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

Transcription

1 Metropolitan Chicago NAI Hiffman Industrial Market Report Third Quarter 21 Committed to Chicago. Connected to the World.

2 To our valued clients and partners... NAI Hiffman is pleased to provide to you our Metropolitan Chicago industrial market report for the third quarter of 21. We trust you will find it helpful as you review your real estate strategies and the relevant changes that are taking place within the Chicago marketplace. I am happy to say that we are seeing positive signs which are based not solely on hope but on statistics, suggesting that contrary to the naysayers predictions, the sky is NOT falling. We are seeing an increase in our deal flow, as well as confirmation from the investor community that there is an immense amount of money on the sidelines ready to be deployed, and we are seeing glimpses of activity in the sales of quality assets which will help to reestablish a benchmark on values and perhaps bring buyer and seller closer together. We also look forward to another election cycle, which we anticipate will return us to firm political gridlock, which is unfortunately needed to reestablish regulatory business rules of the road. I am a big believer that history repeats itself, and in looking back, perhaps we are able to secure a keen perspective on what is to come, learning lessons and gaining experience from the hard times in each cycle. Maybe said another way, there is nothing new under the sun. To jog your memory, here are the dates we survived to remember in retrospect: Stock market collapse and oil crisis Inflation peaks over 14% and fed rate is at 16% Tax reform in our industry changes everything Black Monday RTC bail out 2 - The Dot Com bust 21 - The impact of 9/11 shuts down the world 27 - Credit Market Crisis 28 - Oil prices peak and fed rescue plan begins 29 - Banks fail, Tarp comes unemployment is over 1% 21 - We begin to shift, change and fix the fundamentals Through each setback, we were able to make forward progress, discovering new ways to conduct business and create profit for partners and clients who were willing to have faith in our abilities - adapting and modifying their strategies as the market dictated. We look forward to assisting you with creative adaptations, innovative strategies and successful outcomes as we continue to navigate the new normal for the real estate industry in the days and months ahead. Regards, David A. Petersen, RPA COO NAI Hiffman CEO, NAI Hiffman Asset Management

3 Metropolitan Chicago NAI Hiffman Industrial Market Report Third Quarter 21 Table of Contents Local Economy Industrial Market Statistics Industrial Market Summary Industrial Submarket Overviews Lake County Southeast Wisconsin I-9/Northwest Northwest Cook North Cook Fox Valley Central DuPage O Hare West Cook I-88 Corridor I-55 Corridor South Cook I-8/Joliet Corridor NAI Hiffman understands that our success is the direct result of creating successful outcomes for our clients. We build lasting relationships with our clients and partners, engaging our individual initiative joined with collaboration and teamwork. Our unrelenting commitment to excellence and integrity forms the foundation of our guiding principles and shapes our strategies. Submarket Map Methodology / Definitions NAI Hiffman / NAI Global Committed to Chicago. Connected to the World. Build on the power of our network. NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 3

4 Local Economy POPULATION (29 EST.) 9,84,845 POPULATION CHANGE (2-29 EST.) +5.3% NUMBER OF HOUSEHOLDS (28) 3,516,729 MEDIAN HOUSEHOLD INCOME (28 EST.) $67,234 GROSS METRO PRODUCT (28) $521 BILLION LABOR FORCE 4,858,4 TOTAL JOBS GAINED (6/9-6/1) -71,6 CHICAGO AREA UNEMPLOYMENT RATE 1.5% ILLINOIS UNEMPLOYMENT RATE 1.3% U.S. UNEMPLOMENT RATE 9.6% Local and National Unemployment Metro Chicago Illinois U.S. 12% 1% 8% 6% 4% 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 Source: Bureau of Labor Statistics % and services through aiports 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 Case-Shiller Home Price Indices Chicago Case-Shiller Index U.S. National Case-Shiller Index 2 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 15 products with the Chicago Mercantile Exchange and Board of Trade. 1 Quarter in Review All eyes are on the economic recovery, which, after recording an Source: Standard & Poor s optomistic GDP boost early in 21, has slowed to a crawl when compared to typical recovery periods. Real GDP, when chained to the value of the 25 dollar, has been positive for the past four quarters, 1-Year Treasury Note Year Treasury Note a sure sign that the recover is underway. GDP grew by 1.7% in the second quarter according to the U.S. Department of Commerce, a pace slower than the 3.7% increase recorded in the first quarter of the year and the 5.% increase measured during the final quarter of Source: Commodity Systems, Inc. (CSI) Unemployment has been the sore spot in the ongoing recovery, with local and national rates stubborn to budge from their recent highs around 1%. However, in nearly every past recession period, the job market was the last to recover, typically lagging other leading and conincident economic indicators, including GDP growth, the stock markets, changes in business inventories and industrial production.

5 Despite reported job losses totaling 241, jobs between May and June, the U.S. total nonfarm employment has increased by 751, jobs since the beginning of the year according to the Bureau of Labor Statistics. While preliminary figures for August and September point to additional losses, they are nowhere near the rates at which jobs were being lost during the recession. Barring any unforseen mass layoffs, job growth will likely be positive for 21 for the first time since 27. Consumer Price Indices (CPI) 6% 4% 2% % -2% -4% 2 CPI 12-Month Percent Change Core CPI 12-Month Percent Change (excludes volatile food and energy prices) Local Economy Review Industrial production has grown every month for more than a year, but experienced a slight decline in September compared to the previous month. However, total industrial production was still up 5.4% over a year ago, according to the Federal Reserve s September report. Retail sales and business inventories continue to show strong growth, with monthly sales for retail and food services increasing 7.3% and manufacturing and trade inventories increasing 4.7% over a year ago. These are all signs that the recovery, while it may be slowing, is still ongoing and consumer spending is increasing. Source: Bureau of Labor Statistics Crude Oil Prices 5% 3% 1% -1% -3% -5% 1989 Crude Oil Price Monthly Percent Change $15 $12 $9 $6 $3 $ Looking Forward When measured by depth, duration and breadth, the U.S. is only beginning to recover from the worst economic recession since the Great Depression. The Bureau of Economic Research recently declared June 29 the end of the recession. The four quarters that followed posted a 3% increase in real GDP, a rather sluggish rebound when compared to other similar recovery periods. Historically, deep recessions have been followed by surprisingly strong recoveries. So far, this has not been the case. There are many factors and hypotheses as to why the recovery thus far has been sluggish. One of the factors involves the residential real estate market that was overbuilt during the boom period earlier in the decade resulting in less demand and limited construction. Other factors include less consumer spending following the steep decline compared to other severe recessions, and a general sentiment of uncertainty and lack of confidence in the economy and the current administration s policies. Source: WTRG Economics U.S. Gross Domestic Product 6% 3% % -3% -6% Source: Bureau of Economic Analysis Adjusted GDP Growth (based on 25 dollar) (%) GDP Value (Trillions of $) U.S. Imports & Exports - Trade Balance U.S. Imports U.S. Exports $16 T $14 T $12 T $1 T $8 T $25 B $2 B The economy will likely continue to grow at a modest rate through the end of the year, then begin to gradually accelerate in 211 as concerns of a double-dip recession ease, consumer spending and confidence pick up, and companies continue to hire and expand. Hopefully, the unemployment rate will eventually begin to decrease, reinforcing optimistic views, and speeding up the pace of the economic recovery. Aug 7 August 21 Trade Deficit -$46.3 B Nov 7 Feb 8 May 8 Source: U.S. Census Bureau Aug 8 Nov 8 Feb 9 May 9 Aug 9 Nov 9 Feb 1 Trade Deficit May 1 Aug 1 $15 B $1 B NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 5

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

7 Industrial Market Statistics NAI Hiffman Industrial Market Report Third Quarter 21 Industrial Market Statistics Submarket # Bldgs. Total RBA Vacant Vacancy 3Q1 NET YTD Net New Supply Under Constr. (SF) (SF) Rate (%) Absorption (SF) Absorption(SF) (SF) (SF) Chicago North 1,121 66,18,4 5,7, % -654, ,939 Chicago South 1, ,573,528 14,94, % -941,163-1,27,386 91, North Cook ,32,324 3,563,57 7.7% -253,485-1,48,697 West Cook 741 6,397,55 7,69, % 332,212 76,474 Southwest Cook 49 39,226,488 3,332, % 273, ,998 South Cook 1,126 85,528,194 1,197, % 619, , ,78 514, I-57/Will Corridor 8 12,351,467 2,842,77 23.% 49, -498,236 Lake County 93 66,75,778 7,922, % -267,97-529, , Northwest Cook ,431,27 3,298, % 113, ,375 O Hare 1,725 1,59,67 12,837, % -39,76-1,325,594 Central DuPage 1,98 67,28,163 6,846, % 131,55 54,578 I-55 Corridor 655 8,357,318 1,486,63 13.% 714,448 41,47 53, McHenry County ,562,283 3,32, % 8,881-12,878 42, I-9/Northwest 43 25,62,633 2,792, % 195,591 29,522 52, Fox Valley ,89,494 3,93, % -128, ,51 I-88 Corridor ,834,957 7,769, % 363, ,967 I-8/Joliet Corridor ,48,397 11,72, % -168,31 249,37 217,712 DeKalb County 57 6,97, , % -13,863 43,441 I-39 Corridor ,53,891 4,718, % -378, ,4 Southeast Wisconsin ,614,814 5,335, % 983,661 1,893,642 1,, Northwest Indiana ,72,37 3,363, % 163, ,791 Flex Space Summary Total Flex Space 1,529 72,373,894 1,29, % 159,75-746,363 3, Total Market Summary 16,438 1,194,598,581 14,929, % 1,63,595-1,26,399 1,317,78 1,213,712 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 21 7

