or about $75. PSF # of Buildings The most significant new lease of the third quarter involved retail and showroom display manufacturer Opto International Inc. leasing the 137,42 SF building located at 1325 Mittel Dr in Wood Dale s Chancellory Business Park. Off-highway industrial equipment power solution manufacturer and distributor Power Solutions International leased the 115,561 SF building at 81 AEC Dr in Wood Dale. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward Manufacturers and distributors will continue to turn to the O Hare submarket due to its unique location adjacent to one of the busiest airports in the world and proximity to multiple transcontinental interstates. Home to the nation s largest industrial park, the O Hare area has been one of the first submarkets to benefit from increased demand and the economic recovery. Significant O Hare Sale Transactions 3rd Qtr. 211 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 1717 Busse Rd Elk Grove Village 253, $Undisclosed $Undisclosed Duke Realty Corporation Seefried Properties, Inc Busse Rd Elk Grove Village 215, $5,425, $25. Panattoni Development Company Wirtz Beverage Illinois W Ardmore Ave Itasca 134,665 $3,375, $25. O.H. Rodseth Company Team Services 116 & 12 N Ellis Ave Bensenville 71,768 $6,5, $75. Amerifreight Systems, LLC Auto Truck, Inc. Significant O Hare Lease Transactions 3rd Qtr. 211 Property Address City Leased (SF) Tenant Comments 591 Supreme Dr Bensenville 21,395 Boise Label, Release & Specialty Papers Lease renewal 1325 Mittel Blvd Wood Dale 137,42 Opto International Inc. New lease 81 AEC Dr Wood Dale 115,561 Power Solutions International, Inc. New lease 1345 Norwood Ave Itasca 112,646 Millenia Metals New lease Thorndale Ave Elk Grove Village 1,995 Belmont Technology Remarketing New lease 231 Lively Blvd Elk Grove Village 95,655 Door & Millword Distributors, Inc. New lease NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

26 West Cook POPULATION 244,228 (est.) 2 29 POPULATION CHANGE -4.4% (est.) # INDUSTRIAL BUILDINGS 741 MARKET SIZE (SF) 6,48,738 VACANCY 7,36,175 SF (11.6%) 3Q11 NET ABSORPTION 237,64 YTD NET ABSORPTION 269,734 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,, 6, 2, -2, -6, -1,, 3Q8 4Q8 1Q9 Inventory By City 12% 5% 8% 9% 1,5, 1,2, 9, 29% 2Q9 3Q9 Vacancy Rate (%) 37% 4Q9 2Q1 2Q1 3Q1 4Q1 1Q11 2Q11 Net Absorption (SF) Franklin Park Melrose Park Bellwood Schiller Park Berkeley Construction Deliveries Q11 16% 12% 8% 4% % Harwood Heights, Hillside, Maywood, Norridge, River Grove 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 the submarket. Several new leases signed during the third quarter resulted in positive absorption for the West Cook submarket during the third quarter totaling 237,64 SF. This activity pushed the vacancy rate down half a percent to 11.6% compared to last quarter s 12.1% rate. This is the lowest vacancy rate since a year ago. Despite the improvement over the past three months, the submarket has yet to establish an improvement trend, as the vacancy rate remains elevated near the peak levels witnessed during and following the economic recession. 6, 3, The West Cook vacancy rate dropped to 11.6% during the third quarter, but still remains near peak levels. Pictured Above: 1151 W Irving Park Rd in Franklin Park, a 88,6 SF distribution building leased by Integrated Airline Services during the third quarter

