A Quiet Start. chicago OFFICE MARKET OVERVIEW Q DOWNTOWN OFFICE RESEARCH REPORT Q DOWNTOWN CHICAGO OFFICE.

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1 Q DOWNTOWN OFFICE chicago OFFICE MARKET OVERVIEW RESEARCH REPORT Q DOWNTOWN CHICAGO OFFICE A Quiet Start Consistent with the start of, the first quarter of 2013 proved to be relatively lackluster. Generally sluggish large leasing activity and minimal changes to fundamentals made for a sleepy start to the year and only a minimal decrease in vacancy rate. MarKet indicators Overall Chicago CBD 4Q 1Q 2013 rate 14.0% 13.9% absorption (sf) 499,618 85,451 rents $31.90 $32.04 inventory 144,310, ,310,538 Amidst continued economic uncertainty, tenants remain cautious in their decision-making and are examining space utilizations closely. The largest firms in the market are demanding more efficiency in their space. Trends such as telecommuting, non-dedicated shared office space, standardized office sizes and collaborative workspaces are resulting in an overall net decrease in footprints by many of the CBD s largest tenants. As tenants make their long-term lease decisions, they are thinking more diligently about securing space that can accommodate the flexible culture of today s workforce. The focus is on maximizing efficiencies while implementing creative design to make the workplace more productive and collaborative. Although tenants are interested in reducing their footprint to realize the economic benefit of a direct decrease in rental obligation, the importance of employee productivity remains at the forefront of long-term decision-making. Bolstered by a booming technology sector and benefiting from corporate relocations from the suburbs, the Chicago CBD will continue to make headway as 2013 proceeds. The future migration of companies into the CBD will help create positive absorption upon occupancy. Recent lease signings or commitments to CBD expansion by companies such as United Continental Holdings, GE, Motorola Mobility, Maximus, and Capital One are all examples of a trend that is likely to continue as long as pricing in the CBD remains competitive. With the market currently in a state of equilibrium, a slow return to pre-recession fundamentals is anticipated. The speed with which recovery occurs will be largely dependent upon job creation and continued growth in tenant confidence. Although massive growth is unlikely in the near-term, the next several quarters should result in sustained improvement but at an unhurried pace. colliers international p. 1

2 and The overall CBD vacancy rate decreased slightly to 13.9 percent in the first quarter, down from 14.0 percent one quarter prior. Class A space posted a vacancy decrease to 13.7 percent, down from 13.8 percent at the end of while Class B space increased over the past quarter to 14.2 percent, up from 13.9 percent. Overall vacancy in the CBD has declined 0.7 percent over the past year. Sublease vacancy has remained fairly stagnant, hovering around 1.0 percent over the last four quarters. However, sublease vacancy has fallen by over 100 percent since the start of the financial crisis, a result of burn-off from lease expirations as well as tenants slowing the pace at which they are shedding excess space. Square Footage Net & central business district 1,500,000 1,187, ,271 1,000, % 15.4% 14.6% 14.0% 13.9% 500, , % 85,451 0 (500,000) (309,847) (1,000,000) (1,500,000) (1,743,128) (2,000,000) 2013 YTD Source: Costar; Colliers International Research SUBMARKET RATES ytd 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% The first quarter of the year resulted in net absorption of positive 85,451 square feet. Class A and C space experienced positive demand during the quarter, posting 95,882 square feet and 206,324 square feet of net absorption, respectively. However, those gains were tempered by negative 216,755 square feet of net absorption within Class B properties. (%) 15.0% 10.0% 5.0% 14.6% 13.9% 14.0% 15.4% 15.5% 15.6% 15.3% 14.4% 14.3% 14.3% 14.3% 13.5% 13.1% 12.5% 11.9% 0.0% Central Loop East Loop North Michigan Ave. River North West Loop Source: Costar; Colliers International Research 2013 Colliers International p. 2

3 Leasing Activity Leasing activity in the first quarter of the year was fairly quiet with only two transactions greater than 100,000 square feet completed. The largest was Denton s long-term renewal at 233 S. Wacker Drive in the West Loop. The law firm will be relocating its space within the building as part of its lease. The second largest transaction of the quarter also occurred in the West Loop. Guggenheim Partners signed a renewal and expansion at 227 W. Monroe Street. The company will be relocating some of its employees from suburban Lisle as part of a consolidation into its West Loop location and will occupy approximately 130,000 square feet. Relative to one year ago, leasing volume in transactions greater than 50,000 square feet was rather sluggish during the start of Eight such transactions totaling a cumulative 707,000 square feet were signed during the first quarter. By comparison, during the first quarter of, 16 such transactions totaling 1.5 million square feet had been signed. chicago cbd large Leasing Transactions (35,000+ square feet) first quarter 2013 Tenant Address Class Submarket Size (SF) Deal Type Dentons (formerly SNR Denton) 233 S. Wacker Dr. A West Loop 144,000 Renewal Guggenheim Partners 227 W. Monroe St. A West Loop 130,000 Renewal/ Expansion Echo Global Logistics 600 W. Chicago Ave. B River North 88,900 Renewal/ Expansion Plante Moran 10 S. Riverside Plz. B West Loop 85,600 Consolidation Credit Suisse 227 W. Monroe St. A West Loop 76,500 Renewal/ Contraction Equity Office Properties 2 N. Riverside Plz. B West Loop 72,100 Renewal Heitman 191 N. Wacker Dr. A West Loop 58,000 Renewal The Corporate Executive Board 550 W. Jackson Blvd. A West Loop 52,000 Renewal Truven Health Analytics 1 N. Dearborn St. B Central Loop 40,700 Extension Shuyler, Roche & Crisham 180 N. Stetson Ave. A East Loop 37,000 Expansion/ Consolidation W. W. Grainger 500 W. Madison St. A West Loop 36,600 Expansion Franczek Radelet 300 S. Wacker Dr. B West Loop 36,000 Renewal Associated Banc-Corp. 525 W. Monroe St. A West Loop 35,000 New Lease sales Activity 2013 started with strong investment sales activity. A total of six transactions were completed during the first quarter. The largest transaction was the sale of 550 W. Washington Street. Beacon Capital Partners sold the property to MetLife Insurance for a reported $112 million ($ per square foot). The next largest transaction was the sale of 111 W. Washington Street. Harbor Group Management completed its sale of the building to Shidler Group for $94.6 million ($ per square foot). In addition to the six assets sold during the first quarter, another four remain under contract, an indication that 2013 is likely to be another strong year for investment sales activity within the CBD. With occupancy rates rising in many sectors of the market and low interest rates still available, 2013 will likely serve as a continuation of the resurgence in investment sales activity that was experienced during the past year. Investment Sales Activity ytd Number of Sales YTD Class A Class B Class C Source: Costar; Colliers International Research Colliers International p. 3

