Chicago 050 Rock Creek Blvd., Joliet, IL Market Facts.7% Chicago s unemployment rate trended downward. As of November 017, unemployment stood at.7% 31,7 jobs The metro Chicago area added 31,7 jobs year-over-year, which translates to 0.% increase. 1.7 MSF There was 1.7 msf of new product delivered to the market, of which 90% was speculative. 5.5 MSF 5.5 msf was leased during the fourth quarter, relatively flat from the previous quarter. Economic Overview Chicago s economic climate continued to see improvement throughout the fourth quarter of 017. The metropolitan area added 31,7 jobs as of November up 0.% year-overyear. This job growth pushed the unemployment rate down to.7% down from 5.% last year. Both Kenosha and Cook Counties recorded the largest decreases in unemployment within the region. The super sectors that witnessed the highest year-over-year growth in employment were financial services, information technology and construction up.0%, 1.% and 1.1% respectively. The Midwest saw manufacturing output rise 5.7% yearover-year as of October 017, while the US only increased by 3.% nationally. Within the manufacturing sector, steel output recorded the highest year-over-year growth at.%. The Electronic Logging Device (ELD) law took effect in December of 017, requiring commercial drivers to maintain hour-of-service records limiting their allowed drive times per shift. This has the potential to have a major impact on users who rely on trucking to transport their goods and materials in a timely manner, potentially prompting the need for more distribution centers to cut transportation costs. Chicago Industrial Market The Chicago industrial market, comprised of over 1 billion square feet (bsf ), continued to witness a declining vacancy rate across most major submarkets during the fourth quarter. Construction activity has begun to slow with only 1.7 million square feet (msf ) having been delivered this quarter. There was an additional 1. msf still under construction at the end of the quarter down 1% year-over-year. Leasing velocity has slowed when avisonyoung.com page 1
ILLINOIS INDIANA Chicago Chicago Industrial Market (continued) compared to previous quarters. The average deal size fell % from last quarter with the largest deal signed being 31,750 sf. Investment activity slowed during the fourth quarter with transactional volume down 11% year-over-year. Looking Ahead 17 WINNEBAGO ROCK JEFFERSON BOONE WALWORTH WAUKESHA WISCONSIN ILLINOIS 10 MC HENRY RACINE KENOSHA 1 MILWAUKEE LAKE Lake Michigan The Southern Wisconsin submarket is poised for significant expansion stemming from Foxconn s massive new manufacturing plant. Wisconsin gave upwards of $3 billion in incentives to lure the company north of the state line. Once completed, the plant will likely employ upwards of 13,000 workers with an average salary of $53,000 per year. Construction is expected to commence during the first half of 01. The entire facility will be around 0 msf. This will likely drive further development within the submarket as supporting companies seek space closer to the new plant. The state s strong incentives package could also drive further growth. OGLE LEE LA SALLE DEKALB 9 KANE KENDALL GRUNDY 1 1 DUPAGE 11 1 1 WILL 7 3 COOK 13 15 5 KANKAKEE CHICAGO 19 LAKE LIVINGSTON NEWTON Market By The Numbers Map Key Submarket Inventory (sf ) Vacancy (sf ) Vacancy (%) Net Absorption Under Construction Avg Asking Rent Overall Market 1,03,79,9,750,19.3%,05,397 1,59,05 $. 1 Lake County 70,101,075 3,07,19.% 0,9 59,07 $5.55 Southern Wisconsin 31,1, 1,10,59 5.7%,1 0 $.1 3 North Cook 1,00,39,0,1.9% -1,591 3,17 $5. O Hare 11,59, 5,11,.5% 35,977,19,909 $5.9 5 South Chicago Industrial 10,773,10 5,3,070 5.7% 175, 10,000 $. North Chicago Industrial 57,09,50 3,3,15.0% 713,5 0 $9.0 7 West Cook 9,19,510,777,30 5.