27 Construction The former Central Grocers site, a 24.8 acre parcel, is still awaiting a build-to-suit opportunity and can accommodate a building up to 7, SF in size. Otherwise, no construction activity remains in the West Cook submarket. Available Space Profile 3.1 MM.6 MM 1.5 MM 2.5 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 West Cook Overview Transaction Activity 2.8 MM 2,+ Two buildings over 2, SF in size were acquired through a deed-in-lieu of foreclosure by KTR Capital Partners. They were part of a 2-property industrial portfolio transfer comprised of buildings in the Chicago and Milwaukee markets from Australiabased Mirvac Industrial Properties # of Buildings 2 The largest sale of the quarter involved the Village of Franklin Park purchasing a two-building industrial complex at 9535 and 9451 W Belmont Ave in Franklin Park for $2.1 million. The Village plans to raze the complex to build government buildings on the site. 1 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ The largest new lease of the past three months involves Denverbased air cargo service provider Integrated Airlines Services leasing the 88,6 SF industrial building at 1151 W Irving Park Road near O Hare International Airport in Franklin Park. Looking Forward Leasing activity, especially close to the airport, should continue to pick up over the coming quarters as companies begin to feel comfortable addressing expansion plans and lease some of the more than 7 million SF still vacant in the submarket. As this space is absorbed, the vacancy rate will eventually decline. Significant West Cook Sale Transactions 3rd Qtr. 211 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 19 N 5th Ave River Grove 295, Transfer^ Transfer^ KTR Capital Partners LP Mirvac Industrial Trust 9353 & 9451 W Belmont Ave Franklin Park 284, $2,1, $7. Village of Franklin Park Unilever Food Solutions 1 W Whitehall Dr Northlake 251,586 Transfer^ Transfer^ KTR Capital Partners LP Mirvac Industrial Trust 39 Wesley Ter Schiller Park 13, $2,, $15. Emjay Properties LLC Cielak Family Partners LP Significant West Cook Lease Transactions 3rd Qtr. 211 Property Address City Leased (SF) Tenant Comments 1151 W Irving Park Rd Franklin Park 88,6 Integrated Airline Services New lease 21 N 15th Ave Melrose Park 8, HSF Industries New lease 551 S County Line Rd Franklin Park 51,2 Vapor Power International Lease renewal 1111 Franklin Ave Franklin Park 16,981 Shred-It USA, Inc. New lease 66 W Lake St Northlake 11,52 Integra Detail Center Lease renewal ^Property acquired in deed-in-lieu of foreclosure Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

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 6,859,69 SF (11.1%) 3Q11 NET ABSORPTION -13,89 YTD NET ABSORPTION 319,653 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 3Q11 2Q11 1Q11 4Q1 3Q1 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 Vacancy Rate (%) Net Absorption (SF) 15% 12% 9% 6% 3% % I-88 Corridor Overview The I-88 Corridor industrial submarket saw increased demand and speculative development over the past five years due to the lack of land for development in feeder submarkets 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 stopped over the past three years as obtaining project financing became difficult, vacancy has increased and demand has been limited. 7% 15% 2,5, 2,, 1,5, 1,, 17% 18% 43% Aurora Naperville Montgomery Downers Grove Construction Deliveries Oswego, Westmont, North Aurora, Hinsdale, Lisle, etc. The past six consecutive quarters in the I-88 Corridor have witnessed the vacancy rate decrease and positive absorption, but the third quarter bucked the recent trend, as the vacancy rate ticked upward and absorption was negative. The rate climbed to 11.1% by September, 2 basis points above last quarter s 1.9% rate. A year ago, the vacancy rate was a much higher 12.6%. Although several new leases were signed during the third quarter, new vacancies outnumbered leasing activity for the period, resulting in negative net absorption totaling negative 13,89 SF. The tally for the first three quarters of 211 remains positive, however, totaling 45,543 SF, an indication that demand has been relatively strong and the submarket is well on its way to recovery. 5, Over 2 million SF of vacant space has been absorbed since the I-88 Corridor vacancy rate peaked two years ago. Pictured Above: 75 Enterprise St in Aurora, a 221,149 SF building located in the Meridian Business Campus purchased by GCR Corporation during the third quarter