4 chicago cbd sales activity - first QUARTER 2013 Status Address Sub Mkt Class Size (SF) Sale Price Price/SF Seller Buyer Sold 550 W. Washington Street WL A 372,000 $112,000,000 $ Beacon Capital Partners MetLife Insurance Sold 111 W. Washington Street CL B 579,778 $94,600,000 $ Harbor Group Management Shidler Group Sold 73 W. Monroe Street CL C 52,021 $5,575,000 $ F & F Realty Company Iconic Development Sold E Illinois Street NM C 474,000 $48,000,000 $ Beal Bank American Heritage Investments Sold 224 N. Des Plaines Street WL C 82,000 $7,700,000 $93.90 Wells Fargo Bank South Street Capital Sold 123 W. Madison Street CL C 78,100 $4,850,000 $62.10 Canadian Imperial Bank of Commerce Cagan Management UC 225 W. Wacker Drive WL A 650,812 $218,000,000 $ J.P. Morgan Chase & Co. UC 130 E. Randolph Street & 180 N. Stetson Avenue (Partial Stake) EL A 2,204,137 $100,000,000 - BentleyForbes UC 205 W. Wacker Drive WL B 263,650 $25,000,000 $94.82 Cape Horn Group Mirae Asset Global Investments Co. Michael Silberberg & Mark Karasick Ameritus Corporate Real Estate Service UC 32 W. Randolph Street CL C 226,666 $13,250,000 $58.46 David & Barbara Kalish Undisclosed FS FS 208 S. LaSalle Street (Office Portion) 55 E Washington Street (Floors 2-12) CL B 355,411 TBD TBD Prime Group TBD EL B 192,000 TBD TBD Morgan Reed Group TBD FS 540 N. LaSalle Street RN C 65,140 TBD TBD Joseph Lagoa TBD NM 311 S. Wacker Drive WL A 1,281,000 TBD TBD Fremont Group & Shorenstein Realty Services TBD NM 161 N. Clark Street CL A 1,100,000 TBD TBD Tishman Speyer TBD NM 190 S. LaSalle Street CL A 798,782 TBD TBD CBRE Global Investors TBD NM 625 N. Michigan Avenue NM B 343,072 TBD TBD Lone Star Funds/ Wells Fargo TBD NM 360 N. Michigan Avenue EL B 260,823 TBD TBD Joseph Chetrit TBD NM 400 S. Jefferson Street WL A 233,000 TBD TBD Sterling Bay Partners TBD NM 216 W. Jackson Boulevard WL C 176,622 TBD TBD Farbman Group TBD CL = Central Loop EL = East Loop NMA = North Michigan Avenue RN = River North WL = West Loop FS = For sale NM = New to Market UC = Under Contract Colliers International p. 4

5 Large Blocks of Availability and Tenant Demand Large blocks of space in the CBD are defined as those containing 100,000 square feet or greater on a contiguous and direct basis. During the first quarter, net large block availability remained unchanged at 26 spaces, However, the total amount of available space within those blocks increased to 5.4 million square feet. This is an increase from 5.1 million square feet in the fourth quarter of. Two blocks were removed during the first quarter, the largest of which was a 117,101-squarefoot block at 227 W. Monroe Street. Another large block removed during the quarter was the 112,000-square-foot space at 333 S. Wabash Avenue. Both blocks were reduced in size during the quarter, bringing them below the large block threshold. Added during the quarter was a 131,250-square-foot space at 111 N. Canal Street. The building was recently purchased and is undergoing a redevelopment. The owners of 222 S. Riverside Plaza also listed a 103,120 square foot block of space on the market with availability in early large block direct availabilities (100,000+ square feet) Building Class Size (SF) Floor Submarket W. Monroe B 354, West Loop 515 N. State St. A 350, North Michigan Ave. 500 W. Monroe St. A 338, West Loop N. Michigan Ave. B 316, North Michigan Ave. 200 E. Randolph St. A 306, East Loop 233 S. Wacker Dr. A 285, West Loop 130 E. Randolph St. A 256, East Loop 540 W. Madison St. A 250, West Loop 101 E. Erie St. A 217, North Michigan Ave. 410 N. Michigan Ave. B 214, North Michigan Ave E. Illinois C 210, North Michigan Ave. 222 N. LaSalle St. B 199, Central Loop 300 S. Riverside Plz. B 198, West Loop 303 E. Wacker Dr. B 174, East Loop 111 N. Canal B 294, West Loop 440 S. LaSalle St A 162, Central Loop 130 E. Randolph St. A 155, East Loop 11 S. LaSalle St. C 146, Central Loop 200 N. LaSalle St. A 143, Central Loop 10 S. Dearborn/21 S. Clark A 139, Central Loop 111 N. Canal B 131, West Loop 130 E. Randolph St. A 128, East Loop 233 S. Wacker Dr. A 125, West Loop 401 S. State St. C 110, East Loop 401 N. Michigan Ave. A 104, North Michigan Ave. 222 S. Riverside Plz. B 103, West Loop 14 large direct blocks of CBD Class A space consisting of 2,996,642 square feet 4 large blocks of West Loop Class A space consisting of 1,000,231 square feet 3 large blocks of West Loop High Rise Class A space consisting of 749,678 square feet Large tenants are finding that the spaces available for their occupancies are dwindling when factors such as asset class, submarket desirability and view are considered. Of the 26 large blocks of available space, 14 reside within Class A buildings. When dissected further, the lack of high view, quality, well-located space becomes more apparent. Only four of those blocks reside within the highly desired West Loop submarket and of those, only three are located within the building s high-rise section. Colliers International p. 5

6 Construction The first quarter of the year ended without any new development announcements. Hines will be breaking ground on a new 45-story, 900,000-square-foot office tower at 444 W. Lake Street in the second quarter of Hines and Ivanhoe Cambridge are providing equity financing for the project and have received a letter of intent from law firm, McDermott, Will & Emery to be the anchor tenant of the development. The project is slated for delivery in Recognizing the limited availability of quality, large blocks of space, developers are anticipating that demand is sufficient enough in this sector of the market to support the development of one or more new office towers with deliveries anticipated in 2016 and Several projects continue to garner press as developers attempt to lure large tenants. Square Footage new construction deliveries ,000,000 3,652,913 3,500,000 3,000,000 2,500,000 2,000,000 1,745,968 1,892,460 1,897,981 1,504,364 1,500,000 1,331,436 1,000, , , , , , Source: Costar; Colliers International Research Other projects being discussed include the site owned by developer John O Donnell at 150 N. Riverside Plaza, located along the river between Lake Street and Randolph Street, and the site at 301 S. Wacker Drive which is being marketed by Trammell Crow and InSite Real Estate. Both projects are in the 1.0-million-square-foot range. A secondary subset of new developments also exists in a more peripheral West Loop location between the river and the Kennedy Expressway. The Alter Group and White Oak Realty Partners are marketing a 490,000-square-foot building at 625 W. Adams Street while Fifield Companies is proposing a potential 1.4-million-square-foot tower at W. Monroe Street. Proposed Chicago CBD Office Development Sites Address Developer Total RBA W. Monroe Street Fifield Companies up to 1.4 million 108 N. Jefferson Street Jupiter Realty 450, W. Adams Street The Alter Group/ White Oak Realty Partners 494,601 or 346, N. Riverside Plaza O Donnell Investments 1,471, W. Lake Street Hines/Levy (joint venture) 1,100, S. Wacker Drive InSite/Trammell Crow 1,002,807 Wolf Point Hines/Kennedy (joint venture) 1,500,000 (East) 1,800,000 (South) 130 N. Franklin Street cc Industries/ Tishman Speyer 1,000, W. Madison Street Hines, MR Properties (owner) 500, S. Wacker Drive DRI/Oaktree Capital 863, W. Randolph Street John Buck Company (developer) Interpark (owner) 991,805 Anchor tenants have not yet been secured for any of these projects, although several large tenants are actively engaged in negotiations that could eventually result in signed leases. Responding to the uncertainties that still exist in the economy, large tenants remain very cautious as it relates to their real estate needs, resulting in longer than usual decision timelines, as they evaluate their risk characteristics in a stay versus move outcome. Once commitments are secured, it is likely the Chicago CBD could see, dependent upon size, one to three new developments launched. With the market now trending towards recovery, it is expected that fundamentals will be in place to support the addition of new inventory by the time 2016 arrives. New construction has not delivered to the Chicago CBD since when the vertical expansion of the Blue Cross Blue Shield Building at 300 E. Randolph Street added 933,000 square feet to inventory. The last new building additions to inventory occurred in with the deliveries of 353 N. Clark Street, 300 N. LaSalle Street and 155 N. Wacker Drive, which added a combined 3.7 million square feet to inventory. Colliers International p. 6