8 Metropolitan Chicago NAI Hiffman Industrial Market Report Mid-Year 21 # INDUSTRIAL BUILDINGS 16,438 MARKET SIZE (SF) 1,194,598,581 VACANCY 14,929,31 SF (11.8%) 3Q1 NET ABSORPTION (SF) 1,63, YTD NET ABSORPTION (SF) -1,26,399 NEW SUPPLY (SF) 1,317,78 UNDER CONSTRUCTION (SF) 1,213,712 1,, 6,, 2,, -2,, -6,, -1,, 3Q7 4Q7 1Q8 2Q8 3Q8 Vacancy Rate (%) Historical Deliveries 3 MM 25 MM 2 MM 15 MM 1 MM 5 MM MM * total through 3Q1 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 Net Absorption (SF) Total Sale Transactions and Price PSF $1,,+ Transactions Total Sales Total Sales (Annualized) Average Price PSF 3Q1 Total Deliveries (SF) Average (SF) % 12% 9% 6% 3% % Source: CoStar 21* Source: CoStar $6. $5. $4. Market Summary Chicago is the second largest industrial market in the U.S. with over 1.15 billion SF of inventory. The Chicago industrial market remains the most influential in the Midwest, due to its growing prominence as an inland port and its diverse, comparatively low-cost labor force. It has the second largest workforce in the country and is the largest manufacturing market. Chicago s strategic location and transportation infrastructure make it the most important transportation center in the country. Located in the path of three of the nation s busiest transcontinental expressways (I-8, I-9 and I-94), Chicago also claims 7 percent of the nation s rail and intermodal activity. The metropolitan area sits at the convergence of all six class-one railways and within a day s drive of one-third of the country s population. Quarter in Review For the first time in nearly two years, overall conditions improved throughout the Chicago Industrial Market. The vacancy rate decreased 3 basis points to 11.8% compared to last quarter s 12.1% rate. A year ago, the vacancy rate was in similar territory, at 11.7%, but was still on its way up and many were unsure of how high it would reach and when it would peak. It now appears the peak occurred mid-21, about 12 months after the recession ended according to the Bureau of Economic Research. The coming quarters may still experience minor vacancy increases, as the industrial real estate market typically lags the economy by about 18 to 24 months, but another period of steadily rising vacancies and negative net absorption is unlikely. Although overall vacancy decreased for the market, a few submarkets continued to post rises in vacancies for the third quarter, most notably the Lake County, Fox Valley and I-39 Corridor submarkets * total through 3Q * $3. $2. Net absorption, the change in occupied space that is used to measure demand, was positive for the first time in eight quarters, totaling 1,63,595 SF for the quarter. The tally year-to-date, however, remains in negative territory, totaling negative 1,26,399 SF for 21, due to the Pictured Above: 6755 W. 65th St. in Bedford Park, where end-to-end supply chain solutions provider M. Block & Sons leased 341,114 SF during the third quarter

9 Industrial Market Trends Vacancy Rate Net Absorption Asking Rents Suburban Submarkets by Size I-8/Joliet Corridor I-88 Corridor West Cook 62,48,397 SF 61,834,957 SF 6,397,55 SF Industrial Market Summary North Cook 46,32,324 SF effects of the first two quarters of the year. By the third quarter of 29, the outlook was far more grim, with more than negative 14 million SF of net absorption for the first three quarters of the year. Leasing activity continues to increase in both quantity and deal size market-wide. More than a year into the economic recovery, companies are beginning to feel demand to restock their inventories, and are addressing their real estate expansion plans now to take advantage of competitive rental rates and generous concessions available in today s market. The majority of the quarter s largest lease transactions (many greater than 2, SF in size) were new leases, as opposed to lease renewals, aiding in the positive absorption witnessed for the period. Sales activity is on pace to nearly match last year s paltry totals, but continues to increase each quarter, with average sales price per square foot slightly increasing after nose-diving in 29. Looking Forward While it appears vacancy rates have reached their peak, minor fluctuations over the coming quarters may still occur as the market responds to the sluggish economy. Port activity, imports, industrial production, and trucking and rail volumes continue to show positive year-to-year growth. This translates to more product flowing through the system and increased demand. Improvement in Chicago s Industrial Market will continue to accelerate throughout 211 as the market and economy recover from the worst recession since the Great Depression in the 193s. O Hare South Cook I-55 Corridor Central DuPage Lake County 1,59,67 SF 85,528,194 SF 8,357,318 SF 67,28,163 SF 66,75,778 SF Capitalization Rate and Properties Sold Total Industrial Base 1.3 Billion 1.2 Billion 1.1 Billion 1. Billion.9 Billion.8 Billion.7 Billion Total Industrial Base (SF) Southeast Wisconsin 44,614,814 SF Southwest Cook 39,226,488 SF Northwest Indiana 35,72,37 SF Fox Valley 32,89,494 SF Northwest Cook 28,431,27 SF McHenry County 25,562,283 SF I-9/Northwest 25,62,633 SF I-39 Corridor 24,53,891 SF I-57/Will Corridor 12,351,467 SF DeKalb County 6,97,869 SF 27 Cap Rate (%) # of Properties Sold % 11% 1% 9% 8% 7% 6% Significant Industrial Lease Transactions 3rd Qtr. 21 Property Address Submarket City Leased (SF) Tenant Comments 285 Duke Pky. I-88 Corridor Aurora 549,588 Midwest Warehouse Lease renewal 6755 W. 65th St. South Cook Bedford Park 341,114 M. Block & Sons New lease 1181 S. Central Ave. South Cook Alsip 284,356 California Cartage New lease S. 78th Ave. South Cook Bridgeview 254,425 Oak Creek Distribution (HOBO) New lease Centerpoint Dr. I-8/Joliet Corridor Elwood 16, ITL New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 9

10 Lake County POPULATION 712,567 (est.) 2 29 POPULATION CHANGE +1.6% (est.) # INDUSTRIAL BUILDINGS 93 MARKET SIZE (SF) 66,75,778 VACANCY 7,922,589 SF (11.9%) 3Q1 NET ABSORPTION -267,97 YTD NET ABSORPTION -529,531 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 214, chenry Fox Lake Wisconsin Illinois 45 Grayslake Gurnee Waukegan Regional Airport 12 Zion Waukegan North Chicago Submarket Trends Vacancy Rate Net Absorption Asking Rents ake Lake Zurich 12 Libertyville Mundelein 6 Vernon Hills Buffalo Grove 176 Lake Forest 41 Highland Park Plti 294 4, 2, -2, -4, -6, -8, Inventory By City 33% 3Q7 4Q7 1Q8 2Q8 23% 7% 7% 9% 1% 3Q8 Vacancy Rate (%) 11% 4Q8 1Q9 2Q9 3Q9 4Q9 Waukegan Libertyville Gurnee 1Q1 Buffalo Grove Lake Zurich North Chicago 2Q1 Net Absorption (SF) 3Q1 12% 1% 8% 6% 4% 2% % Other Lake County Suburbs Under Construction & Recent Deliveries 1,, 8, 6, 4, Deliveries (SF) Under Construction (SF) 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. Vacancy continued to climb through the third quarter as additional vacancy space was added to market, the largest being ULINE leaving 397, SF in North Chicago for their brand new facility in Southeast Wisconsin. The overall vacancy rate reached 11.9% by the end of September, up from 11.5% last quarter and far above the 8.5% recorded two years ago. Net absorption totaled negative 267,97 SF for the quarter, bringing the tally for the first three quarters of 21 to negative 529,531 SF. 2, 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 3Q1 Vacany increased to 11.9% by the end of September, up more than 3 basis points from 8.5% two years ago. Pictured Above: 181 Northpoint Blvd. in Waukegan, a 62,822 SF building purchased by router bit manufacturer Onsrud Cutter in August.