29 Construction New construction activity in the I-88 Corridor is limited to the potential construction of a new warehouse facility for U.S. Foodservice in Aurora, where the company purchased an almost 5-acre parcel of land in 21. Transaction Activity Electronics services company GCR Corporation purchased the 221,149 SF building located at 75 Enterprise St in Aurora s Meridian Business Campus. The company plans to move their operations from two buildings in Elk Grove Village and some space in Bensenville over the next few months. Available Space Profile.8 MM 3.1 MM 1.5 MM 1.9 MM 1.5 MM , 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ # of Buildings I-88 Corridor Overview 4 Protective films manufacturer Surface Guard Inc. renewed their lease and expanded by about 41, SF to occupy a total of 149,835 SF of space in two buildings at 515 N Enterprise Dr and N Enterprise Dr in Aurora s Meridian Business Campus. Trinity Machined Products, Inc., a precision machined product manufacturer, leased the 36,78 SF at 256 White Oak Cir, a 163,42 SF building in Aurora s White Oak Business Park. 2 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward The vacancy rate in the I-88 Corridor has returned to levels not seen since early 29. Over two million SF has been absorbed since that rate peaked two years ago. While the submarket hasn t completely recovered, the uptick in sales and leasing activity and the significant absorption recorded should eventually spread to neighboring submarkets over the coming quarters, adding momentum to the market recovery. Significant I-88 Corridor Sale Transactions 3rd Qtr. 211 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 75 Enterprise St Aurora 221,149 $6,225, $28. GCR Corporation JVC U.S.A. 113 Butterfield Rd Aurora 174,3 $7,25, $42. Windy City Distribution Panattoni Development Company 9S14 Frontenac Rd Naperville 73,334 $2,65, $36. Iloca Leasing, Inc. American Real Estate Investments LLC Significant I-88 Corridor Lease Transactions 3rd Qtr. 211 Property Address City Leased (SF) Tenant Comments 91 Bilter Rd Aurora 219,283 Logistics Solutions Holdings Lease renewal 515 & N Enterprise Dr Aurora 149,835 Surface Guard Inc. Lease renewal/expansion 4 South St North Aurora 43,544 Disposal Alternatives Organization, LLC New lease 256 White Oak Cir Aurora 36,78 Trinity Machined Products Inc. New lease 51 Airport Rd North Aurora 26,22 Service Pallet New lease Diehl Rd Warrenville 23,35 Lindsay Window and Door LLC New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

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 6,59,34 SF (7.5%) 3Q11 NET ABSORPTION 49,861 YTD NET ABSORPTION 3,29,25 a Naperville 53 Downers Grove Woodridge Hinsdale Burr Ridge 294 Wi Spr NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 59 Bolingbrook Submarket Trends 3 55 Romeoville Vacancy Rate Net Absorption Asking Rents Plainfield ,, 1,5, 1,, 5,, -5, -1,, 2Q11 1Q11 4Q1 3Q1 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 Vacancy Rate (%) Net Absorption (SF) 3Q11 18% 15% 12% 9% 6% 3% % 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 Construction Deliveries ,, 8,, 6,, Burr Ridge, Forest View, Willowbrook The I-55 Corridor vacancy rate has been in a near free fall for the past three quarters, as more than 1 million SF of vacant space was absorbed each of those periods, but this pace of absorption leveled off during the third quarter, as fewer sizeable vacant spaces were leased. Elevated leasing activity continues, however, suggesting that the rapid improvement trend witnessed over the past year is likely not over yet. The vacancy rate decreased slightly to 7.5% during the quarter, down only a bit from last quarter s 7.6% rate, but more than 5.5% below the rate a year ago. Net absorption for the three month period between June and September totaled 49,861 SF, bringing the astounding total for 211 through the first nine months of the year to more than 3 million SF of vacant space absorbed. 4,, 2,, Numerous deals both large and small in size have pushed the I-55 Corridor vacancy rate down more than 5.5% in the past year. Pictured Above: 254 Internationale Dr in Bolingbrook, a 261,554 SF distribution facility leased by Ricoh Americas Corp. during the third quarter

