Chicago Industrial Submarket Narratives 1Q 2016
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Chicago Market News First Quarter 2016 Submarket Page Overall Chicago Market 4 Lake County 6 North Cook County 8 O Hare 10 West Cook County 12 South Suburbs 14 I-57 Corridor 16 I-80 Corridor 18 I-55 Corridor 20 I-88 Corridor 22 North DuPage Fox Valley North Kane County Southeast Wisconsin Northwest Indiana 24 26 28 30 32 Construction Dashboard Market Statistics 36-37 34
Chicago Market News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 1,124,332,754 vacancy 7.0% availability 8.8% net 3,868,171 net 3,868,171 Average rental rate (nnn) $4.79 12-month dollar change $0.48 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 25,000,000 19% 20,000,000 17% 15% 15,000,000 13% 10,000,000 11% 9% 5,000,000 7% 0 5% 2010 2011 2012 2013 2014 2015 1Q16 AVERAGE RENTAL RATE Overview of Absorption Net continues it s positive trend measuring a very impressive 3.8 million square feet. This was significantly superior to the year-over-year volume in 2015 of 2.5 million square feet. In comparison, fourth quarter 2015 volume totaled 8.2 million square feet. The I-80 Corridor posted the highest leasing volume of all 20 Chicago Area submarkets through space of over 1.2 million square feet. Not too far off was the I-55 Corridor which reported 897,112 square feet absorbed. Conversely five markets posted negative results the worst was South Suburbs which measured negative 369,922 square feet. Net should be more pronounced next quarter. This is due to 3.1 million square feet of new build-to-suit deliveries scheduled to come on line next quarter. Overview of Demand Strong user demand is putting downward pressure on Chicago s vacancy rate which stands at 6.95 percent. Remarkably, three markets vacancy rates fell below 5 percent: Fox Valley at 3.77 percent, Southeast Wisconsin at 4.19 percent and North DuPage at 4.37 percent. When comparing their availability rate Fox Valley, Northeast DuPage, and Southeast Wisconsin were still below Chicago s overall Vacant Rate of 8.78 percent, at 5.96 percent, 7.79 percent and 5.85 percent respectively availability rate is like the wind chill, when the thermometer reads 20 degrees and you factor in the wind chill the temperature really feels like 5 degrees. Tenant demand was strongest in the I-55, I-57, and I-80 corridors plus O Hare each captured leasing volume in excess of 1.0 million square feet which drove overall volume to 8.9 million square feet. Unfortunately the I-39 Corridor and Northwest Indiana submarkets did not report any new leases signed during the quarter. $5.00 $4.80 $4.60 $4.40 $4.20 $4.00 $3.80 $3.60 $4.79 2009 2010 2011 2012 2013 2014 2015 1Q16 Overview of Rents Overall weighted average asking rents inched up moderately from the previous quarter mark of $4.74 per square foot net to $4.79 per square foot net. Rents have been on the upward swing the result of Chicago s improving vacancy rate. RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location City Size Date Price / s.f. Yorkbrook Business Venture One TA Associates Center/Eisenhower Lane Lombard 736,275 2/24/2016 $50.21 Prudential Bridge Development 555 Northwest Ave Northlake 588,284 1/15/2016 $82.87 Midwest Warehouse & Distribution Molto 3451 S Chicago St Joliet 575,024 1/15/16 $47.75 Pritzker Group Midwest Warehouse & Distribution 505 Northwest Ave Northlake 502,272 2/10/16 $44.29 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Type Location City Size RJW Transport New lease 14908 Gougar Rd Lockport 512,265 Hostess New lease 21228 SW Frontage Rd Shorewood 507,187 Ghirardelli Chocolate/OHL New lease 700 S Weber Rd Bolingbrook 382,228 NuFarm New lease 21399 Torrence Ave Sauk Village 378,785 4
Chicago Market News SUBMARKET CHARACTERISTICS MARKET MAP 1 Robust capital markets provide liquidity for institutional investors Inland port; The convergence of six Class I railroads and heavy and advanced manufacturing make it a premier U.S. market 2 Chicago is an industrial gateway city with global connectivity 3 Population: 9.7M: Significant local consumption base 4 SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Under construction completions Warehouse & Distribution 588,256,874 7.4% 9.7% 2,495,219 2,495,219 $4.85 12,956,626 2,083,822 Manufacturing 533,825,388 6.4% 7.7% 1,372,952 1,372,952 $4.67 1,798,730 1,139,105 General 2,250,492 8.7% 8.7% 0 0 $0.00 311,680 0 s 1,124,332,754 6.9% 8.7% 3,868,171 3,868,171 $4.79 15,067,036 3,222,927 Flex / R&D 67,194,423 10.3% 13.6% 409,731 409,731 $10.79 133,000 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. 5
Lake County Submarket News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 66,586,880 vacancy 9.0% availability 11.2% net 129,741 net 129,741 Average rental rate (nnn) $5.62 12-month dollar change $0.28 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 2,500,000 19% 2,000,000 17% 1,500,000 15% 1,000,000 13% 500,000 11% 0 9% -500,000 7% -1,000,000 5% 2010 2011 2012 2013 2014 2015 1Q16 AVERAGE RENTAL RATE $7.00 $5.62 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q16 LEASE ACTIVITY Lake County leasing volume did not reach the previous quarter s mark of 711,864 square feet, however the 507,604 square feet leased was consistent with the 514,634 square feet leased one year ago. Stout leasing volume kept vacancies in check reporting in at 9.1 percent, closely matching the prior quarter rate of 9.0 percent. The most significant lease signed during the quarter occurred by HomeWerks who took possession on 190,925 square feet at 45-85 Albrecht Drive in Lake Bluff. The bath fixtures manufacturer is more than doubling in size, relocating from neighboring Lincolnshire. The remaining leases were diverse in size range. Additionally the majority of the leases signed were 5 years or greater in term. RENTS First quarter weighted average asking rents measured $5.62 per square foot net unchanged from the prior quarter. Asking rents could trend up, influenced by pricing for new speculative construction that recently commenced. SALES AND CONSTRUCTION Investment sale activity was limited to smaller transactions as Venture One Real Estate purchased a value-add facility totally 23,510 square feet at 65 Ambrogio Drive in Gurnee for $29.77 per square foot. User demand was sparse as well as only one user sale totaling 19,839 square feet was sold this quarter. Howe Precision was the buyer. After several years of litigation the SAIA truck terminal in Grayslake is finally delivered. The structure totals 70,000 square feet with 100 dock positions. Two speculative construction projects broke ground this quarter, Bridge Development commenced construction on 400,758 square feet at 3900 Bur Wood Drive in Waukegan, while CenterPoint Properties broke ground on 201,000 square feet at CenterPoint Business Center Gurnee. ECONOMIC OUTLOOK Due in part to recent surge in user demand, the level of speculative construction activity has increased dramatically in Lake County. This will impact Lake County s vacancy rate in the third quarter as most of the product in the ground is slated for delivery then. RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location City Size Date Price / s.f. Plast-ex International Local Investor 2033-3833 Swanson Court Gurnee 41,550 1/10/2016 $35.50 Venture One Real Estate Chenille Kraft Company 65 Ambrogio Drive Gurnee 23,510 2/17/2016 $29.77 Vernon Hills Officeplex LP Sayers Group, LLC 825 Corporate Woods Drive Vernon Hills 22,155 2/15/2016 $112.84 Howe Precision James G Schultz 805 Telser Road Lake Zurich 19,836 1/1/2016 $50.00 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Type Location City Size HomeWerks New lease 45-85 Albrecht Dr Lake Bluff 190,925 Fidelitone New lease 13825 Business Center Antioch 108,575 Fidelitone New lease 1800 Industrial Dr Libertyville 61,000 Alpha Tekniko New lease 1290 Ensell Rd Lake Zurich 55,488 6
Lake County Submarket News SUBMARKET CHARACTERISTICS MARKET MAP 1 Higher ratio of specialized manufacturing. Strong concentration of healthcare, medical device and life sciences companies. 2 3 Dated, less energy efficient and design restrictive product. 4 Constrained developable land supply. SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Under construction completions Warehouse / Distribution 35,299,101 11.3% 14.4% 290,374 0.8% $5.47 661,923 70,000 Manufacturing 31,234,667 6.5% 7.5% -160,633-0.5% $5.99 626,848 0 General 53,112 0.0% 0.0% 0 0.0% $0.00 20,000 0 industrial 66,586,880 9.0% 11.2% 129,741 0.2% $5.62 1,308,771 70,000 Flex / R&D 6,512,029 11.2% 17.8% 133,010 2.0% $9.69 0 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. 7