11 Construction The only new significant new construction project broke ground late this summer off Route 83 in Grayslake, where FedEx is building a new 214, SF distribution facility on 33 acres. The new facility will be the shipping company s second in Lake County, where they already have a 67,55 SF truck terminal in Zion s Trumpet Park. Available Space Profile 1. MM 2.1 MM 2.3 MM 2. MM 2.5 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Lake County Overview Transaction Activity The most significant sale transaction of the quarter involved power tool bit manufacturer Onsrud Cutter purchasing the 62,822 SF building at 181 Northpoint Blvd. in Waukegan. The facility, built in 21 and situated on 6 acres of land, sold for about $65. PSF. The company plans to move their operations to the building from their former Libertyville location # of Buildings Furniture polish manufacturer Weiman Products signed the largest lease of the quarter for 64,148 SF at 1655 S. Waukegan Rd. in Waukegan s Amhurst Lakes Business Park. Similar in size, Leica Microsystems leased 63,61 SF in the Aptakisic Creek Corporate Park in Buffalo Grove. The company plans to build out 47, SF of office space for their headquarters operations. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward Vacancy rates should remain elevated in Lake County until job growth and demand return in earnest, resulting in a sustained period of absorption. The worst is apparently over, but the time frame of the eventual recovery is still uncertain due to the sluggish economy. Significant Lake County Sale Transactions 3rd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 181 Northpoint Blvd. Waukegan 62,822 $4,1, $65. Onsrud Cutter LP Goodman Packing Equipment 191 Ambrogio Dr. Gurnee 14,95 $82, $58. Quest Products, Inc. Wayne Hummer Trust Co. 645 Heathrow Dr. Lincolnshire 71,556 $3,2, $45. Glentronics Inc. Wrightwood Capital 126 Rowena Rd. Grayslake 33 AC $4,159,48 $126,45/acre Scannell Properties Delos LLC Significant Lake County Lease Transactions 3rd Qtr. 21 Property Address City Leased (SF) Tenant Comments 1655 S. Waukegan Rd. Waukegan 64,148 Weiman Products Lease renewal 17 Leider Ln. Buffalo Grove 63,61 Leica Microsystems Inc. New lease 1175 Lakeside Dr. Gurnee 59,981 Select Marketing Solutions, Inc. New lease 921 Sherwood Dr. Lake Bluff 33,7 The Garrett McKenzie Encironmental Group, Inc. New lease Capital Dr. Lake Zurich 29,25 Continental Automotive Systems New lease NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 11

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 5,335,298 SF (12.%) 3Q1 NET ABSORPTION 983,661 YTD NET ABSORPTION 1,893,642 NEW SUPPLY (SF) 1,, 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 3Q1 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 2Q8 1Q8 4Q7 3Q7 Vacancy Rate (%) Net Absorption (SF) 15% 12% 9% 6% 3% % Southeast Wisconsin Overview The primary advantages of the Southeast Wisconsin submarket are the availability of affordable land for big box development as well as lower utility costs, property taxes and workers compensation when compared to submarkets in Illinois. The Lakeview Corporate Park in Pleasant Prairie, Wisconsin accounts for the lion s share of our statistical tracking in the Southeast Wisconsin industrial submarket. This 1,5-acre business park boasts 25 million SF of industrial space and is home to an international roster of companies including S.C. Johnson, IRIS, Yamaha and Jelly Belly. 16% 17% 6% 27% 34% Racine Pleasant Prairie Sturtevant Kenosha Burlington Vacancy continued to decline in Southeast Wisconsin during the third quarter, perpetuating a recent trend in the submarket opposite of the majority of other industrial submarkets. Vacancy rates peaked at 14.2% during the second quarter of 29, and have since steadily declined, reaching 12% at the end of September. The lower costs associated Under Construction & Recent Deliveries 3,, Deliveries (SF) 2,5, Under Construction (SF) with doing business in Southeast Wisconsin have attracted companies looking to lower occupancy and operational costs, resulting in five consecutive quarters of positive absorption. The most recent quarter 2,, was no exception, with absorption totalling 983,661 SF largely due to 1,5, 1,, the completion of ULINE s new 1 million SF headquarters facility. 5, 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 3Q1 Companies looking to lower occupancy and operational costs have been attracted to Southeast Wisconsin, resulting in positive absorption. Pictured Above: 212 Hamilton St. in Racine, a 23,898 SF industrial warehouse building purchased by Patrick O Neil during the third quarter

13 Construction Following the completion of ULINE s new 1 million SF distribution facility and 2, SF office headquarters in Pleasant Prairie, no new build-to-suit or speculative projects are under construction in Southeast Wisconsin. Transaction Activity Largely composed of big-box distribution facilities with large spaces catering to tenants requiring substantial square footage for their operations, significant transactions don t occur as often in the Southeast Wisconsin submarket due to the typical large size of transactions and the comparatively long-term leases these tenants sign. Following several quarters of sizeable lease and sale transactions, several of which were hundreds of thousands of SF in size, no significant transactions occurred during the third quarter. Instead, deals were much smaller in size, such as the sale of a 23,898 SF building purchased by a container and packaging company in Racine. Available Space Profile MM.3 MM 2.1 MM 1, 19,999.7 MM 1.3 MM 2, 49,999 5, 99,999 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ 1, 199,999 # of Buildings 2,+ Southeast Wisconsin Overview Looking Forward Lower taxes, utility costs, rental rates and land values found in Southeast Wisconsin will continue to draw companies from south of the border. Much of the industrial inventory in the submarket is modern, with high clear heights and excellent loading specifications. These high cube properties will continue to make Southeast Wisconsin attractive to large distributors. Significant Southeast Wisconsin Sale Transactions 3rd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 212 Hamilton St. Racine 23,898 Undisclosed Undisclosed Patrick O Neil 212 Hamilton LLC Significant Southeast Wisconsin Lease Transactions 3rd Qtr. 21 Property Address City Leased (SF) Tenant Comments th Ave. Kenosha 2, Undisclosed New lease Renaissance Blvd. Sturtevant 5,292 Probuild New lease NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 13

14 I-9/Northwest POPULATION 211,13 (est.) 2 29 POPULATION CHANGE +25.4% (est.) # INDUSTRIAL BUILDINGS 43 MARKET SIZE (SF) 25,62,633 VACANCY 2,792,342 SF (1.9%) 3Q1 NET ABSORPTION 195,591 YTD NET ABSORPTION 29,522 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 52, Hampshire Carpentersville East Dundee Elgin Submarket Trends 31 Vacancy Rate Net Absorption Asking Rents South Elgin 4, 2, -2, -4, 3Q7 4Q7 Inventory By City 9% 3% 5% 7% 75, 5, 25, 3Q7 1Q8 2Q8 3Q8 Vacancy Rate (%) 4Q7 76% 1Q8 2Q8 4Q8 3Q8 1Q9 4Q8 2Q9 3Q9 4Q9 1Q1 2Q1 Net Absorption (SF) Elgin Carpentersville South Elgin East Dundee 1Q9 2Q9 3Q9 4Q9 3Q1 Dundee, Genoa, Marengo, Hampshire, etc. Under Construction & Recent Deliveries Deliveries (SF) 1Q1 2Q1 12% 9% 6% 3% % Under Construction (SF) 3Q1 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. Following the trend of the overall industrial market, vacancy decreased during the third quarter to 1.9%, down from the 11.7% rate witnessed during the past two quarters. Increased transaction velocity and fewer new vacancies being introduced to the market resulted in the decrease in the vacancy rate and positive absorption totaling 195,591 SF for the quarter. Vacancy in the I-9/Northwest submarket has held between 1% and 12% for the past two years. Increased transaction velocity and fewer new vacancies resulted in decreased vacancy and positive absorption. Pictured Above: 27 Alft Ln., Elgin, where grill manufacurer Weber-Stephen Products Co. has leased 174,212 SF

15 Construction The only building under construction in the submarket remains a 52, SF speculative project on North Lancaster Road in South Elgin. Scheduled to deliver during the fourth quarter of the year, 8, SF of the building is pre-leased. Otherwise, construction will likely remain limited until demand returns in earnest. Transaction Activity Transaction activity picked up during the third quarter. In the largest lease of the quarter, grill manufacturer Weber-Stephen Products Co., better known as Weber Grill, leased 174,212 SF of space in Elgin s Randall Crossings Business Park. The new lease adds to their footprint in the submarket, where the expanding company signed a lease for over 25, SF a year ago. Wind turbine manufacturer Suzlon leased 62,792 SF in Elgin s Northwest Corporate Park X, a 25,3 SF warehouse building constructed in 21. Available Space Profile MM.3 MM.5 MM.9 MM 1, 19,999.9 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,+ I-9/Northwest Overview Rubber products supplier Ebco Inc. purchased a 51, SF building located at 133 Holmes Rd. in Elgin from American Chartered Bank for about $29. PSF. Their current 12, SF facility at 1371 Brummel Ave. in Elk Grove Village is on the market for sale. Looking Forward The I-9/Northwest submarket will remain an attractive location for businesses due to the lower tax base, strong labor pool and interstate access. Tenants will continue to find leasing opportunities such as incentives and aggressive rates. Significant I-9/Northwest Sale Transactions 3rd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 133 Holmes Rd. Elgin 51, $1,49, $29. Ebco, Inc. American Chartered Bank Significant I-9/Northwest Lease Transactions 3rd Qtr. 21 Property Address City Leased (SF) Tenant Comments 27 Alft Ln. Elgin 174,212 Weber-Stephen Products Co. New lease Technology Dr. Elgin 62,792 Suzlon New lease 136 Madeline Dr. Elgin 41,447 Top Flight Volleyball New lease 16 Big Timber Rd. Elgin 4,872 Private partnership New lease NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 15