31 Construction Reacting to the quick turnaround in the I-55 Corridor, developers have started to consider and submit proposals for new speculative construction in the area. Many are sitting on vacant land parcels waiting for a build-to-suit opportunity, but realize based on the recent deal velocity that a deal could come quicker if the building is built. Available Space Profile.5 MM.8 MM 1.7 MM 7.8 MM 1.9 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ I-55 Corridor Overview Transaction Activity The fully-leased 45,9 SF manufacturing building located at W Remington Blvd in Romeoville s Windham Lakes Business Park was purchased as part of a portfolio by Chicagobased LaSalle Investment Management. The portfolio sale included a 98,735 SF warehouse building in Lincolnshire # of Buildings The largest new lease of the third quarter involved office copier and printer manufacturer Ricoh Americas Corp. leasing the 261,554 SF building located at 254 Internationale Dr in Bolingbrook s Corporate Crossing Business Park. The company plans to consolidate several area operations into the building over the next several months, moving 2 employees to the distribution facility by December. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward While other submarkets have yet to establish an improvement trend, the I-55 Corridor has seen more than 3 million SF of absorption, and leasing activity has exceeded 4 million SF through the first nine months of the year. Numerous deals both large and small in size have pushed the vacancy rate to historically low levels, even below rates seen prior to the economic recession. Significant I-55 Corridor Sale Transactions 3rd Qtr. 211 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 175 W Taylor Rd Romeoville 444,171 $17,744,8 $4. AREA Property Partners FlorStar Sales, Inc. 575 Crossroads Pky Bolingbrook 145, $9,6, $66. Industrial Income Trust, Inc. HSA Commercial Real Estate Enterprise Dr Romeoville 12,143 $3,365, $28. Parc Corporation USA Stamar Packaging, Inc W Riverwalk Ct Plainfield 97,2 $5,, $51. Venture One Real Estate LLC PMI Venture LLC 133 Argonne Woods Dr Woodridge 82, $6,4, $78. Industrial Income Trust, Inc. HSA Commercial/Bridge Development Significant I-55 Corridor Lease Transactions 3rd Qtr. 211 Property Address City Leased (SF) Tenant Comments 254 Internationale Dr Bolingbrook 261,544 Ricoh Americas Corp. New lease 555 Remington Blvd Bolingbrook 16,66 Telefonica Cable New lease 241 Internationale Pky Woodridge 67,332 Wesco Distribution New lease 75 Veterans Pky Bolingbrook 38,25 Rockledge Furniture LLC Lease expansion 75 Veterans Pky Bolingbrook 37,788 JB Hunt New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

32 South Cook POPULATION 675,579 (est.) 2 29 POPULATION CHANGE -5.2% (est.) # INDUSTRIAL BUILDINGS 1,126 MARKET SIZE (SF) 85,528,194 VACANCY 9,844,33 SF (11.5%) 3Q11 NET ABSORPTION 187,5 YTD NET ABSORPTION 149,78 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 267, 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% 3Q8 4Q8 1Q9 2Q9 3Q9 Vacancy Rate (%) 26% 5% 8% 11% 14% 1Q1 2Q1 3Q1 4Q1 Bedford Park Alsip 1Q11 Chicago Heights Bridgeview 2Q11 Net Absorption (SF) Construction Deliveries ,5, 2,, 1,5, 4Q9 South Holland 3Q11 Other Southern Cook Communities 15% 12% 9% 6% 3% % 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 solid 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 vacancy rate decreased slightly during the third quarter, dipping to 11.5% by the end of September, down 2 basis points from the 11.7% rate recorded in June and 4 basis points below the 11.9% rate a year ago. Vacancy peaked at 13.6% at the beginning of 29 and began to decrease thereafter, and has held between 11% and 12% for the past 5 quarters. Absorption for the third quarter totaled 187,5 SF, bringing the total for 211 through September to 149,78 SF. 1,, 5, Vacancy peaked at 13.6% in 29 and has since dropped to 11.5%, but has held between 11% and 12% for the past fi ve quarters. Pictured Above: 777 W 71st St, where M. Block & Sons leased 156,683 SF during the third quarter