North Cook Submarket News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 48,316,845 direct vacancy 5.6% vacancy 7.2% net 315,128 net 315,128 Average rental rate (nnn) $5.56 12-month dollar change $0.17 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 1,000,000 800,000 19% 600,000 17% 400,000 15% 200,000 13% 0 11% -200,000-400,000 9% -600,000 7% -800,000 5% 2010 2011 2012 2013 2014 2015 1Q16 AVERAGE RENTAL RATE $5.80 $5.60 $5.40 $5.20 $5.00 $4.80 $4.60 $5.56 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q16 LEASE ACTIVITY Two leases signed in Wheeling, during the quarter drove first quarter leasing volume. An undisclosed tenant leased 172,779 sf at 230 Palatine Road and Richelieu Foods leased 115,000 square feet at 120 Palatine Road. The first quarter volume of 356,251 square feet was similar to the previous quarter volume of 356,920 square feet Last quarter volume was comprised of several mid-sized tenant signings. Interestingly, the majority of leases signed this quarter were by manufacturers. RENTS The decline in vacancy rates, dropping from a fourth quarter rate of 5.78 percent to 5.6 percent is definitely having an impact on North Cook rents. This quarter s asking rent jumped to $5.56 per square foot net, up $0.14 from last quarter. SALES AND CONSTRUCTION User demand exceeded investment activity this quarter as just one of the six sales reported this quarter was an investment offering. Venture One purchased 1019 Noel Avenue in Wheeling. The building totaled 60,900 square feet and was sold vacant, selling for $26.27 per square foot. The largest user sale was completed at 3411 Woodhead Drive in Northbrook where Atlas Fibre acquired the 116,800-square-foot facility for $39.00 per square foot. A speculative facility at 5600-5750 Jarvis Avenue in Niles was delivered to the market this quarter adding 217,280 square feet to North Cook s inventory base. The joint venture between Cabot Properties and Seefried Industrial Properties developed the property, successfully securing a tenant for 135,443 square feet prior to completion They are close on a deal which will leave them with only 39,800 square foot vacant. ECONOMIC OUTLOOK Robust tenant demand is driving more developer interest in North Cook County market however current land pricing is not in line with current rent striking pricing. Limited building options could drive tenants into Lake County. RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location City Size Date Price / s.f. Atlas Fibre Molto Capital 3411 Woodhead Dr Northbrook 116,800 1/29/2016 $45.30 Venture One RSVP Ventures, Inc. 1019 Noel Ave Wheeling 60,900 1/12/2016 $26.27 Kennicott Brothers K&B Galleries Ltd 333 Anthony Trail Northbrook 21,744 1/29/2016 $45.30 Edward R. James Companies, Inc. Illinois Bell Telephone Co. 1725 Winnetka Rd Northfield 16500 1/29/2016 $156.06 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Type Location City Size Undisclosed New lease 230 W Palatine Rd Wheeling 172,779 Richelieu Foods New lease 120 W Palatine Rd Wheeling 115,000 Undisclosed New lease 7001 Central Park Ave Lincolnwood 30,000 Sethness Products New lease 3410-3426 Touhy Ave Skokie 15,540 8
Submarket News SUBMARKET CHARACTERISTICS MARKET MAP 1 Higher ratio of flex and manufacturing 2 Limited modern distribution product 3 Highly educated workforce 4 Highly concentrated and accessible labor pool. SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Under construction completions Warehouse / Distribution 15,492,706 6.9% 7.9% 131,598 131,598 $5.52 0 217,280 Manufacturing 32,750,865 5.0% 6.9% 183,530 183,530 $5.60 0 0 General 73,274 0.0% 0.0% 0 0 $0.00 0 0 industrial 48,316,845 5.6% 7.2% 315,128 315,128 $5.56 0 217,280 Flex / R&D 6,205,859 10.7% 12.7% -23,949-23,949 $6.64 0 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. 9
O Hare Submarket News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 93,596,010 direct vacancy 5.3% available 7.6% net 665,721 net 665,721 Average rental rate (nnn) $5.81 12-month dollar change $0.31 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 3,500,000 16% 3,000,000 14% 2,500,000 12% 2,000,000 10% 8% 1,500,000 6% 1,000,000 4% 500,000 2% 0 0% 2010 2011 2012 2013 2014 2015 1Q16 AVERAGE RENTAL RATE LEASE ACTIVITY DCT Industrial signed a full building lease at 777 Mark Street in Wood Dale with D&W Fine Pack for 227,800 square feet. The 66 month lease backfills the space which was vacated when previous tenant BMAK Auto Auctions went bankrupt. In Bensenville, Hamilton Partners secured Zurn Industries in a 134,514 square-foot lease in their newly completed 184,170 square-foot spec building. Geib Industries occupies 50,000 square feet in the South portion of the building. In Elk Grove, EVE Group signed a new lease for 128,724 square feet with Prologis at 2800-2900 Lively Boulevard. RENTS Rental rates currently stand at $5.81 per square-foot and have shown consistent growth due to unrelenting tenant demand around the airport. With such a deep pool of users and limited supply, growing businesses are seeing their occupancy costs rise. SALES AND CONSTRUCTION Liberty acquired a Class A 73,150 square-foot building at 11222 Melrose Avenue in Franklin Park from Washington Properties for $109 per square-foot. The eight year old building has 34,537 square feet available with an asking rate just shy of $8 net. Currently the only project under construction in O Hare is Aeroterm s three- building airside cargo facility. Molto and RREEF are preparing to break ground on a 367,500 square-foot redevelopment of the former Central Grocers site at 10501 Seymour Avenue in Franklin Park which is seconds away from the South Cargo Gate. Also in Franklin Park, Panattoni is demolishing the AM Castle Steel property with plans to build a 490,000 square-foot spec building. $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 $5.81 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q16 ECONOMIC OUTLOOK Speculative redevelopments in O Hare have been very successful as made evident by Liberty, Hamilton Partners, and DCT quickly leasing up their buildings within a few short months of completion. As international trade grows, users will need to have a supply chain node near the airport or intermodals in Chicago driving demand for modern logistics space. RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location City Size Date Price / s.f. STORE Capital Insight Equity 2300 Pratt Blvd Elk Grove Village 281,000 2/19/2016 $ 49.46 R&M Trucking Albany Bank 1797 Winthrop Dr Des Plaines 74,313 2/8/16 $ 45.00 Liberty Property Trust Washington Properties, Inc. 11222 Melrose Ave Franklin Park 73,150 2/22/2016 $ 109.36 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Type Location City Size D & W Fine Pack New lease 777 Mark St Wood Dale 227,800 Zurn Industries New lease 340 County Line Rd Bensenville 134,514 EVE Group New lease 2800-2900 Lively Blvd Elk Grove Village 128,724 Ecommerce user New lease 1250 W Mittel Dr Wood Dale 82,114 10
O Hare Submarket News SUBMARKET CHARACTERISTICS MARKET MAP 1 Higher ratio of heavy and advanced manufacturing Fewer available bulk distribution spaces 2 3 Elk Grove Village is home to the largest industrial park in North America. 4 Infill location provides one of the deepest labor pools in the region. SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Under construction completions Warehouse / Distribution 55,703,656 4.9% 8.0% 903,626 903,626 $5.76 440,000 0 Manufacturing 37,863,339 5.9% 7.2% -237,905-237,905 $5.91 0 0 General 29,015 0.0% 0.0% 0 0 $0.00 0 0 industrial 93,596,010 5.3% 7.6% 665,721 665,721 $5.81 440,000 0 Flex / R&D 7,262,424 9.7% 11.3% 237,371 237,371-0 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. 11