7 Rents and Concessions The average gross asking rental rate in the Chicago CBD increased during the first quarter of 2013, rising to $32.04 per square foot, up from $31.90 per square foot in the prior quarter. During the past year, the average asking rate has risen by 2.0 percent, increasing by $0.62 from the $31.42 per square foot rate posted one year ago. Class A rates remained stagnant during the first quarter at $37.35 per square foot while Class B asking rates increased to $30.51 per square foot, up from $30.22 per square foot one quarter prior. Asking Gross Face Rate central business district $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 Movement in CBD asking rates has been fairly modest with some well-capitalized landlords placing slight upward pressure on rents. These landlords will continue to outperform averages while the balance of the market will continue to $5.00 $0.00 Source: Costar; Colliers International Research Class A Class B Class C Average see some push back on concessions such as free rent and tenant improvement allowances. Further impeding the average rental rate escalation is historically low property taxes throughout the CBD. Following the credit crisis, with many buildings experiencing inflated vacancies, reassessments resulted in most properties realizing a substantial decrease in their property taxes. These tax savings are helping to offset some of the rental rate increases being imposed by landlords and are impacting the pace at which rates are really increasing. Once the market fully recovers, it can be expected that most buildings will return to more normal property tax levels, resulting in a bump in the average gross asking rate Colliers International p. 7

8 Central Loop Despite boasting the lowest Class A vacancy rate in the CBD, Central Loop s pace of recovery has been slow and inconsistent due to excess sublease availability and inflated vacancies in its Class B sector. market indicators Central Loop 4Q 1Q 2013 rate 13.9% 14.0% (sf) -51,658-42,992 Rents $30.79 $30.70 Inventory 38,232,808 38,232,808 With Class A rental rates residing $4.62 per square foot lower than the pre-recession average posted at the end of, many tenants used the opportunity to upgrade their space, creating a flight to quality that has translated to a relatively healthy Class A vacancy rate for the submarket. Contrarily, the submarket s Class B sector suffered as a result of this trend, resulting in the second highest Class B vacancy rate in the CBD. Following a sluggish start to the year, the submarket remains in transition as it continues to experience quarters of positive demand followed by subsequent quarters of negative demand. Serving as home to several large banks in addition to a fairly sizable professional service presence, the submarket was largely exposed to the fallout resulting from space contractions within these industries during the economic downturn. Although the pace at which footprint contractions are occurring has slowed, some tenants still continue to give back excess space upon renegotiating their leases, hindering the submarket s speed to recovery. The average Central Loop vacancy rate increased slightly during the first quarter to 14.0 percent, up from 13.9 percent one quarter prior. However, during the past year, overall vacancy has fallen 0.5 percent from the 14.4 percent rate posted during the first quarter of. Class A and B space reported very minimal changes in vacancy, ending the quarter at 11.8 and 15.7 percent, respectively. Class C properties experienced a second consecutive spike in vacancy, ending the quarter at 15.3 percent, up from 14.2 percent at the end of. Ending the first quarter of the year with negative 42,992 square feet of net absorption, the Central Loop started off the year on a rather lethargic note. Class A properties reported positive 14,240 square feet of net absorption while Class B space ended the quarter with negative 8,584 square feet of net absorption. Driving most of the negative absorption experienced during the quarter, Class C space posted negative 48,648 square feet of net absorption. Net & central loop Submarket 400, % 200, , % 14.7% 49, % 256, % Square Footage 0-200, ,000 (149,225) 13.9% (42,992) 14.0% 14.0% 13.5% 13.0% -600, % 12.5% -800,000 (742,906) 2013 YTD 12.0% Source: Costar; Colliers International Research Colliers International p. 8

9 LEASing ACTIVITY Large leasing activity cooled during the first quarter in the Central Loop relative to the prior quarter when the Central Loop had two transactions greater than 100,000 square feet consummated. The largest lease transaction to occur this quarter was Truven Health Analytics extension of its 40,700 square foot lease at 1 N. Dearborn Street. Additionally, TIAA-CREF renewed its 27,000-square-foot lease at 200 N. LaSalle Street during the quarter. The largest relocation during the quarter was Responsys new lease at 111 W. Jackson Boulevard. The company will occupy approximately 24,000 square feet of space at the building when it relocates from 225 W. Washington later this year. central loop Lease Activity first QUARTER 2013 Tenant Address Class Size (SF) Deal Type Truven Health Analytics 1 N. Dearborn Street B 40,700 Extension TIAA CREF 200 N. LaSalle Street B 27,000 Renewal/Expansion Responsys 111 W. Jackson Boulevard B 24,000 New Lease SALEs ACTIVITY Three investment sales transactions closed during the first quarter in the Central Loop. The largest was Harbor Group International s sale of 111 W. Washington St. to the Shilder Group for $94.6 million ($163/ per square foot). Also traded during the quarter was 73 W. Monroe which was sold by F&F Realty Co. to Iconic Development for $5.6 million ($107 per square foot). Lastly, 123 W. Madison Street was traded by Canadian Imperial Bank of Commerce to Cagan Management for $4.85 million ($62.10 per square foot). 1 N. Dearborn STREET After securing a 136,000-square-foot new lease with Grant Thornton late last year, Tishman Speyer listed 161 N. Clark Street on the market during the quarter. Also listed on the market this quarter was 190 S. LaSalle Street. CBRE Global Investors is selling the Class A asset as part of a portfolio. 111 W. WASHINGTON STREET central loop sales Activity FIRST QUARTER 2013 Status Address Class Size (SF) Sale Price Price/SF Seller Buyer Sold 111 W. Washington Street B 579,778 $94,600,000 $ Harbor Group Management Shidler Group Sold 73 W. Monroe Street C 52,021 $5,575,000 $ F & F Realty Company Iconic Development Sold 123 W. Madison Street C 78,100 $4,850,000 $62.10 Canadian Imperial Bank of Commerce Cagan Management UC 32 W. Randolph Street C 226,666 $13,250,000 $58.46 David & Barbara Kalish Undisclosed FS 208 S. LaSalle Street (Office Portion) B 355,411 TBD TBD Prime Group TBD NM 161 N. Clark Street A 1,100,000 TBD TBD Tishman Speyer TBD NM 190 S. LaSalle Street A 798,782 TBD TBD CBRE Global Investors TBD FS = For sale NM = New to market UC = Under Contract Colliers International p. 9