33 Construction Construction continues on Winpak s new 267, SF build-tosuit facility at the LogistiCenter at Sauk Village and is anticipated to be completed by February 212. Otherwise, new development is likely to remain minimal until sustained absorption is realized and rental rates increase. Transaction Activity Several buildings over 1, SF in size were acquired through a deed-in-lieu of foreclosure by KTR Capital Partners during the third quarter. They were part of a 2-property industrial portfolio transfer comprised of buildings in the Chicago and Milwaukee markets from Australia-based Mirvac Industrial Properties. Available Space Profile 1. MM 2. MM 4.5 MM 2.1 MM 3.3 MM , 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ # of Buildings South Cook Overview 2 The largest new lease of the third quarter involved end-to-end supply chain solutions provider M. Block & Sons leasing 156,683 SF at 777 W 71st St in Bridgeview. Freight shipping and trucking company TM Transport Inc., based out of Crestwood, IL, leased 42,945 SF at W 122nd St in Alsip Industrial Park. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward Demand for space in the South Cook submarket has yet to pick up in earnest as it has in the neighboring I-8/Joliet Corridor and I-55 Corridor submarkets. Periods of positive absorption have been interspersed with periods of negative results, keeping the vacancy rate in the double digits. Several consecutive quarters of positive absorption totaling several thousand SF must occur before an improvement trend can be declared in the submarket. South Cook Sale Transactions 3rd Qtr. 211 Property Address City Size (SF) Sale Price Price PSF Buyer Seller W 115th St Alsip 399,511 Transfer^ Transfer^ KTR Capital Partners LP Mirvac Industrial Trust Torrence Ave Sauk Village 372,58 Transfer^ Transfer^ KTR Capital Partners LP Mirvac Industrial Trust 1675 Vincennes Ave South Holland 22,51 Transfer^ Transfer^ KTR Capital Partners LP Mirvac Industrial Trust W 74th St Bedford Park 145,48 $2,8, $19. L&L Hardwoods, Inc. Taylor Corp 7447 S Central Ave Bedford Park 118,218 Transfer^ Transfer^ KTR Capital Partners LP Mirvac Industrial Trust 97 S Harlem Ave Bridgeview 11,14 $2,, $2. Rapid Pallets Inc. Mirvac Industrial Trust 2-property portfolio Sauk Village 73,25 $1,379,29* $19.* AIC Ventures SIGMA International Group South Cook Lease Transactions 3rd Qtr. 211 Property Address City Leased (SF) Tenant Comments 777 W 71st St Bridgeview 156,683 M Block & Sons New lease 134 S Pulaski Ave Alsip 81,468 FutureMark Paper Lease renewal W 122nd St Alsip 42,945 TM Transport New lease *Allocated price based on full value of portfolio transaction ^Property acquired in deed-in-lieu of foreclosure NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