% -51,093 155,907 $.1 I-90 East Corridor 0,753,390,510,9 1.1% 70,53 0,000 $. 9 I-90 West/Elgin Corridor 3,73,0,77,35.%,75 50,13 $.5 10 McHenry County 3,355,01 1,1,97.9% 07,599 0 $.7 11 East DuPage 33,1,39 1,,03.9% -95,0 53,000 $5.55 1 US- Corridor,95,099,39,5.% 51,771 00,91 $3. 13 South Cook 7,750,7,5,5 3.3% 39,1 0 $3. 1 I-55 Corridor 9,19,113 1,09,573 1.% -3,535 1,17,1 $. 15 I-57 Corridor 0,30,93 1,,90.1% 33,9 0 $.0 1 I-0 Corridor 7,503,01 5,3,15.9% 75,505,571, $.37 17 I-39 Corridor 50,3,59 3,07,351.% 1, 7,51 $.73 1 I- Corridor 5,30,110,939,3 5.% 0,931 19,50 $.91 19 Northwestern Indiana,095,0 1,9,0.5% 7,071 0 $3. avisonyoung.com page
Vacancy & Availability Average Asking Rental Rate ($) Chicago s overall vacancy rate dipped 0 basis points (bps) from the third quarter and is currently recorded at.3%. 1 of the 19 submarkets witnessed declining vacancy. Submarkets that saw the largest downward shift were Lake County, North Chicago, and the I-90 West/Elgin Corridor dropping 130 bps to.%, 130 bps to.0% and 110 bps to.% respectively. Vacancy within the I-0 Corridor has remained unchanged during the fourth quarter despite. msf of new product $.75 $.70 $.5 $.0 $.55 $.50 $.5 $.0 $.35 015 Q 017 Q having been delivered throughout 017. Amazon moved into their 3,150-sf building which was the largest space Vacancy Rate (%) absorbed during the quarter within the I-0 Corridor. The I-55 Corridor saw the highest uptick in vacancy up 10 bps to 1.%. This is due in part to the high amount of space delivered throughout the year coupled with a lack of demand. Absorption & Demand Leasing activity throughout the Chicago market has remained 7.75 7.50 7.5 7.00.75.50.5.00 5.75 015 Q 017 Q steady from last quarter. There were 5.5 msf leased during the fourth quarter, bringing the year-end total to 31.5 msf leased in 017. The average deal size fell % from the third quarter to 17,71 sf, while net absorption saw a % decrease and is currently recorded at msf. The most active markets during the fourth quarter were Lake County, the I-0 Corridor and North Chicago, which accounted for 5% of total space absorbed. Notable lease transactions include Weiman renewing their 55,1-sf space at 705 Tri-State Pky in the Lake County submarket. They have been at the location since 013 and Net Absorption (MSF) 9 7 5 3 1 015 Q 017 Q have expanded several times. The ODW Company signed a short-term extension for 7,997 sf at 5300 Proviso Dr in the West Cook submarket. Magick Woods has expanded into 13,739 sf at 100 Sequoia Dr in the I- Corridor submarket. This brings their total footprint in the building to 375,00 sf. Demand in the E-commerce and food related industries remains strong. Overall, asking rental rates remained relatively unchanged, averaging $. per square foot (psf ). Submarkets commanding the highest rental rates are North and South Chicago, I-57 Corridor, O Hare and North Cook, collectively averaging $. psf. SF LEASED Leasing Activity 9 7 5 3 1 0 015 Q1 015 Q 015 Q3 015 Q 01 Q1 Net Absorption SF Total 01 Q 01 Q3 017 Q1 017 Q SF Leased 017 Q3 017 Q 1 1 1 1 10 0 NUMBER OF DEALS avisonyoung.com page 3
Construction The Chicago market saw a decrease in product delivered during the fourth quarter of 017 down 79% to 1.7 msf. This drop can be attributed to eight properties delivered during the third quarter that were over 500,000 sf. The largest building to be delivered this quarter was 17,3 sf, the average size delivered was 17,55 sf, and 90% of the new product was built on a speculative basis. There is currently an additional 1. msf under construction. The majority of this product is located within the I-0 Corridor, O Hare and the I-55 Corridor submarkets, which account for 79% of the product under construction. The above mentioned 17,3 sf building is located within the Southern Wisconsin