16 Northwest Cook POPULATION 517,239 (est.) 2 29 POPULATION CHANGE +.3% (est.) # INDUSTRIAL BUILDINGS 525 MARKET SIZE (SF) 28,431,27 VACANCY 3,298,33 SF (11.6%) 3Q1 NET ABSORPTION 113,182 YTD NET ABSORPTION 326,375 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, 3Q7 4Q7 1Q8 2Q8 Inventory By City 7% 7% 5, 4, 3, 2, 1% 14% 15% 3Q8 Vacancy Rate (%) 28% 19% 4Q8 1Q8 2Q9 3Q9 4Q9 1Q1 2Q1 Net Absorption (SF) Schaumburg Northlake Mt. Prospect Palatine Barrington Streamwood 3Q1 15% 12% 9% 6% 3% % Bartlett, Hoffman Estates, Roling Meadows, etc. Under Construction & Recent Deliveries Deliveries (SF) Under Construction (SF) Northwest Cook Overview The Northwest Cook submarket is a desirable business location for entrepreneurial owners and corporate managers who reside in the area s suburban communities. The submarket is conveniently located close to Chicago s O Hare International Airport and has excellent access to Chicago and the western suburbs using I-9, I-29 and Route 53. The user base generally consists of specialized manufacturing and service companies. Many international companies, particularly Asian and European, have located their North American headquarters here due to the proximity to the airport. Few distribution facilities exist relative to neighboring submarkets. Many users come from the comparatively cramped O Hare submarket looking for more space or a location closer to their residences, but don t want to move all the way west to Elgin or beyond. While high Cook County taxes may be prohibitive to some users, landlords continue to offer lower net rents to attract tenants. Vacancy continued to decline throughout the Northwest Cook submarket through the third quarter as transactional activity outweighed the effects of few new significant vacancies being added to the market. The overall vacancy rate dipped to 11.6% by the end of September, marking the fourth consecutive quarter of declining vacancy rates, a 1, 2Q7 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 The vacancy rate dipped to 11.6%, marking the fourth consecutive quarter of declining vacancy rates. Pictured Above: 19-2 S. Carboy Rd., Mt. Prospect, purchased by Chicago-based Brennan Investment Group during the third quarter

17 trend opposite to other area submarkets that have witnessed several quarters of rising vacancy rates. Net absorption was positive, totaling 113,182 SF for the quarter, bringing the 21 tally year-to-date to 326,375 SF. Construction Largely a developed infill market, the majority of construction projects are building additions, but these have been few and far between due to economic concerns and limited financing. Transaction Activity The Chicago-based private investment firm Brennan Investment Group acquired a 217, SF building on Carboy Rd. in Mt. Prospect this September. The building, built in the 198s, was partially leased at the time of the sale. Available Space Profile 1.4 MM MM 1. MM.9 MM 1. MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ # of Buildings Northwest Cook Overview Part of a seven property portfolio sale, private equity real estate investment firm High Street Equity Advisors, LLC purchased the 59,5 SF industrial warehouse building located at 91 Phoenix Lake Ave. in Streamwood from Boston-based TA Associates Realty for about $66. PSF. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward Although improvements have been witnessed in the Northwest Cook submarket during recent quarters, vacancy will remain in the double-digits for the foreseeable future until job growth and consumer buying power increase demand market-wide. Until demand returns, landlords will continue to push aggressive rental rates and significant concession packages for tenants. Significant Northwest Cook Sale Transactions 3rd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 19-2 S. Carboy Rd. Mt. Prospect 217, Undisclosed Undisclosed Brennan Investment Group Principal Financial Group 91 Phoenix Lake Ave. Streamwood 59,5 $3,95, $66. High Street Equity Advisors TA Associates Realty Significant Northwest Cook Lease Transactions 3rd Qtr. 21 Property Address City Leased (SF) Tenant Comments 77 Remington Rd. Schaumburg 5, Fireguy Graphics New lease 371 Berdnick St. Rolling Meadows 3,6 Luxury Auto Group Inc. New lease NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 17

18 North Cook POPULATION 415,646 (est.) 2 29 POPULATION CHANGE +2.1% (est.) # INDUSTRIAL BUILDINGS 714 Grove MARKET SIZE (SF) 46,32,324 VACANCY 3,563,57 SF (7.7%) 3Q1 NET ABSORPTION -253,485 YTD NET ABSORPTION -1,48,697 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, 1Q9 4Q8 3Q8 2Q8 1Q8 4Q7 3Q7 Inventory By City Vacancy Rate (%) 14% 28% 8% 13% 2% 17% 2Q9 3Q9 4Q9 1Q1 2Q1 Net Absorption (SF) Wheeling Niles Skokie Northbrook Morton Grove 3Q1 1% 8% 6% 4% 2% % Evanston, Glenview, Lincolnwood, Northfield, etc. North Cook Overview Desirable for users seeking quick access to Chicago, major area expressways, and the northern suburbs, the North Cook Submarket is also attractive to long-term Chicago-based users looking to stay close to the city while escaping Chicago congestion. The area has the advantage of an inventory of buildings with better specifications than many of the antiquated buildings found in the city of Chicago. It tends to be a primarily user/buyer market, with limited leasing opportunities. The user base generally consists of service providers and light manufacturers who tend to remain in their locations for extended periods of time, resulting in limited transaction velocity in the submarket. The inventory base is mostly comprised of 196s 197sera buildings with lower ceilings and low parking ratios. Higher taxes may be a deterrent for some users, while others are willing to pay the price for the location. Vacancy decreased slightly during the third quarter for the first time in two years. The vacancy rate fell to 7.7% by the end of September, but still remains elevated well above the rates seen at this time last year and especially two years ago. Net absorption, normally inversely related to the vacancy trend, was negative for the quarter due to the Historically an owner-user submarket, vacancy rates have not reached levels experienced in neighboring submarkets. Pictured Above: Messner Dr., Wheeling purchased in an investment sale by ATG Trust Company during the third quarter

19 demolition of a couple buildings in the submarket affecting the total inventory. Construction The North Cook submarket has experienced very little new development in recent years due to its status as a mature market. Available Space Profile.2 MM.8 MM 1.7 MM 1.1 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 North Cook Overview 1.3 MM 2,+ Transaction Activity Deals were limited to smaller spaces during the third quarter. Clock parts manufacturer Timetek Corp. purchased a 35,682 1 # of Buildings SF warehouse building in Skokie for about $5. PSF and 8 expanded their business by relocating from a 11,5 SF building 6 in Harwood Heights. 4 2 Classic car refurbisher RPM Redline leased 34,35 SF at 6143 W. Howard St. in Niles. The deal was an as-is transaction. Also leasing space, Hasley Warehousing and Distribution leased 26,316 SF in Morton Grove during the third quarter. The food distributor built out two offices and a conference room as part of the transaction. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward Vacancy rates are likely near their peak in the North Cook submarket, but should remain elevated over the coming quarters until confidence in the economy improves, driving industrial production and demand. Historically an owner-user submarket, area vacancy rates have not reached levels experienced in neighboring submarkets where large institutionally-owned multitenant buildings prevail. Significant North Cook Sale Transactions 3rd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller Messner Dr. Wheeling 62,229 $2,68, $33. ATG Trust Company Chicago Title Trust Company 6666 W. Howard St. Niles 5,256 $2,3, $46. Angelo D Angelov Oakley Industries, Inc. 765 Austin Ave. Skokie 35,682 $1,8, $5. Timetek Corp. Erell Manufacturing Northfield Rd. Northfield 2,55 $1,835, $92. Fidelity Energy, LP Josephine Louis Significant North Cook Lease Transactions 3rd Qtr. 21 Property Address City Leased (SF) Tenant Comments 6143 W. Howard St. Niles 34,35 RPM Redline New lease 822 N. Austin Ave. Morton Grove 26,316 Hasley Warehousing and Distribution New lease 77 Austin Ave. Niles 21,682 Intelligent Spaces by Design, LLC New lease 2165 Shermer Rd. Northbrook 11,283 Undisclosed New lease 811 St. Louis Ave. Skokie 1,553 Mounsef International New lease NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 19

20 Fox Valley POPULATION 115,494 (est.) 2 29 POPULATION CHANGE +37.8% (est.) # INDUSTRIAL BUILDINGS 495 Elgin MARKET SIZE (SF) 32,89,494 VACANCY 3,93,949 SF (12.2%) South Elgin Streamwoo 3Q1 NET ABSORPTION -128,882 YTD NET ABSORPTION -186,51 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) Dupage 59 Airport St Charles 64 Geneva West Chicago Ca Submarket Trends Batavia 38 Vacancy Rate Net Absorption Asking Rents Sugar 3 Grove North Aurora Aurora 88 Naperville 4, 2, -2, -4, -6, -8, 3Q1 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 2Q8 1Q8 4Q7 3Q7 Inventory By City Vacancy Rate (%) Net Absorption (SF) 11% 35% West Chicago 26% St. Charles Batavia Geneva 28% Under Construction & Recent Deliveries 18% 15% 12% 9% 6% 3% % 4, Deliveries (SF) Under Construction (SF) 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 s vacancy rate climbed above 12% during the third quarter for the first time in the submarket s history. The rate had been hovering around the 12% for the past several quarters, but a handful of new vacancies and net absorption totaling negative 128,882 SF for the quarter was enough to push it to 12.2% by the end of September. Although vacancy has reached a new high point, demand is typically limited in the Fox Valley submarket, and large swings aren t common. 2, 1, 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 3Q1 Negative net absorption and new vacancies pushed the Fox Valley s vacancy rate above 12% for the fi rst time in the submarket s history. Pictured Above: 525 Shingle Oak Dr., West Chicago, purchased by KTR Capital Partners during the third quarter and subsequently leased to McCollister s Transportation Group, Inc.