34 59 I-8/Joliet Corridor POPULATION 43,23 (est.) 2 29 POPULATION CHANGE +39.9% (est.) # INDUSTRIAL BUILDINGS 614 MARKET SIZE (SF) 62,388,294 VACANCY 8,453,565 SF (13.3%) 3Q11 NET ABSORPTION 813,758 YTD NET ABSORPTION 2,29,456 NEW SUPPLY (SF) 657,6 UNDER CONSTRUCTION (SF) 555,292 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, 3Q11 2Q11 1Q11 4Q1 3Q1 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 Inventory By City Vacancy Rate (%) Net Absorption (SF) 22% 19% 16% 13% 1% 7% I-8/Joliet Corridor Overview The I-8/Joliet Corridor submarket has historically catered to multi-state 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 Joliet and 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. CenterPoint Intermodal Center now offers intermodal service as well as direct rail service with both the BNSF and Union Pacific Railroads. 8,, 6,, 4,, 25% 5% 1% 16% 44% Joliet Elwood Minooka Ottawa Construction Deliveries Mokena, New Lenox, Shorewood, Frankfort, etc. The vacancy rate in the I-8/Joliet Corridor has been decreasing nearly every quarter for more than two years. After peaking at 2.7% during the first quarter of 29, it has dropped by an astonishing 7.4% over the ten quarters since, improving by 5 basis points during the third quarter alone to 13.3%. Nearly 6 million SF of vacant space has been absorbed during this period, as many companies have expanded into the area by leasing space in large distribution buildings and warehouses. The intermodal developments have also played a key role in the unquestionable improvement trend in the submarket, attracting additional interest and demand to the area. Construction 2,,, The vacancy rate has decreased nearly every quarter for more than two years, as nearly 6 million SF of vacant space has been absorbed. Pictured Above: 27 W Haven Ave in Joliet, a 86,1 SF warehouse building purchased by Chicago-based investment management firm Heitman LLC during the third quarter

35 In contrast to the majority of industrial submarkets, construction activity, while well below the levels seen during the years of 24 through 28, continues in the I-8/Joliet Corridor. Home Depot s new 657,6 SF build-to-suit facility was completed during the third quarter at the CenterPoint Intermodal Center-Joliet. Another 217,692 SF build-to-suit facility is nearing completion in the intermodal facility for specialty chemical manufacturer Stepan Company to be delivered early in the fourth quarter. Finally, Available Space Profile.4 MM.6 MM.7 MM 1.9 MM 6.7 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ I-8/Joliet Corridor Overview Navistar Inc. is expanding their building at 27 W Haven Rd in Joliet by 337,6 SF, which also should be completed soon. 1 8 # of Buildings Transaction Activity 6 Investment sales among class A product continue to increase, 4 as multiple buildings several thousand square feet in size were 2 purchased by institutional investors during the third quarter. The largest was the 86,1 SF facility at 27 W Haven Ave in Joliet s Cherry Hill Business Park, purchased by Chicago-based investment management firm Heitman LLC. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Third-party logistics provider Saddle Creek Corporation leased a 415,8 SF space in the CenterPoint Intermodal Center in Elwood. The 1,182,788 SF building Saddle Creek is moving into is also occupied by tenants Cypress Medical and Logistics Team. Looking Forward The past two years have witnessed significant absorption of vacant space in the I-8/Joliet Corridor, and a quickly dropping vacancy rate. The location of the submarket and its intermodal developments will continue to drive interest and demand. I-8/Joliet Corridor Sale Transactions 3rd Qtr. 211 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 27 W Haven Ave Joliet 86,1 $47,9, $56. Heitman LLC Northern Builders, Inc S Chicago St Joliet 575,24 $18,289, $32. Molto Capital LLC JP Morgan Chase Bank 391 Rock Creek Blvd Joliet 259,2 $Undisclosed $Undisclosed TA Associates Realty Industrial Development International, Inc. 41 Rock Creek Blvd Joliet 25,56 $11,2, $45. TA Associates Realty Industrial Development International, Inc. 945 W Laraway Rd Frankfort 4, $1,7, $43. Therafin Corporation Bimba Manufacturing Company I-8/Joliet Corridor Lease Transactions 3rd Qtr. 211 Property Address City Leased (SF) Tenant Comments 291 W Walter Strawn Dr Elwood 415,8 Saddle Creek Corporation New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