submarket, located at 11559 0th Ave in Pleasant Prairie. This speculative project was developed by CenterPoint Properties and remains vacant. There are 13 buildings totaling.1 msf currently under construction in the popular O Hare submarket, with the majority of the pipeline being speculative. CenterPoint has broken ground on two of the speculative buildings totaling more than 550,000 sf, divided at 5,91 and 333,9 sf, on a 33-acre site located across from O Hare International Airport on Seymour Avenue. Both properties are scheduled to be delivered in late 01. The largest project under construction is the 1.5 msf build-to-suit for General Mills. The project is being developed by Ridge Development and was chosen by General Mills due to the excellent location, which is minutes from both the BNSF Logistics Park in Elwood and the Union Pacific Intermodal Terminal in Joliet. Investment Investment within industrial product lagged slightly during the fourth quarter when compared to this time last year. Transactional volume recorded a 5.1% drop year-over-year to $9. million. The average price per sf rose 1.% over this same time period to $ psf. Over the last 1 months, the most active buyers of industrial product were institutional and private capital, accounting for 33% and 9% respectively. Canadian investors continued to pour capital into the marketplace, acquiring $19 million worth of product in 017. The largest individual property sale was the Core5 Logistics Center located at 103 E Laraway Rd in Joliet. The recently completed 1,0,000 sf speculative building traded for $9.3 million or $9 psf. The buyer was Core5 Industrial Partners who purchased from developer Exel, Inc. (DHL Supply Chain). 3300-3500 Corporate Dr in Joliet also traded during the fourth quarter; it was 100% leased at the time of sale. The,-sf building was purchased by TA Realty from JLL Income Property Trust for $. million or $3 psf. A newly completed speculative project located at 050 Rock Creek Blvd. in Joliet adds 91,7 sf to the I-0 Corridor submarket. Notable Leases Tenant Address Submarket Size (SF) Type Del Monte Foods, Inc 501 S Steward Rd I-39 Corridor 31,750 Renewal WWeinman 705 Tri-State Pky Lake County 55,1 Renewal T The ODW Company 5300 Proviso Dr West Cook 7,997 Renewal Majick Woods Inc 100 Sequoia Dr I- Corridor 13,739 Expansion Unknown 10 N Central Ave I-39 Corridor 1,000 New M&R Printing 0 Medinah Rd US- Corridor 1,0 New Notable Sales Address Size (SF) Buyer Seller Sales Price 103 E Laraway Rd, Joliet, IL 1,0,000 Core5 industrial Partners Exel Inc $9,33,500 3300-3500 Corporate Dr, Joliet, IL, TA Realty JLL Income Property Trust, Inc $,00,000 0 W Anne Lurie Pl, Chicago, IL 310,775 High Street Equity Advisors Westmount Realty Capital LLC $1,950,000 175 Mercedes Dr, Carol Stream, IL 90,095 Exeter Property Group American Litho $17,00,000 avisonyoung.com page
CHICAGOLAND Construction & Deliveries Notable Q Construction [00,000+ SF Projects] Market Building NRA Type Delivery Date Developer Major Tenants % Leased** I-0 Corridor 30131 Ridgeway Blvd 1,50,5 BTS Q- 01 Ridge Development General Mills 100% I-0 Corridor 50 Emerald Ave 1,50,000 BTS Q- 01 Gray Construction Co. IKEA 100% I-0 Corridor Houbolt Rd & Route 1,0,10 Speculative Q-01 The Opus Group None 0% I-0 Corridor 101 S Frontage Rd 1,000,110 Speculative Q1-01 USAA Real Estate Company None 0% I-0 Corridor 300 Graaskamp Blvd 10,000 Speculative Q1-01 Ridge Development None 0% Lake County Gregory Dr 55,500 BTS Q3-01 IDI Logistics Undisclosed 100% O'Hare 1101 Copenhagen Ct 00,19 Speculative Q-01 Panattoni Development Co None 0% I-0 Corridor Route & Houbolt Rd 355,199 Speculative Q-01 First Industrial None 0% O'Hare 10701 Seymour Ave 333,9 Speculative Q-01 CenterPoint Properties None 0% I-55 Corridor 100 W 13rd St 30,5 Speculative