West Cook Submarket News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 93,613,690 vacancy 9.4% availability 11.0% net 53,069 net 53,069 Average rental rate (nnn) $5.29 12-month percent change -$0.52 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 3,000,000 12% 2,500,000 10% 2,000,000 1,500,000 8% 1,000,000 6% 500,000 4% 0-500,000 2% -1,000,000 0% 2010 2011 2012 2013 2014 2015 1Q16 AVERAGE RENTAL RATE $7.00 $6.00 $5.29 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q16 LEASE ACTIVITY Gross tenant leasing and user sales activity flourished during the first three months of 2016 measuring 408,070 square feet. This was far superior to the previous quarter mark of 146,814 square feet and better than first quarter 2015 s volume of 335,565 square feet. Driving this demand were occupiers seeking space below 100,000 square feet - with the average deal size this quarter being 40,000 square feet. The largest transaction this quarter was signed by Video Equipment Rentals which took 94,152 square feet at 8401 W. 47 th Street in McCook. Demand was strongest for distribution space which accounted for almost 90 percent of all first quarter leasing volume. RENTS West Cook County s vacancy rate dropped 10 basis points from the previous quarter to 9.40 percent.. This improvement provides justification for investors to boost rents. Current average asking rental rates are now at $5.29 per square foot net a sizable increase from the $4.90 per square foot net reported last quarter. SALES AND CONSTRUCTION The investment market is frothy as Chicago witnessed its first pre-sale commitment since 2007. Prudential purchased from Bridge Development a vacant 588,284-square-foot speculative warehouse/distribution facility for $82.87 per square foot at 555 Northwest Avenue in Northlake. The 36 clear building boasts tollway frontage along I-294. User demand captured two sales over 100,000 square feet. Kwok Foods bought 185,198 square feet from Venture One Real Estate, paying $36.76 per square foot, while Thule Car Accessories North American acquired 153,546 square-foot manufacturing plant from First Industrial Realty Trust for $35.00 per square foot. ECONOMIC OUTLOOK Developer interest is heating up and should continue as demand for modern functional product remains high. Furthermore West Cook County will see spillover demand from neighboring O Hare market as there are no first generation options leading tenants to look elsewhere for modern space. RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location City Size Date Price / s.f. Prudential Bridge Development 555 Northwest Ave Northlake 588,284 1/15/2016 $82.87 Pritzker Realty Midwest Warehouse 505 Northwest Ave Northlake 502,272 2/10/2016 $44.29 Kwok Foods Venture One 6500 W 51 st St Forest View 185198 2/15/2016 $36.76 Thule Car Accessories First Industrial 7609 Industrial Dr Forest Park 153,546 1/5/2016 $35.00 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Type Location City Size Video Equipment Rentals New lease 8401 W 47 th St McCook 94,152 CTO Group New lease 3710-3720 River Rd Franklin Park 60,329 Borg Warner New lease 2407-2457 W North Ave Melrose Park 49,763 DHL Express, Inc. New lease 8401 W 47 th St McCook 36,440 12
West Cook Submarket News SUBMARKET CHARACTERISTICS MARKET MAP 1 Higher ratio of heavy manufacturing 2 Due to land constraints, fewer bulk distribution spaces than other Chicago industrial submarkets. 3 West Cook home to the BNSF Corwith and Union Pacific Global II intermodals and UPS Chicago Area Consolidation Hub (CACH). 4 Strong workforce and public transit connections. SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Under construction completions Warehouse / Distribution 42,848,916 13.6% 15.6% -66,676-66,676 $5.37 182,923 0 Manufacturing 50,740,174 6.0% 7.2% 119,745 119,745 $4.78 General 24,600 0.0% 0.0% 0 0 $0.00 0 0 industrial 93,613,690 9.4% 11.0% 53,069 53,069 $5.29 182,923 0 Flex / R&D 2,451,283 2.9% 2.9% 7,644 7,644 $15.00 0 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. 13
South Suburbs Submarket News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 84,635,564 vacancy 7.6% availability 8.6% net -369,922 net -369,922 Average rental rate (nnn) $4.72 12-month dollar change $1.11 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 3,500,000 3,000,000 19% 2,500,000 17% 2,000,000 15% 1,500,000 13% 1,000,000 11% 500,000 0 9% -500,000 7% -1,000,000 5% 2010 2011 2012 2013 2014 2015 1Q16 AVERAGE RENTAL RATE $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 RECENT SALES COMPARABLES (sorted by square feet) $4.72 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q16 LEASE ACTIVITY The most significant new lease inked in the first quarter in Chicagoland s South Suburbs was KW Container s 61,500 square-foot renewal with Colony at 201-217 E 171st Street in Harvey. Stockbridge secured a five year lease with Tireco for 55,000 square feet at 5025 W 73rd Street in Bedford Park. RENTS Rental rates have climbed to $4.72 in Chicago s South Suburbs as vacancy has fallen dramatically to settle below 8.0 percent. As user demand for space in the infill markets remains strong, expect to see robust activity throughout 2016 in towns such as Bedford Park and Alsip with strong industrial clusters. SALES AND CONSTRUCTION Investment sale activity in the South Suburbs has been brisk. Several notable Class B assets have traded hands as investors are broadening their horizons to acquire non-core assets. Gramercy acquired two buildings from Checkers Industrial Safety Products via a sale leaseback. While one asset was in Mississippi, a 246,000 square-foot building at 5655 W 73 rd Street in Bedford Park traded hands at an allocated $51 per square-foot. Also in Bedford Park, Archer Wire completed a sale leaseback on their manufacturing facility with New Yorkbased Buckingham Net Leased Properties. The 142,000-square-foot building is situated on an 8.4-acre site at 7300 South Narragansett Avenue. The masonry and steel-framed manufacturing and headquarters office building was built in 1989 with a recent office renovation in 2015. Welbic Investments, an affiliate of Darwin Realty acquired 15 buildings from Venture One in a Chicago area portfolio sale valued at $47 million. As part of the sale, a 99,200 square-foot building at 6969 W 73 rd Street traded for $35 per square-foot. This building was partially vacant at the time of the sale as Owens Corning vacated 40,000 square feet before closing. ECONOMIC OUTLOOK The South Suburban industrial market remains an attractive location for manufacturing and local distribution. Rail served buildings are easier to find in this market and public transit connections via the CTA red and orange lines and Metra help connect users to the City s deep labor pool. Buyer Seller Location City Size Date Price / s.f. Gramercy Property Trust Checkers Industrial Safety Products 5655 W 73rd Bedford Park 246,060 1/28/2016 $ 50.80 Buckingham Net Leased Archer Wire International Properties Group Corporation 7300 S Narragansett Ave Bedford Park 142,000 1/21/2016 $ 44.37 Litetronics International Darwin Realty & 6969 W 73rd St Bedford Park 99,200 3/31/2016 $ 35.56 Darwin Realty Venture One 6969 W 73rd St Bedford Park 99,200 2/16/2016 $ 35.28 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Type Location City Size KW Container Renewal 201-217 E 171st St Harvey 61,496 Tireco New lease 5025 W 73rd St Bedford Park 55,000 Production Plus New lease 3301 Wireton Rd Blue Island 31,020 Robert James Sales, Inc. New lease 10499 164th Pl Orland Park 24,658 14
South Suburbs Submarket News SUBMARKET CHARACTERISTICS MARKET MAP Higher ratio of manufacturing; Chicago s five largest manufacturing sectors are fabricated metal, food, machinery, printing, and electrical equipment 1 and component manufacturing 2 Proximity to Chicago s deep urban core and public transit accessibility 3 Excellent access to skilled and semi-skilled local workforce 4 Limited Class A inventory SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Under construction completions Warehouse / Distribution 40,186,428 8.5% 9.3% -256,148-256,148 $4.17 33,000 0 Manufacturing 43,281,506 7.0% 8.1% -113,774-113,774 $5.66 0 0 General 1,167,630 0.0% 0.0% 0 0 $0.00 0 0 industrial 84,635,564 7.6% 8.6% -369,922-369,922 $4.72 33,000 0 Flex / R&D 2,416,752 12.2% 14.4% -6,453-6,453 $6.87 0 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. 15
I-57 Submarket News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 30,397,794 vacancy 7.3% availability 7.5% net 101,635 net 101,635 Average rental rate (nnn) $3.74 12-month dollar change $0.72 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 1,500,000 18% 16% 1,000,000 14% 12% 500,000 10% 0 8% 6% -500,000 4% 2% -1,000,000 0% 2010 2011 2012 2013 2014 2015 1Q16 AVERAGE RENTAL RATE $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 $3.74 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q16 LEASE ACTIVITY Reviva Logistics on behalf of Hankook Tire signed a new lease for 718,000 square feet in the former Michelin distribution center at 25850 S Ridgeland Avenue in Monee. Venture One and DRA Advisors successfully backfilled this building with zero downtime on the market after acquiring the building with a near term vacancy pending. In Sauk Village, STAG signed NuFarm to a 375,785 square-foot new lease. NuFarm selected the location due to its close proximity to their manufacturing plants in Alsip and Chicago Heights. RENTS Rental rates in the first quarter currently stand at $3.74 per square-foot in the I-57 submarket. The area offers significant cost advantages to other markets across Metro Chicago and we expect rental rates to stabilize in the mid to high three dollar range after posting significant growth in the last 12 months. SALES AND CONSTRUCTION Reinhardt Foodservice sold a 190,948 square-foot multi-temperature distribution building at 251 Central Avenue in University Park to Dot Foods. The building has 80,000 square