10 LARGE BLOCKS OF AVailability During the first quarter, the net change in the number of available large, contiguous blocks of space available on a direct basis remained unchanged at a total of five available blocks. The largest available block in the Central Loop is a 199,132-square-foot space at 222 N. LaSalle Street. The majority of the space will be available in On a sublease basis, the Central Loop has more large blocks available than any other submarket. United Airlines is marketing 174,624 square feet of space at 77 W. Wacker Drive as it is consolidating its operations at the Willis Tower at 233 S. Wacker Drive. Additionally, as part of a contraction, Citadel is marketing 128,622 square feet of space at 131 S. Dearborn Street. During the quarter, Winston & Strawn also began marketing a 75,000-square-foot block of space for sublease at 35 W. Wacker Drive. large direct blocks available central loop 100,000 + sf 10 S. DEARBORN/ 21 S. CLARK 200 N. LASALLE ST. 11 S. LASALLE ST. CLASS A CLASS B CLASS C 139,165 SF 143,604 SF 146,313 SF RENTS The average direct asking rental rate fell slightly during the first quarter to $30.70 per square foot gross, down from $30.79 per square foot one quarter prior. The current average rate is up $0.19 per square foot from the rate posted one year ago. Class A asking rates increased during the first quarter to $36.42 per square foot gross while Class B rates fell to $29.04 per square foot gross. asking gross face rates central loop Submarket 440 S. LASALLE ST 222 N. LASALLE ST. 162,517 SF 199,132 SF $45.00 $40.00 $35.00 $30.00 $25.00 $ N. LASALLE STreet $15.00 $10.00 $5.00 $ Source: Costar; Colliers International Research Class A Class B Class C Average Construction No new construction was delivered to the Central Loop during the quarter. There are no office developments currently planned in the submarket. Colliers International p. 10

11 East Loop Slightly anemic results during the first quarter of the year resulted in a minor vacancy increase for the submarket. Consistent with its performance over the past year, the East Loop s vacancy rate remains the highest in the CBD. market indicators East Loop 4Q 1Q 2013 rate 15.5% 15.6% (sf) 132,388-34,824 Rents $30.36 $30.28 Inventory 27,435,803 27,435,803 Although some signs of improvement exist, the submarket as a whole continues to labor in terms of recovery. Occupancy losses experienced in Class B properties have tempered any gains within Class A properties. Within the past year, Class A space has shown noteworthy signs of recovery with a 6.2 percent decrease in total vacancy and a $2.10 per square foot increase in the average asking rental rate. Contrarily, Class B space fundamentals have posted a 2.7 percent increase in vacancy and $0.57 per square foot decrease in rental rates. In order for the entire submarket to regain prerecession market strength, Class B landlords must retain current tenancies and work at attracting new tenants into the submarket. The average vacancy rate in the East Loop increased slightly to 15.6 percent, up from 15.5 percent in the prior quarter. In the past year, however, vacancy has remained virtually unchanged. During the first quarter, Class A vacancy increased from 13.3 percent to 13.9 percent. Despite this increase, Class A space has experienced a significant decline in vacancy over the past two years. two years prior in the first quarter of stood at an inflated 21.5 percent. Class B space also experienced a slight increase during the quarter, rising to 18.4 percent, up from 18.2 percent in the quarter prior. For the fifth consecutive quarter, the East Loop experienced negative demand. However, with only 34,824 square feet of negative net absorption posted during the quarter, the submarket seems to have stalled the larger decreases in demand that were experienced one year prior. Class A space ended the quarter with negative 37,804 square feet of net absorption while Class B space posted negative 21,431 square feet. Net & EAST loop Submarket Square Footage 800, , , , , , , ,000-1,000, , % 16.7% 15.9% 69, % 124,582 (12,906) 15.5% (34,824) 15.6% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% -1,200,000 (1,137,311) 2.0% -1,400, YTD 0.0% Source: Costar; Colliers International Research LEASing ACTIVITY The largest lease transaction to close in the East Loop during the first quarter occurred at 180 N. Stetson with Shuyler, Roche & Crisham s expansion to 37,000 square feet. Colliers International p. 11

12 RESEARCH REPORT Q DOWNTOWN CHICAGO OFFICE sales activity There was no significant sales activity this quarter. A partial stake in 130 E. Randolph Street and 180 N. Stetson Avenue is still under contract. Michael Silberberg and Mark Karasick reached an agreement with Bentley Forbes Holdings to recapitalize the assets by investing $100 million in the complex, which pending lender approval, will help to stave off a default on the $470 million in loans due on the property. During the quarter, the Morgan Reed Group placed floors 2 to 12 of 55 E. Washington Street on the market. 55 E. WASHINGTON STREET east loop sales activity first quarter 2013 status address class size (sf) sale price price/sf seller buyer UC 130 e randolph street & 180 n stetson avenue* a 2,204,137 $100,000,000 - bentleyforbes Michael silberberg & Mark Karasick FS 55 e Washington st. (floors 1-12) b 506,000 tbd tbd Morgan reed group tbd NM 360 n. Michigan ave. b 260,823 tbd tbd Joseph chetrit tbd uc = under contract fs = for sale nm = new-to-market * partial stake large blocks of availability During the first quarter, one large block of space was removed from the market, leaving the East Loop with six blocks available for leasing on a direct basis. As availability was reduced at 333 S. Wabash Avenue during the quarter, the block of space fell below the 100,000-square-foot threshold. Of the six blocks that remain, the largest is a 306,163-square-foot space at 200 E. Randolph Street. The space became available after law firm, Kirkland and Ellis, relocated to a new office tower in River North in. The East Loop has decreased its large block availability by three over the past year. large direct blocks available east loop 100,000 + sf 401 S. STATE ST. 130 E. RANDOLPH ST. CLASS A CLASS B CLASS C 110,898 SF 128,948 SF rents The average direct asking rate decreased slightly during the first quarter to $30.28 per square foot gross, down from $30.36 per square foot in the prior quarter. The average asking rental rate still remains elevated compared to the $29.39 per square foot rate posted one year ago. For the fifth consecutive quarter, Class A properties realized slight increases in asking rates. The current Class A asking rate of $37.09 per square foot represents a 6.0 percent increase from the rate posted one year ago. Class B asking rates fell during the quarter to $29.28 per square foot, down from $29.81 per square foot in the prior quarter. Class B asking rates have fallen 1.9 percent from one year ago. 130 E. RANDOLPH ST. 303 E. WACKER DR. 130 E. RANDOLPH ST. 200 E. RANDOLPH ST. 155,829 SF 174,125 SF 256,720 SF 306,163 SF asking gross face rates east loop submarket $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Source: Costar; Colliers International Research Class A Class B Class C Average E. RANDOLPH STREET construction No new construction was delivered to the East Loop during the quarter. There are no office tower developments planned in the submarket. colliers international p. 12