Q3-01 Exeter Properties None 0% US- Corridor Hecht Rd 300,000 BTS Q3-01 Rana USA Rana USA 100% I-55 Corridor 501 Internationale Pky 3,3 Speculative Q-01 Prologis None 0% O'Hare 1001 Franklin Ave 77,7 Speculative Q3-01 Bridge Development None 0% I-0 Corridor 70 N Lisbon Rd 55,99 BTS Q1-01 Costco Costco 100% I- Corridor 390 Curtiss St 53,000 BTS Q3-01 Rexnord Corp Rexnord Corp 100% North Cook 301 Howard St 3,91 Speculative Q3-01 Hillwood None 0% O'Hare 1001 Seymour Ave 5,91 Speculative Q3-01 CenterPoint Properties None 0% O'Hare 1001 Franklin Ave 03,0 Speculative Q3-01 Bridge Development None 0% Delivery 01m 9,775,9 Totalm 1,59,05 Notable Q Deliveries Market Building NRA Type Delivery Date Developer Major Tenants % Leased** Southern Wisconsin 11559 0th Ave 17,3 Speculative Q-017 CenterPoint Properties None 0% I-0 Corridor 050 Rock Creek Blvd 91,7 Speculative Q-017 IDI Logistics None 1% McHenry County 3 Oak Dr 00,000 BTS Q-017 Sage Products 100% US- Corridor 135-1395 Brewster Creek Blvd 1,000 Speculative Q-017 Ridge Development None 0% North Cook 70 Northgate Pky 11,09 Speculative Q-017 Hamilton Partners None 0% Southern Wisconsin 99th St 19,11 Speculative Q-017 Zilber Property Group None 0% I-55 Corridor 5 Greenwood Ave 10,109 Speculative Q-017 DCT Industrial None 0% I- Corridor 119 Fischer Dr 10,957 Speculative Q-017 MOLTO Properties None 0% Southern Wisconsin 9511 5th Pl,35 Speculative Q-017 Zilber Property Group None 0% I-55 Corridor 55 Anderson Dr 3,91 Speculative Q-017 None 0% Construction Completed Total 1,75,5 avisonyoung.com page 5
Contiguous Blocks [Available Class A Space 00,000+ SF] Building Address Submarket Name City State Year Built Rentable Building Area Max Building Contiguous Space Percent Leased Owner Name Houbolt Rd & Route I-0 Corridor Joliet IL 01 1,0,10 1,0,10 0% AEW Capitao Management 103 E Laraway Rd I-0 Corridor Joliet IL 017 1,0,000 1,0,000 0% Core5 Industrial Partners 100 E Millsdale Rd I-0 Corridor Joliet IL 017 99,0 99,0 0% Hillwood 300 Graaskamp Blvd I-0 Corridor Wilmington IL 01 10,000 10,000 0% Ridge Property Trust 1101 W Airport Rd I-55 Corridor Romeoville IL 01 77,99 77,99 0% Edon Construction Co., Inc. 1700 Mark Collins Dr South Cook Sauk Village IL 00 77,515 77,515 100% Warehouse Specialists Inc. 3700 W Bluff Rd I-0 Corridor Channahon IL 017 79,55 79,55 0% IDI Gazeley 500 W Industrial Dr I-0 Corridor Monee IL 000 701, 701, 0% Exeter Property Group 175 Southcreek Pky I-55 Corridor Romeoville IL 017 7,0 7,0 0% Panattoni 001 N Division St McHenry County Harvard IL 1997 19,590 19,590 0% Edward Gong 55 Northwest Ave West Cook Northlake IL 015 5,33 5,33 0% Prudential Financial, Inc 333 Gibraltar Dr I-55 Corridor Bolingbrook IL 199 579,900 597,900 100% Exeter Property Group 5 Bluff Rd I-55 Corridor Romeoville IL 005 500,10 500,10 0% James Campbell Company LLC 15 Pinnacle Dr I-55 Corridor Romeoville IL 007 9,9 9,9 0% DCT Industrial Trust Inc 3901 Rock Creek Blvd I-0 Corridor Joliet IL 199,00,00 100% CBRE Global Investors Ltd 1100 Orchard Gtwy I- Corridor North Aurora IL 01 5,153 5,153 0% AEW Capital Management 701 W 7th St West Cook McCook IL 01 31,9 51,79 % Heitman 300 Mitchell Rd I- Corridor North Aurora IL 015 9,75 9,75 7% Liberty Property Trust 01 th Ave Southern WI Pleasant Prairie WI 01,1,1 0% Majestic Realty Co 10 Falcon Ct I-90 East Corridor Streamwood IL 01 3,7 3,7 0% USAA Real Estate 133 Brewster Creek Blvd US- Corridor Bartlett IL 017 1,03 1,03 0% Exeter Property Group 11559 0th Ave Southern WI Pleasant Prairie WI 017 17,3 17,3 0% CenterPoint Properties 50 Southcreek Pky I-55 Corridor Romeoville IL 01 1,50 1,50 0% Pizzuti Companies 1000 Veterans Pky I-55 Corridor Bolingbrook IL 1999 05, 05, 0% Prologis 1101 Copenhagen Ct O'Hare Franklin Park IL 01 00,19 00,19 0% Panattoni Development Company Inc 01 Galvin Dr