feet of ambient storage, 45,000 square feet of freezer, 46,000 square feet of cooler space and 18,000 square feet of office. McLane Trucking acquired a bank-owned truck terminal at 430 W 194th Street in Glenwood, Illinois for $24.69 per square-foot. In construction news, Northern Builders acquired 35 acres on Dralle Road in University Park for $1,534,438 from Blue Linx for a build-to-suit for Kloeckner Metals. The parcel is rail served by the CN and the 105,000 square-foot manufacturing building is scheduled to be completed in October 2016. Global Logistics Properties has brought a two building Class A offering to market totaling 1,035,465 square feet that is 100% leased to five tenants. These buildings were originally developed by Dermody and were acquired via GLP s acquisition of IndCor. ECONOMIC OUTLOOK The I-57 Corridor remains a key logistics node due to is proximity to the Joliet and South Suburban intermodal terminals and the ability to easily reach the CBD. I-57 offers convenient interstate connectivity to Memphis and St. Louis providing an optimal location for Midwest superregional distribution that has attracted the likes of Clorox, Behr Paints, and Solo Cup. RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location City Size Date Price / s.f. Dot Foods, Reinhardt Foodservice 251 Central Ave University Park 190,948 2/4/2016 $ 90.34 Angeles Equity Partners UGN, Inc. 1231 State St Chicago Heights 120,000 1/28/2016 $ 10.85 The Village of Monee Kathleen E Dickinson 6025 W Industrial Dr Monee 20,400 1/20/2016 $ 18.38 McLane Company North Community Bank 430 W 194th St Glenwood 15,187 1/4/2016 $ 24.69 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Type Location City Size Hankook Tire New lease 25850 S Ridgeland Ave Monee 718,761 NuFarm New lease 21399 Torrence Ave Sauk Village 375,785 Holland, LP New lease 750 Central Ave* 4Q15 University Park 186,560 16
I-57 Submarket News SUBMARKET CHARACTERISTICS MARKET MAP Lower lease velocity reflects its 30-mile distance from the urban Chicago market 1 2 Limited Class A bulk product 3 Area has a high ratio of manufacturers 4 Located in Will County, with lower area tax rates and thriving transportation system SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Under construction completions Warehouse / Distribution 20,667,475 8.3% 8.5% 99,188 99,188 $3.70 0 0 Manufacturing 9,454,414 3.4% 3.4% 2,447 2,447 $7.00 80,000 0 General 275,905 65.6% 65.6% 0 0 $0.00 105,000 0 industrial 30,397,794 7.3% 7.5% 101,635 101,635 $3.74 185,000 0 Flex / R&D 408,336 11.2% 14.9% -6,600-6,600 $9.78 0 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. 17
I-80 Submarket News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 72,321,798 vacancy 6.7% availability 8.2% net 1,230,490 net 1,230,490 Average rental rate (nnn) $4.26 12-month dollar change $0.88 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 4,500,000 4,000,000 19% 3,500,000 17% 3,000,000 15% 2,500,000 13% 2,000,000 11% 1,500,000 1,000,000 9% 500,000 7% 0 5% 2010 2011 2012 2013 2014 2015 1Q16 AVERAGE RENTAL RATE $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 $4.26 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q16 LEASE ACTIVITY Hostess Bakeries committed to a new lease with Clarion Partners for 507,000 square feet at 21228 SW Frontage Road in the Heartland Corporate Center in Shorewood marking the largest lease of the first quarter. Clarion is also building a third and final building in the park of 318,000 square feet to deliver in late 2016. At 3900 Rock Creek Boulevard in Joliet s Rock Run Business Park, Mack Trucks renewed 324,000 square feet with TIAA-CREF. Also in the park, Ecolab inked a new ten year lease for 255,000 square feet with IDI Gazeley at 4101 Olympic Boulevard. RENTS Despite strong occupier demand in the I-80, vacancy ticked up slightly to 6.7 percent in the last 90 days due to new supply coming online. Currently rental rates stand at $4.26 per square-foot. SALES AND CONSTRUCTION The largest building to transact in the first quarter in the I-80 market was Midwest Warehouse's acquisition of 3451 S Chicago Street in Joliet from Molto Properties. The 575,024 square-foot building traded for $47.75 per square foot. Otis Elevator will continue to occupy 209,179 square feet through September 2019 and Midwest will occupy the balance of the building for their 3PL operations. No other significant Class A or investment sales transactions have been recorded thus far in 2016. In construction news, IKEA is preparing to break ground on a 1.25 million square-foot DC on 72 acres on Laraway Road. This facility is expected to be operational in 2018 and IKEA also controls adjacent land with plans for additional 1.0 to 1.5 million square foot facility. ECONOMIC OUTLOOK The I-80 Corridor is a diverse logistics hub and counts other notable occupiers aside from bulk warehouse and distributors. Agricultural and energy relate firms also have a significant presence in the area. The DeLong Co. is expanding its company space at CenterPoint Intermodal Center in Joliet. The company will occupy 25 acres of land within CIC-Joliet to operate its transload operation. It plans to relocate its 15-acre transload operation from Channahon. Arc Logistics Partners acquired Joliet Terminal Joliet Bulk, Barge & Rail from CenterPoint Properties which is a crude oil unloading terminal and a 4-mile crude oil pipeline. RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location City Size Date Price / s.f. Midwest Warehouse & Distribution Molto 3451 S Chicago St Joliet 575,024 1/15/16 $47.75 ComEd KG Leasing 24219 S Northern Illinois Dr Channahon 54,000 10/7/2015 $37.04 Private Individual MMS of Illinois 2467 Laraway Rd New Lenox 20,000 10/1/2015 $47.50 Jay Truck Sales Tim White 251 Republic Ave Joliet 16,893 2/2/16 $28.71 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Type Location City Size Hostess New lease 21228 SW Frontage Rd Shorewood 507,187 Mack Trucks Renewal 3900 Rock Creek Blvd Joliet 324,014 Ecolab Inc. New lease 4101 Olympic Blvd Joliet 254,672 Unisource Worldwide Renewal 1695-1701 Crossroads Dr Joliet 191,260 18
I-80 Submarket News SUBMARKET CHARACTERISTICS MARKET MAP Big box class A bulk distribution 1 2 Large workforce 3 Inland port and logistics hub 4 Multi-state regional distribution SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Under construction completions Warehouse / Distribution 56,365,453 6.9% 8.8% 1,249,157 1,249,157 $3.94 4,522,780 339,934 Manufacturing 15,821,275 6.0% 6.0% -18,667-18,667 $6.59 438,150 0 General 135,070 0.0% 0.0% 0 0 $0.00 0 0 industrial 72,321,798 6.7% 8.2% 1,230,490 1,230,490 $4.26 4,960,930 339,934 Flex / R&D 842,381 8.5% 12.6% -3,880-3,880 $9.19 0 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. 19
I-55 Submarket News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 80,674,516 vacancy 6.1% Availability 10.0% net 897,112 net 897,112 Average rental rate (nnn) $5.02 12-month dollar change $0.56 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 3,500,000 19% 3,000,000 17% 2,500,000 15% 2,000,000 13% 1,500,000 11% 1,000,000 9% 500,000 7% 0 5% 2010 2011 2012 2013 2014 2015 2016 AVERAGE RENTAL RATE $6.00 $5.02 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q16 LEASE ACTIVITY First quarter saw three significant big box lease transactions along I-355 in Lockport. These deals mark the opening of a new frontier along the Veterans Memorial Tollway, a 12 ½ mile extension of I-355 which opened in 2007. The corridor is anchored by the I-55/Stevenson Expressway on the North and connects South to I-80 in the town of New Lenox. ML Realty secured a full building lease with RJW Transport for 512,265 square feet at 14908 Gougar Road. Also in the Heritage Crossings Park, ML inked a prelease with LG Electronics for 363,224 square feet. This building is set for a September delivery. The third notable transaction in Lockport was UPS Supply Chain Solution s lease for 273,640 square feet in a brand new spec building at 16328 S John Lane Crossing developed by Panattoni and Pacific Coast Capital Partners. In Bolingbrook, IDI Gazeley filled the remaining 382,228 square feet at 700 S Weber Road with a new lease to Ghiradhelli Chocolate being operated by Ozburn Hessey Logistics. RENTS The average asking rental rates for industrial space in the I-55 Corridor is just north of five dollars per square-foot. Rental rates have increased $0.56 year-over-year. SALES AND CONSTRUCTION The largest building to trade hands in I-55 in the first quarter was Universal Laminating & Converting s purchase of a newly developed spec building in Northern Builders Carlow Corporate Center. Universal Laminating will occupy 78,000 square feet of the facility and Braun s Express is leasing 35,359 square feet of the building through 2021. The purchase price was nearly $90 per square-foot. In Romeoville, ML Realty Partners sold off a 39,224 square-foot Class B building to Metro Exhibit Corporation. The building is on 2.3 acres and features abundant outdoor storage and traded for $1.7 million. ECONOMIC OUTLOOK Opportunities for economic development abound in the I-55 corridor which is characterized by excellent infrastructure, prime development sites, superior communities and business-friendly local governments. RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location City Size Date Price / s.f. Universal Laminating & Converting Northern Builders, Inc. 910 Carlow Dr Bolingbrook 113,435 1/7/2016 $88.50 Pecora Development Adcock Construction Inc. 637 Forestwood Dr Romeoville 40,000 1/27/2016 $53.00 Metro Exhibit Corporation ML Realty Partners 1308 Marquette Dr Romeoville 39,224 1/14/2016 $43.34 JASPER Engines & WeatherTech Transmissions 575 Woodcreek Dr Bolingbrook 20,991 2/12/2016 $80.99 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Type Location City Size RJW Transport New lease 14908 Gougar Rd Lockport 512,265 Ghirardelli Chocolate/OHL New lease 700 S Weber Rd Bolingbrook 382,228 LG New lease 14746 Gougar Rd Lockport 363,224 Fresh Tyme Grocery New lease 570 W North Frontage Rd Bolingbrook 317,076 20