21 Construction Due to the relatively large amount of vacant space on the market, negative absorption trends and limited access to the area, new development projects have been nonexistent. As the market begins to turn around and vacant space is gradually absorbed, construction activity will eventually pick up in and around communities west of the Fox River, as few industrial-zoned land sites remain near the river. Available Space Profile.8 MM.7 MM 1. MM 1.4 MM.8 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Fox Valley Overview Transaction Activity Real estate services and investment company JSQ Commercial LLC acquired a 146, SF manufacturing building in St. Charles for $7.125 million during the third quarter from global investment management company Invesco. Private equity fund manager KTR Capital Partners purchased an 15, SF industrial building in West Chicago s Crossroads of DuPage business park for $3.9 million. The transaction also included a neighboring 11.6-acre parcel of land and two industrial condominium units totaling 6,491 SF. The original asking price was $9.75 million. As part of the same transaction, KTR was able to secure a long-term lease from McCollister s Transportation Group in the 15, SF building located at 525 Shingle Oak Drive , 19,999 2, 49,999 5, 99,999 1, 199,999 # of Buildings 2,+ Looking Forward Vacancy is likely near its peak and should level off over the coming quarters, but will remain elevated until demand returns in earnest. Transaction velocity is typically low in the Fox Valley submarket, so it may take longer for conditions to improve compared to the characteristically more active submarkets. Significant Fox Valley Sale Transactions 3rd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 3825 Ohio Ave. St. Charles 146, $7,125, $49. JSQ Commercial, LLC Invesco Multi-property sale West Chicago 156,491 $3,899, N/A KTR Capital Partners TCB Development 555 Kirk Rd. St. Charles 62,4 $3,419,52 $55. Kristel Corporation ML Realty Partners 11 Kingsland Dr. Batavia 52,475 $2,65, $51. Gibraltar Properties Group Hopper Investment Inc. Significant Fox Valley Lease Transactions 3rd Qtr. 21 Property Address City Leased (SF) Tenant Comments 525 Shingle Oak Dr. West Chicago 15, McCollister s Transportation Group, Inc. New lease 71 N. Raddant Rd. Batavia 27, BCT Printing New lease 9-94 Paramount Pky. Batavia 7,5 Batavia Youth Baseball New lease 1183 Pierson Dr. Batavia 5,9 Fastenal New lease NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 21

22 Central DuPage POPULATION 393,753 (est.) 2 29 POPULATION CHANGE +1.1% (est.) # INDUSTRIAL BUILDINGS 1,98 Schaumburg MARKET SIZE (SF) 67,28,163 VACANCY 6,846,528 SF (1.2%) 3Q1 NET ABSORPTION 131,55 YTD NET ABSORPTION 54,578 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 2 19 Bloomingdale Glendale Heights Addison Elk Grove Village Ohare Int'l Airport 294 Submarket Trends est Chicago 64 Carol Stream 355 Elmhurst 83 Vacancy Rate Net Absorption Asking Rents Glen Ellyn Lombard 88 W 1,2, 8, 4, -4, -8, Inventory By City 7% 9% 5, 4, 3, 2, 3Q7 18% 4Q7 1Q8 2Q8 3Q8 Vacancy Rate (%) 1% 29% 27% 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 Net Absorption (SF) Addison Carol Stream Glendale Heights Elmhurst Hanover Park 3Q1 12% 9% 6% 3% % Bloomingdale, Lombard, Roselle, Vill Park, Wheaton Under Construction & Recent Deliveries Deliveries (SF) Under Construction (SF) Central DuPage Overview The well-positioned Central DuPage industrial submarket benefits from advantages including relatively low taxes, newer building inventory and an educated workforce. The recent completion of the I-355 extension, Chicago s newest expressway, has improved access to the area and spurred interest in the mature market. Users in the Central DuPage submarket vary by type and are not limited to primarily distribution like other nearby submarkets. The uptick in transactional activity witnessed in the Central DuPage submarket over the past few quarters has helped to stabilize the vacancy rate. Vacancy decreased during the second quarter, ending September with a rate of 1.2%, down slightly from 1.4% last quarter and comparable to the 1.3% rate witnessed a year ago. The active marketplace pushed net absorption positive for the quarter, totaling 131,55 SF, and bringing the year-to-date tally to 54,578 SF. 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. 1, 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 3Q1 Vacancy in the submarket has likely peaked and will begin to improve as elevated transactional activity continues and demand picks up. Pictured Above: 115 N. Swift Rd., Addison, where restaurant equipment parts supplier Parts Town leased 63,455 SF during the third quarter

23 Transaction Activity The most significant sale of the quarter involved manufacturing company Startex Industries purchasing a 54,77 SF building in Addison from Vacumet, a subsidiary of the Schoelle Corporation for about $56. PSF. Shoelle, a packaging supply manufacturer closed their Addison Vacumet location and a location in New Jersey, consolidating operations at their Austell, Georgia location. The company is headquartered in nearby Northlake. Available Space Profile 1.1 MM 2.3 MM 1.9 MM 1.2 MM 2.2 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Central DuPage Overview The largest lease transaction of the quarter was the long term lease of 63,455 SF at 115 N. Swift Rd. in Addison from Dallasbased landlord Lincoln Property Company. The restaurant equipment parts provider Parts Town will use the space for storage and distribution throughout the local market. Computer and equipment dealer COM2 Computers & Technologies LLC signed a lease for 52,218 SF at 14 E. Fullerton Ave. in Carol Stream. The landlord of the property is Finch & Barry Properties, LLC , 19,999 2, 49,999 5, 99,999 1, 199,999 # of Buildings 2,+ Looking Forward Vacancy in the submarket has likely peaked and will begin to recover as elevated transactional activity continues and demand picks up. As companies become increasingly confident in the eventual economic recovery, they will begin to readdress their real estate expansion needs. The advantageous location of the Central DuPage submarket, combined with its variety of industrial product, ensure the submarket will be quick respond to improving economic conditions and industry expansion, and one of the first to recover. Significant Central DuPage Sale Transactions 3rd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 31 Mitchell Ct. Addison 54,77 $3,87, $56. Startex Industries Inc. Schoelle Corporation 455 W. Kay Ave. Addison 2,88 $1,35, $65. David Hennicke Not listed 122 Capitol Dr. Addison 15,5 $1,256,5 $81.` Gelatin Innovations, Inc. Colony Capital Significant Central DuPage Lease Transactions 3rd Qtr. 21 Property Address City Leased (SF) Tenant Comments 115 N. Swift Rd. Addison 63,455 Parts Town New lease 14 E. Fullerton Ave. Carol Stream 52,218 COM2 Computers & Technologies, LLC New lease 945 N. Larch Ave. Elmhurst 51,23 Garland Converting New lease 5 W. North Ave. Lombard 48, Overton Gear & Tool New lease 146 Alexandra Way Carol Stream 42,341 Target Marketing Lease renewal 5 Commercial Ave. Addison 37,5 Great Kitchens, Inc. New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 23

24 O Hare POPULATION 136,517 (est.) 2 29 POPULATION CHANGE -2.6% (est.) # INDUSTRIAL BUILDINGS 1,725 MARKET SIZE (SF) 1,59,67 VACANCY 12,837,39 SF (12.8%) 3Q1 NET ABSORPTION -39,76 mburg 72 Heights 9 Des Plaines Morto Grov N YTD NET ABSORPTION -1,325,594 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 2,, 1,3, 6, -1, -8, -1,5, Inventory By City 3Q1 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 2Q8 1Q8 4Q7 3Q7 Vacancy Rate (%) Net Absorption (SF) 9% 1% Elk Grove Village 11% Des Plaines 42% Bensenville Itasca 18% Wood Dale Rosemont 18% Under Construction & Recent Deliveries 15% 12% 9% 6% 3% % 8, Deliveries (SF) Under Construction (SF) 6, 4, 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. The O Hare vacancy rate was unchanged in the third quarter, with 12.8% of space in submarket vacant at the end of September, the same percentage posted last June. While the vacancy rate didn t change, net absorption totaled negative 39,76 SF for the quarter, largely due to the demolition of a handful of buildings in the submarket, including several industrial buildings on O Leary Drive in Bensenville. The buildings were leveled to make way for the eventual relocation of Irving Park Road to the south of the recently demolished industrial park, as part of the O Hare Modernization Program. 2, 3Q7 4Q7 1Q8 2Q9 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 3Q1 Vacancy is likely near its peak in the O Hare submarket but will only slowly improve until the economy and demand signifi cantly rebound. Pictured Above: Supreme Dr. in the Bensenville Industrial Park, where Henderson Transport Inc. leased 115, SF during the third quarter