I-90 West/Elgin Corridor Elgin IL 01 35,37 35,37 0% McShane Development Co 35 E North Ave US- Corridor Carol Stream IL 017 31,00 31,00 0% Dermody Properties Inc 130 S 17th Ct I-55 Corridor Lockport IL 017 371,99 371,99 0% ML Realty Partners LLC 10501 Seymour Ave O'Hare Franklin Park IL 01 37,39 37,39 0% Molto Capital, LLC 01 Internationale Pky I-55 Corridor Woodridge IL 1999 35,1 35,1 0% J.P. Morgan Investment Management Inc Route & Houbolt Rd I-0 Corridor Joliet IL 01 355,199 355,199 0% First Industrial Realty Trust, Inc 515 Ameriplex Dr Northwest Indiana Portage IN 00 57,9 31,9 1% DRA Advisors LLC 001 N Division St McHenry County Harvard IL 1997 335,315 335,315 0% Edward Gong 10701 Seymour Ave O'Hare Franklin Park IL 01 333,9 333,9 0% CenterPoint Properties 00 Remington Blvd I-55 Corridor Bolingbrook IL 01 30,91 30,91 0% McShane Development Co 100 W 13rd St I-55 Corridor Lockport IL 01 30,9 30,9 0% Exeter Property Group LLC 100 W 13rd St I-55 Corridor Lockport IL 01 30,5 30,5 0% Exeter Property Group LLC 999 Dalton Ln I-55 Corridor Bolingbrook IL 017 30,35 30,35 0% Northern Builders 75 31st St Southern WI Somers WI 017 0,3 301,17 50% First Industrial Realty Trust Inc 150 S John Lane Crossing I-55 Corridor Lockport IL 017 300,9 300,9 0% Duke Realty Corporation 15901 W 17th St I-55 Corridor Lockport IL 017 93,7 93,7 0% ML Realty Partners LLC 050 Rock Creek Blvd I-0 Corridor Joliet IL 017 91,7 91,31 1% Industrial Prop Fund Viii 501 Internationale Pky I-55 Corridor Woodridge IL 01 3,3 3,3 0% Prologis 75 Santa Fe Dr I-55 Corridor Hodgkins IL 01,933,933 0% Seefried Properties Inc 1100-1150 W Airport Rd I-55 Corridor Romeoville IL 017,, 0% Clarion Partners 301 Ellis Ct I-0 Corridor New Lenox IL 005,0,0 100% Gramercy Property Trust Inc. 5139 W 73rd St South Cook Bedford Park IL 00 70,79 70,79 100% Global Logistic Properties Ltd 1150 W 115th St I-55 Corridor Bolingbrook IL 00 53,090 9,590 1% IDI Logistics 3900 Bur Wood Dr Lake County Waukegan IL 017 00,75, 100% Bentall Kennedy 0 Auto Mall Dr I-90 West/Elgin Corridor Elgin IL 01 57,3 57,3 0% Zilber Property Group 3900 Brandon Rd I-0 Corridor Joliet IL 017 751,79 50,5 7% CenterPoint Properties 351 Youngs Rd I-0 Corridor Joliet IL 013 1,001,1,77 7% Higgins Development Partners 770 Alft Ct I-90 West/Elgin Corridor Elgin IL 015,, 0% Molto Capital LLC 01 Alft Ln I-90 West/Elgin Corridor Elgin IL 01 30,553 3,571 % Northern Builders 301 Howard St North Cook Skokie IL 01 3,91 3,91 0% Hillwood 5 Marquett Dr I-55 Corridor Bolingbrook IL 005,0,0 0% Global Logistic Properties Ltd 1001 Seymour Ave O'Hare Franklin Park IL 01 5,91 5,91 0% CenterPoint Properties 700 N Enterprise St I- Corridor Auroroa IL 1990,000,000 100% High Street Realty Company LLC 33 S Pulaski Rd South Chicago Chicago IL 015 31,0 09,900 3% PGIM Real Estatei_ 01 Bilter Rd i- Corridor Aurora IL 007 03,09 03,09 0% Liberty Property Trust 00 Wirsing Pky I-39 Corridor DeKalb IL 00 0,30 0,30 0% 00 DeKalb IL LLC Trends To Watch 01 Property Taxes: The passing of the new tax bill should benefit property owners, prompting further capital investment in commercial real estate ventures.. Market Drivers: Demand within E-commerce and food-related industries are expected to remain high throughout 01. O'Hare Development: The O Hare submarket is seeing a construction boom with 13 buildings totaling.1msf currently under construction. This represents a % jump over last year. avisonyoung.com page
For more information, please contact: Kathleen Cavanaugh Research Manager 31.90. kathleen.cavanaugh@avisonyoung.com Greg Rogalla Senior Research Analyst 7.37.070 gregory.rogalla@avisonyoung.com Avison Young Chicago One South Wacker Drive, Ste. 3000 Chicago, Illinois, 00 www.avisonyoung.com avisonyoung.com 01 Avison Young Chicago. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.