I-55 Submarket News SUBMARKET CHARACTERISTICS MARKET MAP 1 High velocity market for both lease and sale activity 2 Big box class A bulk distribution 3 Close proximity to Joliet intermodals 4 Large, available and skilled local workers SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Under construction completions Warehouse / Distribution 68,342,428 6.3% 10.4% 724,320 724,320 $4.89 1,323,021 414,256 Manufacturing 12,277,888 4.5% 8.0% 172,792 172,792 $6.08 0 0 General 54,200 26.2% 26.2% 0 0 $0.00 0 0 industrial 80,674,516 6.1% 10.0% 897,112 897,112 $5.02 1,323,021 414,256 Flex / R&D 2,824,253 6.8% 7.5% 10,109 10,109 $12.05 0 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. 21
I-88 Submarket News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 58,771,347 vacancy 5.3% availability 7.2% net 136,011 net 136,011 Average rental rate (nnn) $4.50 12-month dollar change $0.09 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 2,500,000 19% 2,000,000 17% 15% 1,500,000 13% 1,000,000 11% 9% 500,000 7% 0 5% 2010 2011 2012 2013 2014 2015 1Q16 AVERAGE RENTAL RATE $4.80 $4.50 $4.60 $4.40 $4.20 $4.00 $3.80 $3.60 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q16 LEASE ACTIVITY The largest lease of the first quarter was Rockpoint Logistics' 291,510 square-foot renewal with Liberty at 901 Bilter Road in Aurora. The 3PL agreed to a 38 month term. Exel Logistics did a short term renewal with International Realty Corporation for 110,355 square feet at 2350 Prospect Drive in Aurora. Also in Aurora, DCT secured a tenant for half of their building at 2413 Prospect Court. Cherryman Industries will lease 160,000 square feet for nearly thirteen years. DCT is in negotiations with another potential tenant for the balance of the building. DCT bought this building vacant in December 2014 and carried the building for 20 months with no income. RENTS A slight retreat in rents was posted from year end 2015 but overall market activity is healthy in the I-88 Corridor. With vacancy standing just over five percent, continued positive net should continue to chip away at standing availabilities. SALES AND CONSTRUCTION Seefried Properties sold a newly completed 275,422 square-foot building at 1405 Sequoia Drive in Aurora to Clarion Partners for $22 million at a 5.85 % cap rate. This building was a build-to-suit for Victory Packaging with a ten year lease. Clear Height Properties sold a 30,000 square-foot building at 3847 Exchange Avenue in the Meridian Business Park in Aurora to a private individual for $43 per square-foot. In Naperville, 84 Lumber acquired a 17,700 square-foot building at 1712 N Aurora Road from Universal Granite & Marble for $43 per square-foot. The Levy Organization sold a 20.48 acre site on Ferry Road in Aurora to Old Dominion Trucking for nearly six dollars per square-foot. Old Dominion has received planning approval to construct a new truck terminal. ECONOMIC OUTLOOK The I-88 corridor remains a highly sought after location in metro Chicago due to the higher corporate image facilities and educated workforce. However, some of the newer spec product is experiencing slightly slower leasing velocity. RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location City Size Date Price / s.f. Clarion Partners Seefried Properties 1405 Sequoia Drive Aurora 275,422 3/1/16 $79.87 CAGR, LLC CHP Exchange, LLC 3847 Exchange Ave Aurora 30,000 3/4/16 $42.83 84 Lumber Universal Granite & Marble 1712 N Aurora Rd Naperville 17,700 1/15/16 $43.31 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Type Location City Size Rockpoint Logistics Renewal 901-997 Bilter Rd Aurora 291,510 Cherryman Industries New lease 2413 Prospect Dr Aurora 160,000 Exel Logistics Renewal 2350 Prospect Dr Aurora 110,355 Cable Plus Renewal 2012 Corporate Ln Naperville 34,717 22
I-88 Submarket News SUBMARKET CHARACTERISTICS MARKET MAP Higher ratio of Flex, R&D industrial product when compared to other Chicago suburban industrial submarkets 1 An alternative industrial submarket to that of the I-55 Corridor but at a price premium 2 3 As a result, the I-88 submarket affords a stronger corporate image Aurora is home to the State s largest population base outside of Chicago proper. 4 SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Under construction completions Warehouse / Distribution 35,995,826 6.0% 8.1% 11,243 11,243 $4.48 2,594,271 145,000 Manufacturing 22,651,181 4.4% 5.8% 124,768 124,768 $4.63 0 0 General 124,340 0.0% 0.0% 0 0 $0.00 0 0 industrial 58,771,347 5.3% 7.2% 136,011 136,011 $4.50 2,594,271 145,000 Flex / R&D 3,075,402 8.7% 13.4% -11,789-11,789 $9.95 0 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. 23
North DuPage Submarket News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 79,453,185 vacancy 4.4% availability 7.8% net 210,933 net 210,933 Average rental rate (nnn) $5.24 12-month dollar change $0.88 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 3,000,000 12% 2,500,000 2,000,000 1,500,000 1,000,000 500,000 AVERAGE RENTAL RATE $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 0 2010 2011 2012 2013 2014 2015 1Q16 RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location City Size Date Price / s.f. Venture One TA Associates Yorkbrook Business Center/Eisenhower Lane Lombard 736,275 2/24/2016 $50.21 Clear Height Properties Van Der Molen Real Estate 2000 Bloomingdale Rd Glendale Heights 105,000 1/15/2016 $48.38 LifeStorage, Inc. Richard C Hoffman 1N372 Main St Glen Ellyn 106,892 1/22/2016 $31.87 Titan Tool Works Hamilton Property Mgmt 615 Kimberly Dr Carol Stream 20,000 2/24/2016 $70.00 RECENT LEASE COMPARABLES (sorted by square feet) 10% 8% 6% 4% 2% 0% $5.24 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q16 LEASE ACTIVITY The largest lease signed in the first quarter was Prinova Ingredient s short term lease for 100,000 square feet at 700-710 Kimberly Drive in Carol Stream. This was only a two year lease as they are actively searching the market for a headquarters build-to-suit site. In Addison, SunSource Industrial Services renewed their lease for 90,561 square feet with Cabot at 2301 Windsor Court. Local entrepreneur, Greco & Sons preleased a 64,192 squarefoot building at 1580 Hecht Court in the Brewster Creek Business Park to Ixmation. RENTS Rental rates currently stand at $5.24 per square-foot as vacancy stands at 4.4 percent which is reflective of the tremendous demand witnessed across the North DuPage market. As one of Chicago s core submarkets, limited available supply and high barriers to entry will put upward pressure on rents. SALES AND CONSTRUCTION TA Associates sold the 18-building, 736,275 square-foot flex and light industrial Yorkbrook Business Park on Eisenhower Lane in Lombard to Venture One for roughly $37 million. The complex is approximately 91% occupied and reflects a 9.5% cap rate on in-place income. Local value-add investor, Clear Height Properties acquired a 105,000 square-foot building at 2000 Bloomingdale Road in Glendale Heights from Van Der Molen Real Estate for $48 per square-foot. Sitex Group is under contract on a 88,150 square-foot incubator freezer/cooler and food production building at 238-248 Tubeway Drive in Carol Stream. The building is fully leased to three tenants. There are currently three projects under construction at this time in Central DuPage. Ridge Development and Diamond Realty have a 271,200 square-foot building planned for the Brewster Creek Business Park. Diamond is the real estate investment arm of Mitsubishi Corp. They acquired the 14.2 acre site and in January from Elmhurst- Chicago Stone and are rumored to have a prelease commitment from a user for 135,000 square feet. Prologis is building 186,000 on spec at 601 Regency in Glendale Heights and is on track for a summer delivery. ECONOMIC OUTLOOK The North DuPage market continues to see robust leasing and user sale activity as manufacturing still accounts for 1 in 10 jobs in the County. A strong component of the demand is driven by local business growth and corporate expansions as well as spillover demand from O Hare and West Cook County. Tenant Type Location City Size Prinova New lease 700-710 Kimberly Dr Carol Stream 100,000 Undisclosed New lease 775 W Belden Ave Addison 99,086 SunSource Industrial Services. Renewal 2301 W Windsor Ct Addison 90,561 Ixmation Prelease 1580 Hecht Dr Bartlett 64,192 24