13 market indicators North Michigan Avenue 4Q 1Q 2013 rate 14.3% 15.3% (sf) 35, ,990 Rents $30.92 $31.10 Inventory 13,843,082 13,843,082 North Michigan Avenue North Michigan Avenue is composed of a unique mix of hotels, retail space, office buildings, medical facilities and residential properties. Its inventory composition and a peripheral location make it an appealing home for less traditional office tenants. The submarket is home to a small office tenant base consisting primarily of advertising firms, media agencies, and a growing number of medical office users that desire close proximity to the large hospitals in the area. The relocation of the new Children s Hospital to 225 E. Chicago Avenue and 680 N. Lake Shore combined with Northwestern Hospital s recent growth have helped to solidify North Michigan Avenue as the CBD s medical office submarket. During the first quarter of 2013, Northwestern secured a city permit to tear down the former Prentice Women s Hospital and build a new state-of-the-art research facility. This continued commitment to maintaining and developing facilities in North Michigan Avenue will help the submarket balance out future tenant losses by continuing to attract medical office users. North Michigan Avenue will continue to recover more slowly than other CBD markets due to its peripheral location and lethargic leasing activity as it relates to more traditional users. With the submarket s current vacancy rate of 15.3 percent substantially elevated over the 8.0 percent average experienced during pre-recession quarters, it is crucial that the submarket s strong medical presence remains robust to aid in recovery. North Michigan Avenue s overall vacancy rate increased 100 basis points to 15.3 percent during the first quarter of the year. Compared to one year ago, the current rate remains relatively unchanged from the 15.6 percent vacancy posted in the first quarter of. Class A space has experienced inconsistent performance over the last year with alternating quarters of vacancy improvements and declines. During the first quarter Class A vacancy increased to 15.2 percent, up from 13.3 percent in the prior quarter. Class B properties also experienced a rise in vacancy during the quarter, increasing to 14.1 percent compared to 13.2 percent. North Michigan Avenue started the year off on an undesirable note with negative 140,900 square feet of net absorption. Class A and B space both demonstrated a decrease in demand with negative 86,955 square feet and negative 57,141 square feet of absorption, respectively. Net & north michigan Submarket Square Footage 100, , , , ,000 (81,363) 9.4% (59,757) 9.8% 14.1% 14.4% (42,608) 21, % (140,990) 15.3% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% -500, % -600,000 (592,962) 2.0% -700, YTD 0.0% Source: Costar; Colliers International Research Colliers International p. 13

14 LEASING ACTIVITY There were no significant lease transactions completed during the first quarter in the North Michigan Avenue submarket. SALEs ACTIVITY The River East Arts Center at 401 E. Illinois Street was sold to American Heritage Investments, who intends to convert the office building into a 350-unit apartment building. During the quarter, Wells Fargo placed 625 N. Michigan Avenue on the market, only four months after seizing the property at a foreclosure auction. 401 e. illinois street north michigan SALES Activity FIRST QUARTER 2013 Status Address Class Size (SF) Sale Price Price/SF Seller Buyer Sold E Illinois Street C 474,000 $48,000,000 $ Beal Bank American Heritage Investments NM 625 N. Michigan Avenue B 343,072 TBD TBD NM = New-to-Market Lone Star Funds/ Wells Fargo TBD LARGE BLOCKS OF AVailability Large block availability remained unchanged during the first quarter. North Michigan Avenue currently has six blocks of contiguous and direct space greater than 100,000 square feet. The largest block in the submarket resides at 515 N. State Street. The 350,906-square-foot space is available at the end of 2013 when the current tenant, American Medical Association, relocates to River North. RENTS Although other key market indicators are adverse, the average direct asking rate in North Michigan Avenue experienced an increase during the first quarter. The overall asking rate increased slightly to $31.10 per square foot gross during the first quarter of 2013, up from $30.92 per square foot one quarter prior. Class A asking rates remained unchanged at $35.22 per square foot gross while Class B rates slightly increased during the first quarter to $31.31 per square foot gross, up from $31.22 per square foot. Class C realized the largest quarter-over-quarter increase, posting $21.30 per square foot gross compared to $20.66 per square foot. large direct blocks available north michigan avenue 100,000 + sf 401 N. MICHIGAN AVE E. ILLINOIS 410 N. MICHIGAN AVE. 101 E. ERIE ST N. MICHIGAN AVE. 515 N. STATE ST. CLASS A CLASS B CLASS C 104,990 SF 210,000 SF 214,831 SF 217,569 SF 316,190 SF 350,906 SF asking gross face rates north michigan Submarket $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $ N. STATE STREET $ Source: Costar; Colliers International Research Class A Class B Class C Average Construction No new construction was delivered to North Michigan Avenue during the quarter. There are currently no office developments planned in the submarket. Colliers International p. 14

15 River North Continued vacancy descents in River North give credence to the submarket s reputation as one of the hottest submarkets in the CBD. The submarket continues to retain and attract new tenants largely due to its attractiveness to Chicago s growing technology sector. market indicators River North 4Q 1Q 2013 rate 12.5% 11.9% (sf) 119,891 97,655 Rents $31.24 $32.01 Inventory 16,579,138 16,579,138 River North s dynamic office environment, interspersed with residential units and entertainment venues, is modern in concept and highly desirable to the young employees that companies within the submarket are looking to hire. Leasing activity remains steady in River North with the focus largely on technology tenants and overall innovation. Companies targeting small technology start-ups continue to emerge, fueling growth in the submarket. During the quarter, Industrious, the newest office-sharing initiative, signed a lease for 17,000 square feet at 320 W. Ohio Street. The company will target smaller users desiring short-term leases and optimum flexibility as they grow. Although much of the focus in River North has been on its standing as a technological hotbed, the submarket continues to benefit from the retention and relocation of more traditional users as well. in the submarket will continue to be positive in future quarters with the American Medical Association, Latham & Watkins and SmithBucklin all relocating to River North from other submarkets. These three tenants alone will bring over 500,000 square feet of net absorption to the submarket upon occupancy. The submarket s vacancy rate continued its descent for the tenth consecutive quarter, ending the first quarter of the year at 11.9 percent. For the first time in over three years, the submarket s vacancy has dipped below 12 percent. This benchmark is significant as fundamentals in the submarket have officially returned to pre-recession levels. Class A vacancy resides at 17.4 percent, down from 19.3 percent in the prior quarter. Although Class A vacancy is considered inflated by historical standards, it has fallen under 18 percent for the first time in over four years. With only six Class A properties in the submarket, vacancy in this sector is substantially impacted with any major occupancy gain or loss. Class B vacancy continues to be the lowest in the CBD at 8.5 percent, down from 8.7 percent in the prior quarter. River North experienced a solid start to the year, posting positive net absorption of 97,655 square feet during the first quarter. The majority of the positive absorption experienced during the quarter was fueled by Class A space which measured positive 98,025 square feet absorbed during the first quarter. Class B space reported positive 20,547 square feet of absorption while Class C space posted negative net absorption of 20,917 square feet. Net & river north Submarket 1,000, , , , % 15.0% 14.3% 18.0% 16.0% 14.0% Square Footage 700, , , , , % 305, , % 11.9% 12.0% 10.0% 8.0% 6.0% 200, , , ,359 97, % 2.0% YTD 0.0% Source: Costar; Colliers International Research Colliers International p. 15