25 Construction Development activity, so prevalent a few years ago, has come to a standstill in the submarket. Many of the projects completed during recent years were speculative facilities, and they still sit vacant today due to depressed demand and low rental rates. Available Space Profile 2.7 MM 2.1 MM 3.4 MM 4.9 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 O Hare Overview Transaction Activity 4.5 MM 2,+ Printer cartridge manufacturer RPT Toner, Inc. purchased the the 5, SF building located at 475 Supreme Dr. in Bensenville in August for $2.75 million. The building had been vacant and available on the market for 18 months prior to the sale. The buyer is in the process of building out the space prior to moving in # of Buildings 1 The largest leases of the third quarter involved trucking company Henderson Transport Inc. leasing 115, SF in the Bensenville Industrial Park and the third-party logistics arm of FedEx Corp. leasing 14,619 SF in Elk Grove Village. Color Concepts also leased the full 93,38 SF building at 121 Kirk St. in the Elk Grove Industrial Park. 5 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward Vacancy is likely near its peak in the O Hare submarket and will slowly begin to improve over coming quarters, but should remain elevated until the economy significantly rebounds and demand returns. The premier location of the submarket close to O Hare International Airport with easy access to the nation s longest interstate highway (I-9) and several other area expressways, will help the submarket bounce back more readily than other submarkets. Significant O Hare Sale Transactions 3rd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 475 Supreme Dr. Bensenville 5, $2,75, $55. RPT Toner, Inc. Value Industrial Partners 22 Touhy Ave. Elk Grove Village 35, $1,312,5 $38. Permatron Corporation Derrick Hesser Significant O Hare Lease Transactions 3rd Qtr. 21 Property Address City Leased (SF) Tenant Comments Supreme Dr. Bensenville 115, Henderson Tranport Inc. New lease 11 Busse Rd. Elk Grove Village 14,619 FedEx Corp. New lease 121 Kirk St. Elk Grove Village 93,38 Color Concepts New lease Supreme Dr. Bensenville 63,618 Shenkers International Forwarders New lease Ellis St. Bensenville 59,372 KW International New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 25

26 West Cook POPULATION 244,228 (est.) 2 29 POPULATION CHANGE -4.4% (est.) # INDUSTRIAL BUILDINGS 741 MARKET SIZE (SF) 6,397,55 VACANCY 7,69,27 SF (11.7%) 3Q1 NET ABSORPTION 332,212 YTD NET ABSORPTION 76,474 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) Submarket Trends Vacancy Rate Net Absorption Asking Rents k Grove Village Bensenville 29 Elmhurst Ohare Int'l Airport Franklin Park Melrose Park Bellwood Schiller Park Niles 43 Oak Park Skokie 9 94 Chicago 1,, 5, -5, -1,, -1,5, Inventory By City 8, 6, 4, 3Q7 12% 5% 8% 9% 4Q7 29% 1Q8 2Q8 3Q8 Vacancy Rate (%) 37% 4Q8 1Q9 2Q9 3Q9 4Q9 2Q1 2Q1 Net Absorption (SF) Franklin Park Melrose Park Bellwood Schiller Park Berkeley 3Q1 15% 12% 9% 6% 3% % Harwood Heights, Hillside, Maywood, Norridge, River Grove Under Construction & Recent Deliveries Deliveries (SF) Under Construction (SF) West Cook Overview The West Cook submarket draws companies from the city of Chicago looking for a more functional building and additional amenities compared to the aging, often obsolete inventory of properties in Chicago. Additionally, companies migrate to the area from the nearby O Hare submarket where interstate and airport access is similar, but rental rates tend to be higher. The West Cook submarket benefits from good access to the city of Chicago, close proximity to area interstates and rail providers and relatively low rental rates. It is primarily an owner/ user market, but leasing opportunities have increased as institutional and private owners have entered the submarket. After briefly peaking above 12% last quarter, the West Cook vacancy rate dipped again during the third quarter to 11.7%, a rate similar to the same time a year ago. The vacancy rate responded quickly to the economic downturn in the second half of 28, rising from 8% to nearly 12% in less than a year. It has held around that 12% rate ever since. Net absorption was positive for the quarter, totaling 332,212 SF for the period between July and September, the most significant positive traction witnessed in the submarket in more than two years. 2, 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 3Q1 Net absorption was positive between July and September, marking the most signifi cant quarter of improvement in more than two years. Pictured Above: 421 Raymond Dr., Franklin Park, purchased by automotive parts remanufacturer Dynamic Manufacturing Corporation during the third quarter

27 Construction The most desirable development property in the submarket sits just south of O Hare International Airport and was the former home to Central Grocers 8, SF facility. Molto Capital LLC purchased the site this past June and is waiting for a build-to-suit opportunity. The 25-acre property can accommodate a building up to 7, SF in size. Available Space Profile.4 MM 1.4 MM 2.8 MM 2.4 MM 3. MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ West Cook Overview Transaction Activity The most significant sale transaction of the quarter involved Dynamic Manufacturing Corporation, a remanufacturer of torque converters and automotive transmissions, purchasing the 173, SF building located at 421 Raymond Dr. in Hillside. The seller, book and magazine distributor Chas. Levy Circulating Company, moved out of the facility more than two years ago when they leased space in the I-55 submarket. The building had been vacant since. Dynamic Manufacturing plans to consolidate their locations into the Hillside building over the next few years , 19,999 2, 49,999 5, 99,999 1, 199,999 # of Buildings 2,+ Metal bookcase and stereo cabinet manufacturer Metal Box International leased 9,97 SF at 34 Powell St. in Franklin Park, expanding their operations in the area. Looking Forward Plagued by high vacancy, the West Cook and O Hare submarkets will continue to experience the same vacancy concerns until demand picks up and institutional owners respond to the market by leasing spaces in their buildings at a discount. Significant West Cook Sale Transactions 3rd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 421 Raymond Dr. Hillside 173, $4,, $23. Dynamic Manufacturing, Inc. Chas. Levy Circulating Company Significant West Cook Lease Transactions 3rd Qtr. 21 Property Address City Leased (SF) Tenant Comments 34 Powell St. Franklin Park 9,97 Metal Box International Lease renewal W. North Ave. Melrose Park 49,763 WEG Electric Motors Corporation New lease Winona Ave. Schiller Park 17,779 LAS Hardwoods Inc. New lease 52 Proviso Dr. Melrose Park 1,8 Maritime Delivery Services New lease N. 25th Ave. Schiller Park 9,257 Medtronic New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 27

28 3 59 I-88 Corridor POPULATION 557,546 (est.) 2 29 POPULATION CHANGE +21.2% (est.) # INDUSTRIAL BUILDINGS 771 MARKET SIZE (SF) 61,834,957 VACANCY 7,769,179 SF (12.6%) 3Q1 NET ABSORPTION 363,396 YTD NET ABSORPTION 989,967 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 3Q1 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 2Q8 1Q8 4Q7 3Q7 Vacancy Rate (%) Net Absorption (SF) 15% 12% 9% 6% 3% % I-88 Corridor Overview The I-88 Corridor industrial submarket has witnessed increased demand and speculative development during the past few 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 slowed over the past couple years as obtaining project financing has become difficult, vacancy has increased and demand has been limited. 7% 15% 17% 18% 43% Aurora Naperville Montgomery Downers Grove Oswego, Westmont, North Aurora, Hinsdale, Lisle, etc. Under Construction & Recent Deliveries Vacancy improved again for the third consecutive quarter, dropping to 12.6% at the end of September, down 6 basis points from last quarter s rate of 13.2%. At its peak at the end of 29, vacancy had reached more than 14%, a steep climb from the 8.2% witnessed before the economic downturn began in early 28. Net absorption was once again positive for the quarter, totaling 363,936 SF, bringing the year-todate tally to nearly 1 million SF of positive absorption. 1,5, 1,25, 1,, 75, 5, Deliveries (SF) Under Construction (SF) Construction New construction activity in the I-88 Corridor is limited to the potential construction of a new warehouse facility for U.S. Foodservice. 25, 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 3Q1 Net absorption was positive for the third consecutive quarter, pushing the year-to-date absorption tally to nearly 1 million SF. Pictured Above: 238 Diehl Rd., in Aurora, purchased by Jel Sert in July, will allow the dessert and beverage manufacturer to expand their warehousing operations in the area

29 Transaction Activity Dessert and beverage manufacturer Jel Sert purchased the 34,482 SF building at 238 Diehl Rd. in Aurora from Teachers Retirement System of Illinois this July for $1.5 million. At the time of the sale, the building was half occupied by SYX Distribution. Jel Sert will assume occupancy of the entire building when SYX Distribution s lease expires in February, expanding their warehousing capabilities in the area. The company is headquartered in nearby West Chicago. One of the largest land sales of the year, U.S. Foodservice, the biggest privately held company based in the Chicago area, purchased a nearly 5-acre parcel of land in Aurora this July. The large land site could accommodate a warehouse building up to 1 million SF. Available Space Profile.7 MM 3.5 MM 1.7 MM 1, 19,999 2, 49,999 5, 99, MM 1, 199,999 2,+ 2.4 MM 1 # of Buildings I-88 Corridor Overview Supply chain management service provider Midwest Warehouse signed a short-term lease renewal and expansion to expand into the full 549,588 SF building located at 285 Duke Pky. in Aurora during the third quarter. The company currently occupies about 35, of the facility. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward Conditions will continue to improve in the I-88 Corridor as companies look to take advantage of the current market through new leases and significant expansions. One of the largest news stories of the quarter, truck and truck engine manufacturer Navistar has agreed to move their corporate headquarters to the former Alcatel-Lucent East campus in Lisle. Significant I-88 Corridor Sale Transactions 3rd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 238 Diehl Rd. Aurora 34,482 $1,5, $35. Jel Sert Teachers Retirement System of Illinois Duke Pky. Aurora 49.8 acres $8,243,5 $3.8 U.S. Foodservice, Inc. Duke Realty Corporation 21 Ogden Ave. Lisle 11,876 $4,365, $43. ROC Companies Wrightwood Capital 2225 White Oak Cir. Aurora 32, $9, $28. Chicago Title Land Trust Supermax, Inc. Significant I-88 Corridor Lease Transactions 3rd Qtr. 21 Property Address City Leased (SF) Tenant Comments 285 Duke Pky. Aurora 549,588 Midwest Warehouse Lease renewal 91 Bilter Rd. Aurora 195, Kohler New lease 392 Enterprise Ct. Aurora 175, Cano Container New lease 94 N Enterprise St. Aurora 88,436 Demand One New lease Janes Ave. Downers Grove 44,372 Undisclosed New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 29