36 Northwest Indiana POPULATION 487,858 (est.) 2 29 POPULATION CHANGE +1.5% (est.) # INDUSTRIAL BUILDINGS 431 g MARKET SIZE (SF) 35,746,37 VACANCY 2,76,363 SF (7.6%) 3Q11 NET ABSORPTION 485,348 YTD NET ABSORPTION 61,85 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 9 Gary/Chicago Airport 12 Hammond 8 94 Gary 65 Portage Porter Merrillville Valparaiso Submarket Trends Illinois Indiana Crown Point Vacancy Rate Net Absorption Asking Rents Lowell 1,, 7, 4, 1, -2, -5, 3Q8 4Q8 1Q9 Inventory By City 4% 11% 1,5, 1,2, 9, 6, 19% 19% 2Q9 3Q9 Vacancy Rate (%) 25% 22% 4Q9 1Q1 2Q1 3Q1 4Q1 1Q11 2Q11 Net Absorption (SF) Hammond East Chicago Gary Portage Merrillville Other Northwest Indiana Suburbs Under Construction & Recent Deliveries 3Q11 15% 12% 9% 6% 3% % Northwest Indiana Overview The Northwest Indiana submarket is a bifurcated market, with areas north of I-8 including the towns of Hammond, East Chicago, and Gary containing some of the heaviest manufacturing facilities in the world, home to companies like BP Amoco, US Steel, and Arcelor Mittal. There are many functionally obsolete crane & manufacturing buildings housing firms in this area that service the steel and chemical industries. South of I-8, towns such as Munster, Hobart, Merrillville and Portage cater to more modern business parks. Indiana has historically held significant economic advantages over Illinois, such as lower property taxes, utility costs, labor rates, and soft costs (workman s compensation and unemployment insurance). Most companies new to Northwest Indiana migrate from South Cook/Will Counties, but existing Northwest Indiana firms rarely move across the state line to Illinois. The vacancy rate declined by 1.3% in the Northwest Indiana submarket during the third quarter, due to an increase in user sale transactions and leasing activity. By the end of September, the rate had dipped to 7.6%, down from 8.9% in June and 9.4% a year ago. Net absorption for the three month period totaled 485,348 SF, bringing the tally for the first nine months of 211 to 61,85 SF. 3, On the decline since the beginning of 21, the Northwest Indiana vacancy rate has reached historically low levels. Pictured Above: 1575 Louis Sullivan Dr in Portage, the 399,5 SF building purchased by Fronius USA, LLC for $12.75 million during the third quarter

37 Construction The previous decade was an active construction period in the Northwest Indiana submarket, as more than 3 million SF was added to the total industrial inventory, an increase of about 9%. Economic and vacancy concerns have resulted in limited construction since 29. Transaction Activity Battery charging system and welding technology manufacturer Fronius USA, LLC purchased the nearly 4, SF industrial warehouse building known as The Randolph located at 1575 Louis Sullivan Dr in Portage, IN during the third quarter for $12.75 million, or about $32. PSF. The company plans to relocate their operations to the facility from Brighton, Michigan. Available Space Profile MM.9 MM.3 MM.3 MM 1.2 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ # of Buildings I-8/Joliet Corridor Overview Metal processing and distribution company Phoenix Metals Company signed a lease for 6, SF at 21 Mississippi, a 1.1 million industrial facility known as the Great Lakes Industrial Center and located just south of the Gary Works industrial complex in Gary. The company processes metals at 13 locations throughout the country. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward The Northwest Indiana vacancy rate has been on the decline since the beginning of 21, and has reached historically low levels. Looking for cost saving solutions, companies from the South Cook and Will County areas in Illinois continue to be attracted by the economic advantages and leasing incentives being offered by Northwest Indiana landlords. Northwest Indiana Sale Transactions 3rd Qtr. 211 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 1575 Louis Sullivan Dr Portage 399,5 $12,75, $32. Fronius USA, LLC Lincoln National Life Insurance Company 8757 Colorado St Merrillville 143,459 $Undisclosed $Undisclosed Modern Drop Forge Company NSU Corporation Northwest Indiana Lease Transactions 3rd Qtr. 211 Property Address City Leased (SF) Tenant Comments 21 Mississippi St Gary 6, Phoenix Metals New lease 4 7th Ave Gary 46, Veolia Environmental Services New lease 32 Sheffield Ave Hammond 2, United Wholesalers New lease NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