16 LEASE ACTIVITY The largest lease transaction reported in the submarket was Echo Global Logistics renewal and expansion to 88,900 square feet at 600 W. Chicago Avenue. Also during the quarter, CloserLook Inc. renewed and expanded its space at 212 W. Superior Street, nearly doubling its space to occupy a total of 27,502 square feet. Consistent with the submarket s reputation as a hub for new technology firms, Industrious signed a lease at 320 W. Ohio Street for 17,000 square feet. This space is intended for the company s Hive Office concept. Tenants will begin moving into the Hive Offices in May. RIVER NORTH lease Activity FIRST QUARTER 2013 Tenant Address Class Size (SF) Deal Type Echo Global Logistics 600 W. Chicago Avenue B 88,900 Renewal/Expansion CloserLook Inc. 212 W. Superior Street C 27,500 Renewal/Expansion Industrious 320 W. Ohio Street C 17,000 New Lease 600 W. Chicago Avenue SALEs ACTIVITY No investment sales transactions occurred during the first quarter. Joseph Lagoa is selling 540 N. LaSalle Street, which is currently vacant, for an asking price of $8,500,000 ($ per square foot). RIVER NORTH sales Activity FIRST QUARTER 2013 Status Address Class Size (SF) Sale Price Price/SF Seller Buyer FS 540 N. LaSalle Street C 65,140 TBD TBD Joseph Lagoa TBD FS = For sale LARGE BLOCKS OF AVailability River North currently has no contiguous blocks of space containing 100,000 square feet or greater on a direct basis. However, two large sublease spaces are available in the submarket. AT&T continues to market its 126,402 square foot space for sublease at 350 N. Orleans and Level 3 Communications is looking to sublease its 117,101 square foot space at 600 W. Chicago Avenue. RENTS The average direct asking rate in River North increased by $0.77 per square foot during the quarter, to $32.01 per square foot gross. An increase of this magnitude has not been experienced in over three years and suggests landlords in the submarket are responding to the low vacancy in the submarket by increasing rental rates. Class A space observed a slight decrease in asking rents, falling to $40.34 per square foot during the quarter. However, the current rate still remains elevated by $0.66 per square foot over the rate posted a year ago. Class B landlords placed upward pressure on asking rates this quarter, increasing the average to $32.21 per square foot gross, up from $31.00 per square foot one quarter ago. asking gross face rates river north Submarket $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Source: Costar; Colliers International Research Class A Class B Class C Average 2013 Construction No new construction was delivered to River North during the quarter. There is currently no office development planned in the submarket. Colliers International p. 16

17 West Loop Known as the premier submarket in the CBD due its possession of the largest Class A inventory as well as its proximity to public transit, the West Loop continues to outpace all other submarkets in terms of its recovery. Since spiking to 17.6 percent in the first quarter of, vacancy in the West Loop has fallen a remarkable 4.5 percent over the past three years. A fairly strong first quarter of the year contributed to a now cumulative 1.5 million square feet of net absorption in the submarket in the past two years. market indicators West Loop 4Q 1Q 2013 rate 13.5% 13.1% (sf) 263, ,602 Rents $34.62 $34.58 Inventory 48,219,707 48,219,707 The improvements experienced in the submarket s fundamentals over the past year alone have given way to at least one new proposed development. The last addition to inventory in the submarket was in when the 1.2-million-square-foot building at 155 N. Wacker Drive was constructed. There are several potential new developments in play for the West Loop with targeted delivery dates between 2016 and Hines development at 444 W. Lake Street recently gained momentum as the first building to be launched as law firm McDermott, Will & Emery has signed a letter of intent to anchor the development. For the seventh consecutive quarter the overall vacancy rate in the West Loop posted a decrease, ending the first quarter at 13.1 percent, down from 13.5 percent one quarter prior. The overall vacancy rate in the submarket has fallen 1.0 percent over the past year. During the quarter Class A vacancy descended to 13.7 percent, down from 14.1 percent at the end of. Following a substantial decrease in vacancy in the fourth quarter of, Class B space lost ground during the first quarter as vacancy increased to 12.7 percent, up from 11.8 percent one quarter prior. Net absorption during the first quarter remained healthy with positive 206,602 square feet. The West Loop experienced the most net absorption of any submarket during the quarter. Class A space reported positive 108,376 square feet of net absorption at the quarter s end while Class B space experienced negative 150,146 square feet of net absorption. Net & West loop Submarket West Loop Submarket 1,200, % Square Footage 1,000, , , , , % 16.3% 16.2% 56, , % 364, % 206, % 16.0% 14.0% 12.0% 10.0% 8.0% (200,000) (400,000) (600,000) (800,000) (478,616) (741,691) 6.0% 4.0% 2.0% (1,000,000) 2013 YTD 0.0% Source: Costar; Colliers International Research Colliers International p. 17

18 Leasing Activity Activity was robust in the West Loop during the first quarter as the CBD s two largest lease transactions of the quarter occurred here. The largest was law firm Dentons (formerly SNR Denton) lease renewal at 233 S. Wacker Drive. The company will be relocating its space in the building and contracting to 144,000 square feet as part of a long-term renewal. Also during the quarter, two large tenants were retained at 227 W. Monroe Street as Guggenheim Partners and Credit Suisse both agreed to renew space at the building. Guggenheim Partners expanded from 76,000 square feet to 130,000 square feet as part of its renewal. Contrarily, Credit Suisse will be contracting its space from 155,000 square feet to 76,000 square feet. west loop Lease Activity FIRST QUARTER 2013 Tenant Address Class Size (SF) Deal Type Dentons (formerly SNR Denton) 233 S. Wacker Dr. A 144,000 Renewal Guggenheim Partners 227 W. Monroe St. A 130,000 Renewal/Expansion Plante Moran 10 S. Riverside Plz. B 85,600 Consolidation Credit Suisse 227 W. Monroe St. A 76,500 Renewal/Contraction Equity Office Properties 2 N. Riverside Plz. B 72,100 Renewal Heitman 191 N. Wacker Dr. A 58,000 Renewal The Corporate Executive Board 550 W. Jackson Blvd. A 52,000 Renewal W. W. Grainger 500 W. Madison St. A 36,600 Expansion Franczek Radelet 300 S. Wacker Dr. B 36,000 Renewal Associated Banc-Corp. 525 W. Monroe St. A 35,000 New Lease 233 s. wacker drive SALEs ACTIVITY Investment sales activity in the West Loop remained active during the quarter with two transactions occurring during the quarter. Beacon Capital Partners sold 550 W. Washington Street to Metlife for a reported $112 million ($ per square foot). Also during the quarter, 224 N. Des Plaines Street was sold to South Street Capital by Wells Fargo Bank for $7.7 million ($93.90 per square foot). Two assets went under contract during the quarter. Mirae Asset Global Investments agreed to purchase 225 W. Wacker Drive for approximately $218 million ($ per square foot) from J.P. Morgan Chase & Co. while Ameritus Corporate Real Estate Service is under contract to purchase 205 W. Wacker Drive from Cape Horn Group for $25 million ($94.82 per square foot). 550 W. WASHINGTON STREET west loop Lease Activity FIRST QUARTER 2013 Status Address Class Size (SF) Sale Price Price/SF Seller Buyer Sold 550 W. Washington Street A 372,000 $112,000,000 $ Beacon Capital Partners MetLife Insurance Sold 224 N. Des Plaines Street C 82,000 $7,700,000 $93.90 Wells Fargo Bank South Street Capital UC 225 W. Wacker Drive A 650,812 $218,000,000 $ J.P. Morgan Chase & Co. Mirae Asset Global Investments Co. UC 205 W. Wacker Drive B 263,650 $25,000,000 $94.82 Cape Horn Group Ameritus Corporate Real Estate Service NM 311 S. Wacker Drive A 1,281,000 TBD TBD Fremont Group & Shorenstein Realty Services TBD NM 400 S. Jefferson Street A 233,000 TBD TBD Sterling Bay Partners TBD NM 216 W. Jackson Blvd. C 176,622 TBD TBD Farbman Group TBD NM = New to Market UC = Under Contract Colliers International p. 18