North DuPage Submarket News SUBMARKET CHARACTERISTICS MARKET MAP Tight market overall with mainly mid-sized users 1 2 Some tenant migration out of O Hare / Cook County 3 More high-image business park setting and mix of land uses 4 Strong labor pool for manufacturing, assembly, and fulfillment SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Under construction completions Warehouse / Distribution 46,154,822 4.5% 8.3% 198,090 198,090 $5.02 414,192 89,000 Manufacturing 33,285,673 4.1% 7.1% 12,843 12,843 $6.05 15,072 0 General 12,690 0.0% 0.0% 0 0 $0.00 186,680 0 industrial 79,453,185 4.4% 7.8% 210,933 210,933 $5.24 615,944 89,000 Flex / R&D 3,887,774 7.7% 11.9% 51,751 51,751 $11.21 0 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. 25
Fox Valley Submarket News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 35,495,792 vacancy 3.7% availability 5.9% net 18,634 net 18,634 Average rental rate (nnn) $4.20 12-month dollar change $0.91 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 900,000 12% 800,000 10% 700,000 600,000 8% 500,000 6% 400,000 300,000 4% 200,000 2% 100,000 0 0% 2010 2011 2012 2013 2014 2015 1Q16 AVERAGE RENTAL RATE $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 $4.20 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q16 LEASE ACTIVITY Two leases were recorded this quarter measuring 149,000 square feet which was less fruitful than the 163,060 square feet leased last quarter. The larger of the two transactions was completed by PDS Transportation which leased 107,800 square feet of warehouse/distribution space at 1070 Swanson Drive in Batavia. The full-service logistics provider will consolidate operations from St. Charles and Batavia. RENTS Fox Valley s vacancy rate posted one of the lowest levels in Chicago at 3.77 percent. However it asking rental rate of $4.20 per square foot net is lower than the Chicago Metropolitan average of $4.79 per square foot net. SALES AND CONSTRUCTION Three investment sales were recorded this quarter. The largest building was acquired by Venture One Real Estate which purchased a 54,569 square-foot asset from Wells Fargo at 401-431 Raddant Road in Batavia, paying $42.12 per square foot. There were two user sales reported this quarter. The most significant purchase was by a local individual who bought a 15,636-square-foot facility at 3830 Ohio Avenue in St. Charles for $73.55 per square foot. AJR Filtration group purchased a 15.1 acre site in the East Kirk Commerce Center from Venture One and has broken ground on a 180,121-square-foot facility at 1200 Equity Drive in St. Charles. The building is scheduled for completion by the end of 2016. Additionally, DS Container which recently took possession of 299,520 square feet at 2500 Enterprise Circle in West Chicago has asked the developer, CenterPoint Properties, to expand the building by 250,575 square feet. Interestingly the last seven construction projects in Fox Valley have been build-to-suit developments. ECONOMIC OUTLOOK Fox Valley vacant supply has numerous options under 50,000 square feet however there are only four blocks of space available above 100,000 square feet and only one of those options can accommodate a user looking for 30 clear facility. RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location City Size Date Price / s.f. Simpson Manufacturing Co CenterPoint Properties 2505 Enterprise Cir West Chicago 174,352 12/1/2015 $73.70 Westwind Properties Ohio Partners, LLC 3820 Ohio Ave Saint Charles 50,000 12/14/15 $67.50 Darwin VentureOne 3705 Stern Ave Saint Charles 20,199 12/23/15 $66.86 Geneva Auto Body Exact Replacement Parts 901 N Raddant Rd Batavia 24,450 10/6/15 $55.21 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Type Location City Size Undisclosed New 2080 Gary Ln Geneva 41,200 Eagle Flexible Packaging New lease 1100-1120 Commerce Dr West Chicago 38,639 Undisclosed New lease 2630 Kaneville Ave Geneva 18,000 Eye Care & Cure Corp New lease 1151 Atlantic Dr West Chicago 12,500 26
Fox Valley Submarket News SUBMARKET CHARACTERISTICS MARKET MAP Velocity tends to lag the overall Chicago industrial market 1 2 High ratio of heavy and advanced manufacturers 3 Limited Class A bulk distribution product when compared to the I- 88 and North DuPage submarkets. 4 Access to large, available and skilled local workforce. SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Under construction completions Warehouse / Distribution 18,049,021 4.8% 8.8% -237,194-237,194 $4.00 180,121 0 Manufacturing 17,446,771 2.7% 2.9% 255,828 255,828 $5.00 0 299,520 General 0 0.0% 0.0% 0 0 $0.00 0 0 industrial 35,495,792 3.7% 5.9% 18,634 18,634 $4.20 180,121 299,520 Flex / R&D 1,589,913 11.7% 16.8% -5,999-5,999 $10.57 0 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. 27
North Kane Submarket News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 30,114,499 direct vacancy 9.2% availability 10.9% net 148,398 net 148,398 Average rental rate (nnn) $4.92 12-month percent change $0.76 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 2,000,000 14% 12% 1,500,000 10% 1,000,000 8% 500,000 6% 4% 0 2% -500,000 0% 2010 2011 2012 2013 2014 2015 1Q16 AVERAGE RENTAL RATE LEASE ACTIVITY Stamar Packaging leased 166,052 square feet at 1600 Fleetwood Drive in Elgin accounting for 50 percent of all first quarter volume which measured 288,575 square feet. Leasing activity was nowhere near the 565,395 square feet leased last quarter. It also compares unfavorably to one year ago where 382,677 square feet was leased. The balance of first quarter transactions fell between 10,000 to 70,000 square feet. RENTS The average asking rental rate for the quarter was $4.92 per square foot net which was significantly lower than the previous quarter mark of $5.39 per square-foot net. In this market rents tend to have big swings due to the shall pool of available properties which are influenced by higher priced manufacturing space that comes on/off the market. SALES AND CONSTRUCTION Just one building was sold this quarter. The Capital Companies, LLC purchased from Exeter a 73,000-square-foot warehouse for $29.08 per square foot. Ironically Capital sold the asset to Exeter several years earlier. Two speculative developments were announced this quarter, Zilber will break ground on 257,313 square feet at 2640-2650 Auto Mall Drive and Hillwood, in partnership with Pancor will construct 159,000 square feet at 1380 Madeline Lane. Both projects are in Elgin. On the build-to-suit side, Opus has two projects underway at Oakview Corporate Park in West Dundee: 133,000 square feet for Renshaw and 23,400 square feet for Oelheld Production. Both projects are scheduled for completion by the end of the year $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 $4.92 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q16 ECONOMIC OUTLOOK Developers have made significant land purchase during the last 18 months which could turn into more speculative construction stay tuned! RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location City Size Date Price / s.f. The Capital Companies Exeter 2555 Decade Ct Elgin 73,000 1/6/2016 $ 29.08 Midwest Industrial Funds Lightolier/Phillips 1600 Fleetwood Dr Elgin 246,052 12/30/2015 $ 16.62 2001 Fox Lane Investors Todd & Libby Ricke 2000 Fox Ln Elgin 138,175 12/17/2015 $ 52.65 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Type Location City Size Stamar Packaging New lease 1600 Fleetwood Dr Elgin 166,052 Promac, Inc. Renewal 1149-1157 Timber Dr Elgin 70,900 Time Definite Services, Inc. Renewal 1360 Madeline Dr Elgin 57,695 Alside New lease 901 Wesemann Dr West Dundee 26,483 28