30 I-55 Corridor POPULATION 239,267 (est.) 2 29 POPULATION CHANGE +34.8% (est.) # INDUSTRIAL BUILDINGS 655 MARKET SIZE (SF) 8,357,318 VACANCY 1,486,63 SF (13.%) 3Q1 NET ABSORPTION 714,448 YTD NET ABSORPTION 41,47 a Naperville 53 Downers Grove Woodridge Hinsdale Burr Ridge 294 Wi Spr NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 53, 59 Bolingbrook Submarket Trends 3 55 Romeoville Vacancy Rate Net Absorption Asking Rents Plainfield ,, 3,, 2,, 1,, -1,, 2Q1 1Q1 4Q9 3Q9 2Q9 1Q9 4Q8 3Q8 2Q8 1Q8 4Q7 3Q7 Vacancy Rate (%) Net Absorption (SF) 3Q1 2% 16% 12% 8% 4% % I-55 Corridor Overview Of all of the Chicago area industrial submarkets, the I-55 Corridor has seen the most activity and development interest over the past several years. As a result, the majority of the available land parcels are either already developed or are controlled by developers, rendering the I-55 Corridor an infill market with little additional land available for significant new development. Inventory By City 5% 5% 1% 9% 34% 37% Bolingbrook Romeoville Woodridge Lemont Plainfield Burr Ridge, Forest View, Willowbrook Under Construction & Recent Deliveries 3,, 2,5, 2,, 1,5, Deliveries (SF) Under Construction (SF) The vacancy rate dropped nearly 1% during the third quarter from 13.9% at the end of June to 13.% by the opening days of the third quarter. This decrease, the first appreciable drop in nearly two years, is due to significant absorption of vacant space, totaling 714,448 SF for the quarter. Sprawling vacant spaces were absorbed, such as the 56,777 SF building located at 821 Bluff Rd. in Romeoville, which had sat vacant since 28. The facility was purchased by user Midwest Air Technologies, Inc. during the third quarter. Construction New construction in the submarket remains limited to expansions such as 53, SF being added at 51 Woodcreek Drive in Bolingbrook. 1,, 5, 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 3Q1 The vacancy rate dropped nearly 1% during the third quarter, the fi rst appreciable decrease in nearly two years. Pictured Above: 821 Bluff Rd. in Romeoville s Bluff Point Business Park, purchased by fencing, lawn care and hardware products company Midwest Air Technologies during the third quarter

31 Transaction Activity One of the largest sale transactions in the submarket in recent history, Midwest Air Technologies, Inc. purchased the vacant 56,777 SF distribution building located at 821 Bluff Rd. in Romeoville s Bluff Point Business Park. This fall, the company will take occupancy of the building which was completed last year and plans to use the space for distribution of fencing, Available Space Profile.5 MM 1. MM 1.8 MM 8.6 MM 2.7 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ I-55 Corridor Overview hardware and lawn and garden products. A specialized freezer/cold storage building was purchased by food distributor Supreme Lobster & Seafood Co. this September. 5 4 # of Buildings The building sold for $16. PSF, a comparatively high amount 3 due to the specialized nature of the facility. Supreme Lobster 2 plans to soon take occupancy of the 11,88 SF building. 1 The largest leases of the quarter involved ATI Fabricated Components leasing 138,741 SF at 34 W. Crossroads Pky. and warehousing company Dedicated Logistics leasing 16,733 SF at 145 Remington Rd. in Bolingbrook s Carlow Corporate Center. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward Demand should continue to pick up as companies look to take advantage of the competitive rental rates and generous concession packages being offered by area institutional landlords. Due to the comparatively large size of the average transaction in the I-55 Corridor, significant absorption will be realized more quickly than other submarkets where spaces tend to be smaller in size and less desirable in amenities. The I-55 Corridor will likely be one of the leaders in the recovery of Chicago s Industrial Market in the years to come. Significant I-55 Corridor Sale Transactions 3rd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 821 Bluff Rd. Romeoville 56,777 $15,264,123 $3. Midwest Air Technologies, Inc. Land and Lake Development 279 Marquette Dr. Bolingbrook 11,88 $1,75, $16. Supreme Lobster & Seafood Co. M&E Cold Storage 175 E. Crossroads Pky. Bolingbrook 12,936 $7,895, $77. Steve Kersten IDI Significant I-55 Corridor Lease Transactions 3rd Qtr. 21 Property Address City Leased (SF) Tenant Comments 34 W. Crossroads Pky. Bolingbrook 138,741 ATI Fabricated Components New lease 145 Remington Rd. Bolingbrook 16,733 Dedicated Logistics, Inc. Lease renewal st St. Lemont 1,8 Consolidated Distribution New lease 5 Territorial Dr. Bolingbrook 77,751 D&D Manufacturing Lease renewal 1442 Van Dyke Rd. Plainfield 73,753 Logoplaste New lease 4 Crossroads Pky. Bolingbrook 64,11 IFCO Systems Lease expansion Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 31

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 1,197,898 SF (11.9%) 3Q1 NET ABSORPTION 619,352 YTD NET ABSORPTION 578,225 NEW SUPPLY (SF) 137,78 UNDER CONSTRUCTION (SF) 514, 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% 3Q7 4Q7 1Q8 2Q8 3Q8 Vacancy Rate (%) 26% 5% 8% 11% 14% 4Q8 1Q9 2Q9 3Q9 Bedford Park Alsip 1Q1 Chicago Heights Bridgeview 2Q1 Net Absorption (SF) South Holland Other Southern Cook Communities Under Construction & Recent Deliveries 1,5, 1,2, 9, 4Q9 Deliveries (SF) 3Q1 15% 12% 9% 6% 3% % Under Construction (SF) South Cook Overview The South Cook submarket is one of the Chicago metropolitan area s largest in terms of geographic size and total square footage. The area benefits from a good mix of manufacturing and distribution facilities due to an abundance of skilled, educated labor, and excellent access to several major expressways, train lines and public transportation. The submarket consists of primarily older product with scattered modern infill developments of around 2 million SF in Bedford Park and additional projects in Alsip and Sauk Village. Ownership is mixed, including institutional, owner/user and both national and local private owners. While its location close to Chicago is key, Cook County taxes can be a financial burden. The South Cook vacancy rate dropped below 12% during the third quarter for the first time since the end of 28. September ended with a rate of 11.9%, down from 12.5% last quarter, a difference of 6 basis points. Vacancy had held between 12% and 13% for the duration of the economic durntown, so this adjustment is an important step towards recovery. This decrease is due to significant absorption, totaling 619,352 SF for the quarter. 6, 3, 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 3Q1 Vacancy dropped below 12% for the fi rst time since the end of 28 due to signifi cant absorption totaling 619,352 SF. Pictured Above: 6755 W. 65th St., Bedford Park, where M. Block & Sons leased 341,114 SF of vacant space, representing the largest lease in submarket this year

33 Construction The 135,78 SF 197 s-era building located at 8687 S. 77th Ave. in Bridgeview was recently rebuilt into a 137,78 SF facility and was completed during the second quarter. Ongoing projects include building expansions, such as the doubling of 161 Lathrop Ave. in Harvey. The building is being expanded to roughly 1 million SF in order to accommodate tenants Allied Tube & Conduit Corp. and Tyco Electrical & Metal Products. Available Space Profile 1.1 MM 4. MM 1.8 MM 2.1 MM 2.8 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ South Cook Overview Transaction Activity The largest sale of the third quarter involved private equity firm KTR Capital Partners purchasing the 21,424 SF building located at 66 W. 73rd St. in Bedford Park for $7.4 million. The building is fully leased to helicopter and plane engine parts manufacturer Northstar Aerospace Inc # of Buildings In the largest lease transaction in the South Cook submarket this year, end-to-end supply chain solutions provider M. Block & Sons leased the 341,114 SF industrial facility located at 6755 W. 65th St. in Bedford Park. The warehouse building was built in 26. 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ Looking Forward Vacancy rates should begin to fall as some of the more than 1 million SF of vacant space continues to be absorbed over coming quarters if demand picks up and large transactions occur. Until consecutive quarters of positive absorption are realized, landlords will keep offering low lease rates and substantial concession packages to attract tenants. South Cook Sale Transactions 3rd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller 66 W. 73rd St. Bedford Park 21,424 $7,4, $37. KTR Capital Partners American Realty Advisors S. Lombard Ln. Alsip 86,2 $1,715, $2. Venture One Real Estate Freis Family Ventures South Cook Lease Transactions 3rd Qtr. 21 Property Address City Leased (SF) Tenant Comments 6755 W. 65th St. Bedford Park 341,114 M. Block & Sons New lease 1181 S. Central Ave. Alsip 284,356 California Cartage New lease S. 78th Ave. Bridgeview 254,425 Oak Creek Distribution (HOBO) New lease 5139 W. 73rd St. Bedford Park 72,33 Undislosed New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 33