19 LARGE BLOCKS OF AVailability The number of available, direct blocks of space 100,000 square feet or greater increased by one during the quarter, bringing the total available in the submarket to nine. The largest block was a 250,553 square foot space at 540 W. Madison Street. The largest block added during the quarter was a 131,520 square foot block of space in the low rise of 111 N. Canal St. Additionally, a 103,128 square foot block of space is now being marketed for lease at 222 S. Riverside Plaza with a future availability of early Removed during the quarter was a large block of availability in the low rise of 227 W. Monroe Street. The block decreased in size and therefore fell below the 100,000 square large block threshold. Four of the large blocks in the submarket reside in Class A properties and of those three reside in high-rise space. RENTS The average direct gross asking rate remained steady during the first quarter of the year at $34.58 per square foot. The average asking rate in the West Loop has increased $1.15 per square foot or 3.4 percent over the past year. During the quarter, Class A asking rates remained unchanged at $38.42 per square foot while Class B rates increased substantially to $32.17 per square foot gross, up from $30.98 per square foot gross one quarter prior. large DIRECT blocks available 100,000 + square feet 222 S. RIVERSIDE PLZ. 233 S. WACKER DR. 111 N. CANAL 111 N. CANAL 300 S. RIVERSIDE PLZ. 540 W. MADISON ST. 233 S. WACKER DR. 500 W. MONROE ST W. MONROE CLASS A CLASS B CLASS C 103,128 SF 125,553 SF 131,520 SF 294,200 SF 198,302 SF 250,553 SF 285,994 SF 338,131 SF 354,017 SF asking gross face rates West loop Submarket $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 $ w. monroe street $10.00 $5.00 $ Source: Costar; Colliers International Research Class A Class B Class C Average Construction No new construction was delivered to the West Loop during the quarter. However, Hines will be proceeding with groundbreaking on a new 45-story, 900,000-square-foot office tower at 444 W. Lake Street. The developer is in Letter of Intent with law firm, McDermott Will & Emery to secure the anchor tenancy for the tower and the building is slated for delivery in Several other potential West Loop developments are being explored as developers continue to court potential anchor tenants but no formal announcements regarding their launch have been made. 444 W. lake STREET Colliers International p. 19

20 FIRST QUARTER 2013 Office Market Statistics LOCAL standards (Includes competitve owner-occupied properties) Class Central Loop Total Inventory SF Direct SF Vacant Sublease SF Vacant vacancy rents Total Vacant SF Direct Rate Sublease Rate Total Rate Total Direct Net Total Sublease Net Total Net Net ytd SF Asking Full Service Average Direct Rent Per SF Class A 15,980,771 1,731, ,494 1,886, % 1.0% 11.8% 14,540 (300) 14,240 14,240 $36.42 Class B 17,930,510 2,663, ,355 2,813, % 0.8% 15.7% (19,930) 11,346 (8,584) (8,584) $29.04 Class C 4,321, ,560 6, , % 0.1% 15.3% (48,648) 0 (48,648) (48,648) $22.08 Subtotal 38,232,808 5,049, ,990 5,361, % 0.8% 14.0% (54,038) 11,046 (42,992) (42,992) $30.70 East Loop Class A 6,737, ,832 41, , % 0.6% 13.9% -71,930 34,126 (37,804) (37,804) $37.09 Class B 12,845,281 2,308,577 48,833 2,357, % 0.4% 18.4% (63,529) 42,098 (21,431) (21,431) $29.28 Class C 7,853, ,763 8, , % 0.1% 12.6% 15,678 8,733 24,411 24,411 $24.32 Subtotal 27,435,803 4,183,172 99,080 4,282, % 0.4% 15.6% (119,781) 84,957 (34,824) (34,824) $30.28 North Michigan Avenue Class A 4,584, ,229 32, , % 0.7% 15.2% (105,816) 18,861 (86,955) (86,955) $35.22 Class B 6,492, ,320 58, , % 0.9% 14.1% (54,609) (2,532) (57,141) (57,141) $31.31 Class C 2,766, , , % 0.0% 18.3% 390 2,716 3,106 3,106 $21.30 Subtotal 13,843,082 2,025,374 91,510 2,116, % 0.7% 15.3% (160,035) 19,045 (140,990) (140,990) $31.10 River North Class A 5,124, , , % 0.0% 17.4% 98, ,025 98,025 $40.34 Class B 9,176, , , , % 3.5% 8.5% (11,422) 31,969 20,547 20,547 $32.21 Class C 2,277, ,603 9, , % 0.4% 13.1% (20,917) 0 (20,917) (20,917) $22.29 Subtotal 16,579,138 1,639, ,481 1,969, % 2.0% 11.9% 65,686 31,969 97,655 97,655 $32.01 West Loop Class A 27,491,184 3,447, ,161 3,775, % 1.2% 13.7% 152,255 (43,879) 108, ,376 $38.42 Class B 16,447,500 1,998,321 97,684 2,096, % 0.6% 12.7% (159,271) 9,125 (150,146) (150,146) $32.17 Class C 4,281, ,392 20, , % 0.5% 10.5% 239,543 8, , ,372 $23.97 Subtotal 48,219,707 5,877, ,845 6,322, % 0.9% 13.1% 232,527-25, , ,602 $34.58 CBD Total Class A 59,918,526 7,627, ,150 8,184, % 0.9% 13.7% 87,074 8,808 95,882 95,882 $37.35 Class B 62,893,028 8,283, ,051 8,960, % 1.1% 14.2% (308,761) 92,006 (216,755) (216,755) $30.51 Class C 21,498,984 2,863,143 43,705 2,906, % 0.2% 13.5% 186,046 20, , ,324 $23.04 Subtotal 144,310,538 18,774,701 1,277,906 20,052, % 0.9% 13.9% (35,641) 121,092 85,451 85,451 $32.04 Quarterly Comparisons Q ,310,538 18,774,701 1,277,906 20,052, % 0.9% 13.9% (35,641) 121,092 85,451 85,451 $32.04 Q ,310,538 18,739,060 1,398,998 20,138, % 1.0% 14.0% 535,874 (36,256) 499, ,271 $31.90 Q ,310,538 19,274,934 1,362,742 20,637, % 0.9% 14.3% 216, , , ,653 $31.96 Q ,310,538 19,491,714 1,506,654 20,998, % 1.0% 14.6% 2,197 48,356 50,553 63,961 $31.72 Q ,310,538 19,493,911 1,555,010 21,048, % 1.1% 14.6% (39,088) 52,496 13,408 13,408 $31.42 The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability. As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports Colliers International p. 20