North Kane Submarket News SUBMARKET CHARACTERISTICS MARKET MAP Product in close proximity to full interchanges along I-90 commands a premium 1 2 Higher proportion of owneroccupiers 3 Legacy of skilled manufacturing workforce 4 Elgin is the 8th largest city in the state SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Under construction completions Warehouse / Distribution 15,250,346 14.1% 17.2% -24,372-24,372 $4.92 572,713 82,922 Manufacturing 14,850,953 4.2% 4.3% 172,770 172,770 $4.90 0 0 General 13,200 0.0% 0.0% 0 0 $0.00 0 0 industrial 30,114,499 9.2% 10.9% 148,398 148,398 $4.92 572,713 82,922 Flex / R&D 3,612,164 5.7% 6.7% 7,752 7,752 $9.82 133,000 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. 29
Southeast Wisconsin Submarket News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 52,533,434 vacancy 4.1% availability 5.8% net 266,936 net 266,936 Average rental rate (nnn) $4.42 12-month dollar change $0.84 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 5,000,000 9% 8% 4,000,000 7% 6% 3,000,000 5% 2,000,000 4% 3% 1,000,000 2% 1% 0 0% 2010 2011 2012 2013 2014 2015 1Q16 AVERAGE RENTAL RATE $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 $4.42 2007 2008 2009 2010 2011 2012 2013 2014 2,015 1Q16 LEASE ACTIVITY Southeast Wisconsin demand fluctuates from quarter to quarter. This quarter just one new lease was signed. S.C. Johnson & Son, Inc. expanded into 137,000 square feet at 9201 Wilmont Road in Pleasant Prairie. The long term corporate resident has several locations in the area. One sizeable renewal was completed this quarter. Kem Krest, a 3PL warehousing for Harley Davidson, extended it s lease of 227,454 square feet at 9801 80 th Avenue in Pleasant Prairie. RENTS Although first quarter vacancies climbed 86 basis points from the previous quarter to 4.19 percent it did not have an adverse affect on Southeast Wisconsin rents. In fact the weighted average asking rents this quarter reached $4.42 per square-foot net, up from the prior quarter mark of $4.24 per square foot net. SALES AND CONSTRUCTION No buildings traded this quarter compared to one sale reported last quarter limited supply is the culprit. There is however one institutional grade offering on the market The SC Johnson distribution center totaling 891,567 square feet at 9800 72 nd Avenue in Pleasant Prairie. Wisconsin has welcomed back speculative construction. There are six projects at various stages of development that will add 1.8 million square feet to Southeast Wisconsin s available supply. The largest facility is a 600,539 square feet being developed by First Industrial Realty Trust at 8448 38 th in Somers. The property is scheduled for completion late summer. Additionally Majestic Realty Company has committed to build a 424,164 square feet on 88 th Avenue in Pleasant Prairie. ECONOMIC OUTLOOK Low vacancy rates are driving more speculative development in Southeast Wisconsin. This has developers seeking land opportunities which in turn has placed upward pressure on land prices RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location City Size Date Price / s.f. Midwest Refrigerated Services CenterPoint Properties 11681 88th Ave Pleasant Prairie 411,415 9/10/15 $55.44 Gourmet Foods International David R Shaw 9629 58th Pl Kenosha 35,216 8/14/15 $74.54 Private Southport Heating & Cooling 6919 51st St Kenosha 26,272 10/30/15 $37.87 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Type Location City Size Kem Krest Harley Davidson 3PL Renewal 9801 80 th Ave Pleasant Prairie 227,454 S.C.Johnson & Son, Inc. New lease 9201 Wilmont Rd Pleasant Prairie 137,000 30
Southeast Wisconsin Submarket News SUBMARKET CHARACTERISTICS MARKET MAP Newer big box industrial ideal for next generation supply chains 1 Comparatively lower land costs. 2 3 Attracting national attention for firms looking to have a presence in Chicago metro area. 4 Pro business-climate aggressive economic development initiatives. SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Under construction completions Warehouse / Distribution 27,314,215 5.3% 7.3% -449,649-449,649 $4.60 356,451 81,900 Manufacturing 25,175,595 2.8% 4.1% 716,585 716,585 $3.23 600,539 629,585 General 43,624 0.0% 0.0% 0 0 $0.00 0 0 industrial 52,533,434 4.1% 5.8% 266,936 266,936 $4.42 956,990 711,485 Flex / R&D 1,630,168 9.2% 13.1% -3,097-3,097 $7.84 0 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document. 31
Northwest Indiana Submarket News First Quarter 2016 KEY MARKET INDICATORS Supply Demand Pricing inventory 30,335,139 vacancy 9.9% availability 10.6% net -22,904 net -22,904 Average rental rate (nnn) $3.51 12-month dollar change $0.31 Arrows represent change from prior quarter NET NEW SUPPLY, NET ABSORPTION, VACANCY s.f. Net new supply Net vacancy 1,600,000 1,400,000 19% 1,200,000 17% 1,000,000 15% 800,000 13% 600,000 11% 400,000 200,000 9% 0 7% -200,000 5% 2010 2011 2012 2013 2014 2015 1Q16 AVERAGE RENTAL RATE $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 $3.51 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q16 LEASE ACTIVITY Availability of modern industrial spaces with adequate distribution amenities is essentially limited to three areas of the submarket, including a recently completed 75,086 square-foot unit at NorthWind Crossings in Hobart, Indiana. Two larger spaces, 341,249 square feet and 91,000 square feet remain vacant in Ameriplex at the Port in Portage, Indiana. In Munster, Indiana, 150,000 square feet is available at the Calumet Business Center, a recentlyrenovated former mattress manufacturing plant. As the business climate in Indiana continues to outrank Illinois, lease renewal activity remains brisk as more tenants choose to remain in their existing spaces. RENTS The vacancy rate across Porter and Lake Counties is just under 10 percent. The Northwest Indiana market has tightened considerably with limited availability in the modern business parks with high ceilings, ESFR sprinklers and ample loading capacity. Current rental rates stand at $3.51 per square foot which represents a $0.31 cent increase year over year. SALES AND CONSTRUCTION In the Ameriplex Business Park a 115,815 square-foot truck terminal at 6410 Ameriplex Drive traded to Broadstone for $15.65 million at a 6.65 cap rate. Becknell Industrial is nearing completion of construction on their 159,813 square foot speculative building at 6451 NorthWind Parkway in Hobart, Indiana, expecting an on-time delivery on April 1, 2016 for an anchor tenant. In Ameriplex at the Port in Portage, Indiana, MonoSol, a manufacturer of detergent pods is preparing to commence operations in a recently completed 300,000sf manufacturing facility. ECONOMIC OUTLOOK The Northwest Indiana Submarket will remain a pertinent player in the Chicago Metro Market. Available incentives, especially those offered to companies relocating from Illinois combined with the close proximity to Illinois and especially Chicago add to the long list of benefits associated with operating in the submarket. Potential hurdles in the economic outlook in this submarket include limited supply of adequate development land. RECENT SALES COMPARABLES (sorted by square feet) Buyer Seller Location City Size Date Price / VentureOne/DRA Advisors TCB Development 6515 Ameriplex Dr Portage 574,249 12/7/15 $32.00 Broadstone Net Lease Private individual 6410 Ameriplex Dr Portage 115,815 3/30/16 $135.00 596 E Ridge Rd Private 596 E Ridge Rd Griffith 14,538 11/28/15 $29.20 TradeWinds Services Certified Safety 3201 E 83rd Pl Merrillville 11,000 12/30/15 $43.64 RECENT LEASE COMPARABLES (sorted by square feet) Tenant Type Location City Size CalPipe New lease 6451 Northwind Parkway Hobart 84,415 Team Industrial Services Build to suit 7920 Maryland Ave Hammond 38,121 Americall Group Renewal 1901-1951 Northwind Pky Hobart 35,000 32
33 Northwest Indiana Submarket News SUBMARKET CHARACTERISTICS MARKET MAP 1 More measured in its lease velocity compared to other Chicago area submarkets 2 Heaviest, traditional industrial users north of I-90 Limited Class A warehouse/distribution and flex/ R&D product due to the market being traditional heavy industrial. 3 4 Access to dense workforce SUBMARKET STATISTICS Property type inventory vacancy availability Q1 total net total net (s.f) Average direct asking rent ($ p.s.f.) Completions Under construction Warehouse / Distribution 9,385,171 13.0% 13.7% -37,904-37,904 $3.83 0 459,813 Manufacturing 20,949,968 8.5% 9.3% 15,000 15,000 $3.35 0 38,121 General 0 0.0% 0.0% 0 0 $0.00 0 0 industrial 30,335,139 9.9% 10.6% -22,904-22,904 $3.51 0 497,934 Flex / R&D 2,780,385 4.3% 13.2% 5,000 5,000 $7.33 0 0 2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document.