34 59 I-8/Joliet Corridor POPULATION 43,23 (est.) 2 29 POPULATION CHANGE +39.9% (est.) # INDUSTRIAL BUILDINGS 614 MARKET SIZE (SF) 62,48,397 VACANCY 11,72,174 SF (17.7%) 3Q1 NET ABSORPTION -168,31 YTD NET ABSORPTION 249,37 NEW SUPPLY (SF) UNDER CONSTRUCTION (SF) 217,712 Submarket Trends Vacancy Rate Net Absorption Asking Rents le Ottawa Seneca 47 North Aurora 113 Aurora Plainfield Tinley Park 3 6 Shorewood Joliet Mokena 3 New Lenox 53 Minooka Channahon Elwood Downers 55 Grove Bolingbrook A Kankakee 2,, 1,5, 1,, 5, -5, Inventory By City 6,, 5,, 4,, 3,, 25% 5% 1% 3Q7 4Q7 16% 1Q8 2Q8 3Q8 Vacancy Rate (%) 44% 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 Net Absorption (SF) Joliet Elwood Minooka Ottawa 3Q1 22% 19% 16% 13% 1% 7% Mokena, New Lenox, Shorewood, Frankfort, etc. Under Construction & Recent Deliveries Deliveries (SF) Under Construction (SF) I-8/Joliet Corridor Overview The I-8/Joliet Corridor submarket has historically catered to multistate big box distribution. Its access to I-8 and I-55 position the corridor well for distribution operations. In addition, the nation s largest inland port is located in Elwood. This intermodal development, also known as CenterPoint Intermodal Center, has remained a bright spot not only in the corridor, but for the entire Chicago market. The reason for its continued success is the development s ability to offer tremendous transportation savings to importing operations as well as being a pre-approved Foreign Trade Zone. In addition, CenterPoint Intermodal Center announced the much anticipated opening of a new intermodal facility that began operations this quarter. CenterPoint Intermodal Center now offers intermodal service with both the BNSF and Union Pacific Railroads. The vacancy rate climbed slightly to 17.7%, up from 17.5% last quarter, but down significantly from 19.3% a year ago. Net absorption totaled negative 168,31 SF for the quarter, the first period of negative net absorption seen in the submarket in the past three years. This is deceiving, however, as the delivery of several million SF of new 2,, 1,, 3Q7 4Q7 1Q8 2Q8 3Q8 4Q8 1Q9 2Q9 3Q9 4Q9 1Q1 2Q1 3Q1 Vacancy and absorption will improve over coming quarters as tenants take occupancy of recently lease space. Pictured Above: An artist s rendering of Frontage Rd. in Shorewood, where logistics firm Jacobson Companies leased 57,187 SF during the third quarter

35 construction during 28 offset the effects of new vacancies. Without the completion of these new buildings, net absorption would have been strongly negative during that period, as vacancy had climbed from around 15% to over 2% in just over a year. Construction A 217,712 SF build-to-suit building is still under construction at the new 8-acre intermodal facility in Joliet. Available Space Profile 8.6 MM.8 MM.9 MM.6 MM 1.7 MM 1, 19,999 2, 49,999 5, 99,999 1, 199,999 2,+ I-8/Joliet Corridor Overview Transaction Activity Following a very quiet second quarter for significant transactions, the third quarter featured several sale and lease deals well over 1, SF in size. High speed internet, television and voice satellite solution manufacturer KVH Industries purchased the 1,415 SF building located at W. 185th St. in Tinley Park, where it had been the sole tenant and leased about 4%. The building was taken into receivership in February , 19,999 2, 49,999 5, 99,999 1, 199,999 # of Buildings 2,+ The I-8/Joliet corridor s largest leases of the year took place during the third quarter and included logistics firm Jacobson Companies servicing New Zealand dairy company Fonterra leasing 57,187 SF at Frontage Rd. in Shorewood. Looking Forward Vacancy will decrease and net absorption will turn positive again over coming quarters as tenants take occupancy of recently leased space. Additionally, the submarket s intermodal developments play a key role in the future of the I-8/Joliet Corridor. Increased interest in the cost-saving locational advantages of these facilities will continue to drive demand. I-8/Joliet Corridor Sale Transactions 3rd Qtr. 21 Property Address City Size (SF) Sale Price Price PSF Buyer Seller W. 185th St. Tinley Park 1,415 $4,262,358 $42. KVH Industries, Inc. Lincoln Financial Group S. Youngs Rd. Channahon 167,282 $3,5, $18. Siwin Corporation Smurfit-Stone Container I-8/Joliet Corridor Lease Transactions 3rd Qtr. 21 Property Address City Leased (SF) Tenant Comments Frontage Rd. Shorewood 57,187 Jacobson Companies New lease Crossroads Dr. Joliet 266,68 Castle & Cooke Cold Storage Lease renewal Centerpoint Dr. Elwood 16, ITL New lease S. Youngs Rd. Channahon 158,85 Siwin Corporation New lease 41 Olympic Blvd. Joliet 121,45 Smurfit-Stone Container New lease 41 Rock Creek Rd. Joliet 1,6 Touchpoint Logistics New lease Italics denotes NAI Hiffman transaction NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 35

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

37 Methodology & Defi nitions Methodology The information included in this report is the result of a compilation and analysis of data from various sources on class A, class B and class C office and industrial properties located in the metropolitan Chicago area defined by the submarket map on page 36. NAI Hiffman obtained the information from property representatives, CoStar Group, RealCapital Analytics, industry periodicals and magazines, our in-house property database, and other sources. NAI Hiffman greatly appreciates the participation of all individuals, companies and resources, whose contributions helped make this report possible. All of the information detailed throughout this report is saved and organized in our own in-house database and is regularly updated. By utilizing this database, we can analyze, calculate and report demographic information, inventory, vacancy, availability, net absorption, and transactional information. Definitions The NAI Hiffman Industrial Market Report tracks several measures of market conditions. This information is collected for individual properties then consolidated, organized and analyzed for submarket and market totals. These terms, used throughout the report, are defined below according to NAIOP Terms & Definitions. Net Absorption The net change in occupied space in a given market between the current measurement period and the last measurement period. Net absorption can be either positive or negative and must include decreases as well as increases in inventory levels. For the purpose of this report, sublease space is included in the calculation of net absorption. New Supply The total inventory delivered to the market since the last measurement period. Delivered is defined as total square footage and/or number of buildings that has completed construction and received a certificate of occupancy during a stated period. Under Construction Buildings where either: a) actual ground breaking has occurred (site excavation or foundation work) and construction is ongoing (not abandoned or discontinued) but for which a certificate of occupancy has not yet been issued; or b) properties undergoing conversion to office from another use or c) properties undergoing a major renovation where 75 percent or more of the building is not available for lease and building generally requires a certificate of occupancy to be made available for lease. Submarket Map / Methodology / Definitions Total Inventory (Market Size) The total square footage of gross rentable area in a specific market. It includes the gross rentable area in buildings that have received a certificate of occupancy. Total inventory increases when a new building is delivered and decreases when an existing building is destroyed, demolished or its use changes. Available Space The total amount of space that is currently being marketed as available for lease in a given time period. It includes space that is available, regardless of whether the space is vacant, occupied, available for sublease, or available at a future date. Available space excludes shadow space. Vacancy Rate A measurement expressed as a percentage of the total amount of vacant space divided by the total amount of inventory. Vacant space is inventory that is not currently occupied. Shadow Space That portion of leased space which is vacant but not available space. Shadow space is difficult to measure. (Synonym: phantom space) NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT THIRD QUARTER 21 37

38 NAI Hiffman & NAI Global The Power of Local Knowledge. NAI Hiffman is the largest full service, privately-owned commercial real estate brokerage and management company in the Chicago region. With over 15 brokers and employees, NAI Hiffman is dedicated to providing our clients with the most comprehensive real estate services. Our clients come to us for our deep local knowledge and they build their business on the power of our global managed network. NAI Hiffman delivers world-class, results-oriented, office, industrial, retail, and investment brokerage and management services including: Acquisition & Dispositions Leasing & Subleasing Tenant Representation Property Management Sale/Leaseback Build-to-Suit Investment Services Site Selection Due Diligence Market Research Consulting & Strategic Planning Receivership & REO Disposition The Power of Global Reach. NAI Global is the premier network of independent commercial real estate firms and is one of the largest commercial real estate service providers worldwide. What makes us different is the way we bring together people and resources in over 325 offices in 55 countries around the world to deliver results for our clients. As the world s only managed network of commercial real estate firms, we conclude over $45 billion in business annually by working together to help our clients strategically optimize their assets. We also manage over 2 million SF of commercial space. For more information, visit NAI Global has received top industry rankings: Ranked #2 brokerage network by Real Estate Forum Ranked #3 brokerage by Commercial Property News Ranked #4 by Lipsey s Top 25 Real Estate Brands NAI Global is based in Princeton, New Jersey. A dedicated staff, strategically positioned around the world, provides technology, marketing and corporate services support to NAI Global s network of real estate offices.

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

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