21 FIRST QUARTER 2013 Office Market Statistics colliers international standards (Includes all owner-occupied properties) Class Central Loop Total Inventory SF Direct SF Vacant Sublease SF Vacant vacancy rents Total Vacant SF Direct Rate Sublease Rate Total Rate Total Direct Net Total Sublease Net Total Net Net ytd SF Asking Full Service Average Direct Rent Per SF Class A 15,980,771 1,731, ,494 1,886, % 1.0% 11.8% 0 (300) 14,240 14,240 $36.42 Class B 22,654,231 2,709, ,355 2,859, % 0.7% 12.6% (61,360) 11,346 (50,014) (50,014) $29.04 Class C 6,228, ,215 6, , % 0.1% 12.3% (81,213) 0 (81,213) (81,213) $22.08 Subtotal 44,863,202 5,201, ,990 5,513, % 0.7% 12.3% (128,033) 11,046 (116,987) (116,987) $30.70 East Loop Class A 6,737, ,832 41, , % 0.6% 13.9% (71,930) 34,126 (37,804) (37,804) $37.09 Class B 13,068,548 2,308,577 48,833 2,357, % 0.4% 18.0% (63,529) 42,098 (21,431) (21,431) $29.28 Class C 8,302,895 1,074,697 8,343 1,083, % 0.1% 13.0% (8,565) 8, $24.32 Subtotal 28,108,854 4,276,106 99,080 4,375, % 0.4% 15.6% (144,024) 84,957 (59,067) (59,067) $30.28 North Michigan Avenue Class A 4,818, ,229 32, , % 0.7% 14.5% (105,816) 18,861 (86,955) (86,955) $35.22 Class B 8,218, ,266 58, , % 0.7% 11.3% (54,609) (2,532) (57,141) (57,141) $31.31 Class C 3,493, , , % 0.0% 15.4% (3,250) 2,716 (534) (534) $21.30 Subtotal 16,529,776 2,076,035 91,510 2,167, % 0.6% 13.1% (163,675) 19,045 (144,630) (144,630) $31.10 River North Class A 5,124, , , % 0.0% 17.4% 98, ,025 98,025 $40.34 Class B 10,110, , , , % 3.3% 8.3% (4,583) 37,207 32,624 32,624 $32.21 Class C 4,064, ,119 11, , % 0.3% 12.8% (7,221) 2,174 (5,047) (5,047) $22.29 Subtotal 19,300,253 1,910, ,243 2,252, % 1.8% 11.7% 86,221 39, , ,602 $32.01 West Loop Class A 28,172,184 3,482, ,161 3,810, % 1.2% 13.5% 152,255 (43,879) 108, ,376 $38.42 Class B 17,759,512 1,977,409 97,684 2,075, % 0.6% 11.7% (169,758) 9,125 (160,633) (160,633) $32.17 Class C 5,249, ,384 20, , % 0.4% 11.0% 250,445 8, , ,274 $23.97 Subtotal 51,181,467 6,019, ,845 6,464, % 0.9% 12.6% 232,942 (25,925) 207, ,017 $34.58 CBD Total Class A 60,833,562 7,662, ,150 8,219, % 0.9% 13.5% 87,074 8,808 95,882 95,882 $37.35 Class B 71,811,604 8,380, ,713 9,066, % 1.0% 12.6% (353,839) 97,244 (256,595) (256,595) $30.51 Class C 27,338,386 3,440,955 45,805 3,486, % 0.2% 12.8% 150,196 22, , ,648 $23.04 Subtotal 159,983,552 19,484,268 1,288,668 20,772, % 0.8% 13.0% (116,569) 128,504 11,935 11,935 $32.04 Quarterly Comparisons Q ,983,552 19,484,268 1,288,668 20,772, % 0.8% 13.0% (116,569) 128,504 11,935 11,935 $32.04 Q ,983,552 19,367,699 1,417,172 20,784, % 0.9% 13.0% 542,774 14, ,829 1,086,633 $31.90 Q ,983,552 19,910,473 1,431,227 21,341, % 0.9% 13.3% 243, , , ,804 $31.96 Q ,983,552 20,154,317 1,566,737 21,721, % 1.0% 13.6% 22,498 41,302 63, ,450 $31.72 Q ,983,552 20,176,815 1,608,039 21,784, % 1.0% 13.6% 38,654 47,996 86,650 86,650 $31.42 The information contained in this report was provided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability. As new, corrected or updated information is obtained, it is incorporated into both current and historical data, which may invalidate comparison to previously issued reports Colliers International p. 21

22 D a n R ya n E x p w y research report first quarter 2013 downtown chicago office OW FREMONT HICKORY LESSING PEORIA PEORIA PEORIA PEORIA DAYTON BLACKHAWK UPERIOR URON MS ERIE 90 EASTMAN CONCORD CONCORD downtown chicago Submarket TOWN Map EVERGREEN HAINES GREEN GREEN Expwy O L N P A R K NEWBERRY 94 NEWBERRY HALSTED HALSTED GRAND KINZIE OHIO WASHINGTON MONROE 12TH PL O BRIEN 13TH MAXWELL LIBERTY 14TH 14TH PL 15TH PL 16TH 17TH 17TH PL 18TH OGDEN ELM HUBBARD DESPLAINES VINE HOBBIE DESPLAINES LARRABEE FULTON LAKE RANDOLPH JEFFERSON JACKSON VAN BUREN HARRISON JEFFERSON JEFFERSON TAYLOR ROOSEVELT MOHAWK SCOTT CLINTON CLINTON KINGSBURY BLACKHAWK CLEVELAND DIVISION OAK HUDSON CANAL HUDSON WEST LOOP POLK MADISON CABRINI MAXWELL SEDGWICK SEDGWICK ELM VAN BUREN CABRINI EUGENIE NORTH ORLEANS ORLEANS WACKER NORTH PARK SCOTT RANDOLPH OAK FRANKLIN FRANKLIN WIELAND WALTON WASHINGTON MADISON MONROE ADAMS OLD EVERGREEN HILL LOCUST CHESTNUT WELLS WELLS INSTITUTE PL. WENDELL CHICAGO RIVER NORTH WELLS WELLS CLARK LA SALLE LAKE LA SALLE JACKSON FINANCIAL LA SALLE NORTH MAPLE ERIE ONTARIO OHIO GRAND ILLINOIS HUBBARD KINZIE SCHILLER CLARK WACKER CLARK CLARK CLARK LA SALLE BURTON GOETHE HURON DEARBORN SUPERIOR FEDERAL DEARBORN PARK TERR DEARBORN PLYMOUTH FEDERAL PLYMOUTH FEDERAL DEARBORN WALTON CENTRAL LOOP POLK 17TH STATE STATE RUSH STATE ELM ASTOR BANKS SCOTT CEDAR PEARSON OAK WABASH WABASH WABASH RITCHIE DIVISION DELAWARE 14TH PL STONE BELLEVUE 13TH 14TH CHESTNUT RUSH MICHIGAN HARRISON 8TH 9TH 11TH 18TH 16TH MICHIGAN MICHIGAN T H E M A G N I F I C E N T M I L E WACKER ST. CLAIR STETSON PRAIRIE MIES VAN DER ROHE NORTH CITY FRONT PLAZA DRIVE SOUTH WATER CONGRESS ROOSEVELT BALBO COLUMBUS COLUMBUS FAIRBANKS DE WITT PARK CHICAGO NORTH MICHIGAN AVENUE NEW NORTH WATER LAKE SHORE DRIVE LAKE SHORE DRIVE McCLURG EAST LOOP McFETRIDGE HARBOR LAKE SHO RE DRIVE 18TH 41 SO 522 offices in 62 countries on 6 continents United STATES: 147 Canada: 37 Asia: 36 AUSTRALIA/New Zealand: 165 LATIN Ameria: 19 EMEA: 118 > $1.8 billion in annual revenue > 1,250,000 square feet under management* > More than 12,300 professionals * The combination of Colliers International and FirstService results in 2.2 billion under management (2nd largest in the world) research: Michelle Tenuta Vice PRESIDENT Research and Analytics tel michelle.tenuta@colliers.com DESIGN: Mark Breithaupt Creative Manager Marketing and Communications tel mark.breithaupt@colliers.com COLLIERS International 200 S Wacker Drive, Suite 700 Chicago, IL PEORIA 19TH 19TH PL CANALPORT CULLERTON CLINTON NORMAL CANAL 19TH CULLERTON AIRIE LUMET Colliers International p. 22