38 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 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

39 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 industrial properties located in the metropolitan Chicago area defined by the submarket map on the previous page. 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 each of these individuals, companies and resources, without whose help this report would not have been possible. All of the information detailed throughout this report is saved and organized in our own in-house database and is regularly updated. Utilizing this database, we can analyze, calculate and report demographic information, inventory, vacancy, availability, net absorption, and transactional information. Definitions The NAI Hiffman Market Reports track 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 reports, 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. NAI Global / 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 THIRD QUARTER

40 NAI Global From Chicago to Shanghai, from leasing to logistics, leverage our global network to your advantage. NAI Global is the world s largest managed network, consisting of 5, professionals in 325 offices in over 5 countries throughout the world. NAI professionals work together with our global management team to help our clients strategically optimize their real estate assets. NAI offices around the world complete over $45 billion in transactions annually. We also manage over 26 million square feet of commercial space. NAI Global has received top industry rankings: Ranked #2 brokerage network by Commercial Property News Ranked #3 brokerage organization by Real Estate Forum Ranked #4 Lipsey s Top 25 Real Estate Brands NAI Global is based in Princeton, New Jersey. A dedicated 7-person staff, strategically positioned around the world, provides management, technology, marketing and corporate services support to its network of real estate offices. Global Offi ce Locations by Country ASIA PACIFIC Australia China India Indonesia Japan South Korea Malaysia New Zealand Philippines Singapore Taiwan LATIN AMERICA & THE CARRIBEAN Argentina Bahamas Brazil Chile Costa Rica Jamaica Panama Peru Venezuela NORTH AMERICA Canada Mexico United States EUROPE, MIDDLE EAST & AFRICA Austria Belgium Bulgaria Czech Republic Denmark Finland France Germany Greece Iceland Israel Kazakhstan Kuwait Latvia Norway Qatar Republic of Serbia Romania Russian Federation South Africa Spain Sweden Switzerland Turkey Ukraine United Kingdom

41 NAI Hiffman Dennis Hiffman Eric Fischer Chairman Senior Associate David Petersen, RPA Jeff Fischer C.E.O. Vice President Industrial Services John Cash, SIOR Exec. V.P./Managing Director Duke Botthof Executive Vice President Joe Bronson Vice President Brian Colson Executive Vice President Steve Connolly, SIOR Executive Vice President Benjamin Cremer Vice President Kelly Disser Senior Associate Larry Goldwasser Vice President Chris Gary Vice President Colin Green Associate David Haigh Associate Daniel Leahy, SIOR Executive Vice President Anthony Leeds Senior Associate Jay Maher, III Associate Adam Marshall Senior Associate Mark Moran Executive Vice President Lawrence Much, SIOR Executive Vice President Michael Robbins Associate Adam Roth, CCIM, SIOR Vice President Stephen Sullivan Vice President Eric Tresslar Executive Vice President John Whitehead Associate Daniel Wilkins Associate Investment Services Arthur Burrows Senior Vice President Mike Tenteris Senior Vice President Research Craig Hurvitz Director of Statistics and Market Information Marketing Julia Sutherland Marketing Director Matt Hronick Senior Designer Jennifer Burke Catherine DeBoer Elsa Gaztambide Karen Kirian Alison O Connell Melody Lawrence Denise Racana Teri Vemmer NAI Hiffman / NAI Global kdisser@hiffman.com NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

42 Notes

43 Notes Notes NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER

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