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Development Report First Quarter 2016 This report analyzes all industrial developments under construction & new deliveries > 30,000 s.f. New deliveries 3,222,927 delivered Completions in-depth leased at delivery 51.5% speculative at delivery 1,554,562 BTS at delivery 1,668,365 Owner-User at delivery 608,677 20,000,000 15,000,000 10,000,000 5,000,000 0 2010 2011 2012 2013 2014 2015 2016 # of properties delivered 16 Historical deliveries Top 5 projects delivered to date Building Submarket Owner/developer RBA Spec or BTS Delivery date Leased at delivery 10 Falcon Court Northwest Cook County The Opus Group 423,672 Speculative Q1 2016 0% Enterprise business park Southeast Wisconsin Ashley Capital 375,908 Speculative Q1 2016 0% Dupage Business Center Fox Valley CenterPoint Properties 299,520 BTS q1 2016 100% 355 Corporate Center I-55 Corridor Panattoni/Pacific Coast Capital Partners 228,690 Speculative Q1 2016 0% Molto Normantown I-55 Corridor Molto Properties 226,090 Speculative Q1 2016 0% Under construction 16,887,442* Under construction including sitework Under construction in-depth pre-leased 42.4% speculative under construction 9,919,237 BTS under construction 6,968,205 Owner-user under construction n/a # of properties UC 58 Top 5 projects currently under construction 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 BTS Speculative 2016 2017 Building Submarket Owner/developer RBA Spec or BTS Delivery date Pre-leased Mars/Wrigley I-80 Corridor CenterPoint Properties 1,388,200 BTS q1 2017 100% Saddle Creek I-80 Corridor CenterPoint Propertiee 1,114,575 BTS q2 2016 100% 3M BTS I-39 Corridor Venture One Real Estate/Clayco 978,120 BTS Q3 2016 100% Hillwood Spec I-80 Corridor Hillwood 746,772 Speculative Q2 2016 0% BridgePoint North Lake County Bridge/Wanxiang 626,848 Speculative Q2 2016 0% 35
Market Statistics First Quarter 2016 Inventory Quarterly total net total net total net (% of stock) vacancy availability Average total asking rent ($ p.s.f.) Quarterly completions completions Under construction Lake County Warehouse / Distribution 35,299,101 290,374 290,374 0.8% 11.3% 14.4% $5.47 70,000 70,000 661,923 Manufacturing 31,234,667-160,633-160,633-0.5% 6.5% 7.5% $5.99 0 0 626,848 General 53,112 0 0 0.0% 0.0% 0.0% $0.00 0 0 20,000 industrial 66,586,880 129,741 129,741 0.2% 9.0% 11.2% $5.62 70,000 70,000 1,308,771 Flex / R&D 6,512,029 133,010 133,010 2.0% 11.2% 17.8% $9.69 0 0 0 North Cook County Warehouse / Distribution 15,492,706 131,598 131,598 0.8% 6.9% 7.9% $5.52 217,280 217,280 0 Manufacturing 32,750,865 183,530 183,530 0.6% 5.0% 6.9% $5.60 0 0 0 General 73,274 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 48,316,845 315,128 315,128 0.7% 5.6% 7.2% $5.56 217,280 217,280 0 Flex / R&D 6,205,859-23,949-23,949-0.4% 10.7% 12.7% $6.64 0 0 0 Northwest Cook County Warehouse / Distribution 13,244,377-48,751-48,751-0.4% 10.7% 11.1% $5.02 423,672 423,672 0 Manufacturing 13,134,247-64,489-64,489-0.5% 10.5% 10.8% $4.64 0 0 0 General 80,592 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 26,459,216-113,240-113,240-0.4% 10.6% 10.9% $4.82 423,672 423,672 0 Flex / R&D 8,147,846 20,514 20,514 0.3% 20.4% 25.0% $10.07 0 0 0 O'Hare Warehouse / Distribution 55,703,656 903,626 903,626 1.6% 4.9% 8.0% $5.76 0 0 440,000 Manufacturing 37,863,339-237,905-237,905-0.6% 5.9% 7.2% $5.91 0 0 0 General 29,015 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 93,596,010 665,721 665,721 0.7% 5.3% 7.6% $5.81 0 0 440,000 Flex / R&D 7,262,424 237,371 237,371 3.3% 9.7% 11.3% - 0 0 0 West Cook County Warehouse / Distribution 42,848,916-66,676-66,676-0.2% 13.6% 15.6% $5.37 0 0 182,923 Manufacturing 50,740,174 119,745 119,745 0.2% 6.0% 7.2% $4.78 0 0 0 General 24,600 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 93,613,690 53,069 53,069 0.1% 9.4% 11.0% $5.29 0 0 182,923 Flex / R&D 2,451,283 7,644 7,644 0.3% 2.9% 2.9% $15.00 0 0 0 North Chicago Warehouse / Distribution 18,701,998-68,650-68,650-0.4% 3.9% 6.1% $10.71 0 0 0 Manufacturing 41,119,098-92,181-92,181-0.2% 7.0% 8.5% $7.62 0 0 0 General 25,000 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 59,846,096-160,831-160,831-0.3% 6.0% 7.8% $8.67 0 0 0 Flex / R&D 5,237,009 12,904 12,904 0.2% 10.7% 13.3% $14.83 0 0 0 South Chicago Warehouse / Distribution 34,586,993 108,555 108,555 0.3% 7.1% 7.9% $6.46 219,858 219,858 237,298 Manufacturing 61,144,678-147,581-147,581-0.2% 7.0% 8.0% $5.79 0 0 0 General 103,790 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 95,835,461-39,026-39,026 0.0% 7.1% 7.9% $6.02 219,858 219,858 237,298 Flex / R&D 4,913,685-6,087-6,087-0.1% 11.6% 13.2% $8.98 0 0 0 South Suburbs Warehouse / Distribution 40,186,428-256,148-256,148-0.6% 8.5% 9.3% $4.17 0 0 33,000 Manufacturing 43,281,506-113,774-113,774-0.3% 7.0% 8.1% $5.66 0 0 0 General 1,167,630 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 84,635,564-369,922-369,922-0.4% 7.6% 8.6% $4.72 0 0 33,000 Flex / R&D 2,416,752-6,453-6,453-0.3% 12.2% 14.4% $6.87 0 0 0 I-57 Corridor Warehouse / Distribution 20,667,475 99,188 99,188 0.5% 8.3% 8.5% $3.70 0 0 0 Manufacturing 9,454,414 2,447 2,447 0.0% 3.4% 3.4% $7.00 0 0 80,000 General 275,905 0 0 0.0% 65.6% 65.6% $0.00 0 0 105,000 industrial 30,397,794 101,635 101,635 0.3% 7.3% 7.5% $3.74 0 0 185,000 Flex / R&D 408,336-6,600-6,600-1.6% 11.2% 14.9% $9.78 0 0 0 I-80 Corridor Warehouse / Distribution 56,365,453 1,249,157 1,249,157 2.2% 6.9% 8.8% $3.94 339,934 339,934 4,522,780 Manufacturing 15,821,275-18,667-18,667-0.1% 6.0% 6.0% $6.59 0 0 438,150 General 135,070 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 72,321,798 1,230,490 1,230,490 1.7% 6.7% 8.2% $4.26 339,934 339,934 4,960,930 Flex / R&D 842,381-3,880-3,880-0.5% 8.5% 12.6% $9.19 0 0 0 I-55 Corridor Warehouse / Distribution 68,342,428 724,320 724,320 1.1% 6.3% 10.4% $4.89 414,256 414,256 1,323,021 Manufacturing 12,277,888 172,792 172,792 1.4% 4.5% 8.0% $6.08 0 0 0 General 54,200 0 0 0.0% 26.2% 26.2% $0.00 0 0 0 industrial 80,674,516 897,112 897,112 1.1% 6.1% 10.0% $5.02 414,256 414,256 1,323,021 Flex / R&D 2,824,253 10,109 10,109 0.4% 6.8% 7.5% $12.05 0 0 0 36
Market Statistics First Quarter 2016 Inventory Quarterly total net total net total net (% of stock) vacancy availability Average total asking rent ($ p.s.f.) Quarterly completions completions Under construction I-88 Corridor Warehouse / Distribution 35,995,826 11,243 11,243 0.0% 6.0% 8.1% $4.48 145,000 145,000 2,594,271 Manufacturing 22,651,181 124,768 124,768 0.6% 4.4% 5.8% $4.63 0 0 0 General 124,340 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 58,771,347 136,011 136,011 0.2% 5.3% 7.2% $4.50 145,000 145,000 2,594,271 Flex / R&D 3,075,402-11,789-11,789-0.4% 8.7% 13.4% $9.95 0 0 0 North DuPage County Warehouse / Distribution 46,154,822 198,090 198,090 0.4% 4.5% 8.3% $5.02 89,000 89,000 414,192 Manufacturing 33,285,673 12,843 12,843 0.0% 4.1% 7.1% $6.05 0 0 15,072 General 12,690 0 0 0.0% 0.0% 0.0% $0.00 0 0 186,680 industrial 79,453,185 210,933 210,933 0.3% 4.4% 7.8% $5.24 89,000 89,000 615,944 Flex / R&D 3,887,774 51,751 51,751 1.3% 7.7% 11.9% $11.21 0 0 0 Fox Valley Warehouse / Distribution 18,049,021-237,194-237,194-1.3% 4.8% 8.8% $4.00 0 0 180,121 Manufacturing 17,446,771 255,828 255,828 1.5% 2.7% 2.9% $5.00 299,520 299,520 0 General 0 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 35,495,792 18,634 18,634 0.1% 3.7% 5.9% $4.20 299,520 299,520 180,121 Flex / R&D 1,589,913-5,999-5,999-0.4% 11.7% 16.8% $10.57 0 0 0 North Kane County Warehouse / Distribution 15,250,346-24,372-24,372-0.2% 14.1% 17.2% $4.92 82,922 82,922 572,713 Manufacturing 14,850,953 172,770 172,770 1.2% 4.2% 4.3% $4.90 0 0 0 General 13,200 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 30,114,499 148,398 148,398 0.5% 9.2% 10.9% $4.92 82,922 82,922 572,713 Flex / R&D 3,612,164 7,752 7,752 0.2% 5.7% 6.7% $9.82 0 0 133,000 McHenry County Warehouse / Distribution 10,630,867-67,604-67,604-0.6% 2.3% 4.1% $4.63 0 0 0 Manufacturing 18,858,696 222,406 222,406 1.2% 18.8% 19.2% $3.59 0 0 0 General 0 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 29,489,563 154,802 154,802 0.5% 12.8% 13.7% $3.72 0 0 0 Flex / R&D 2,134,151-8,470-8,470-0.4% 4.3% 6.4% $10.95 0 0 0 Rockford Warehouse / Distribution 10,320,576 58,616 58,616 0.6% 8.3% 9.2% $3.07 0 0 0 Manufacturing 13,617,911-15,402-15,402-0.1% 11.8% 11.9% $3.33 0 0 0 General 0 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 23,938,487 43,214 43,214 0.2% 10.3% 10.7% $3.26 0 0 0 Flex / R&D 1,262,609 0 0 0.0% 3.1% 6.1% $13.06 0 0 0 I-39 Corridor Warehouse / Distribution 13,716,499-22,600-22,600-0.2% 5.9% 8.1% $3.90 0 0 978,120 Manufacturing 18,166,489 224,870 224,870 1.2% 5.1% 7.2% $3.01 210,000 210,000 0 General 34,450 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 31,917,438 202,270 202,270 0.6% 5.4% 7.6% $3.21 210,000 210,000 978,120 Flex / R&D N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Northwest Indiana Warehouse / Distribution 9,385,171-37,904-37,904-0.4% 13.0% 13.7% $3.83 0 0 459,813 Manufacturing 20,949,968 15,000 15,000 0.1% 8.5% 9.3% $3.35 0 0 38,121 General 0 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 30,335,139-22,904-22,904-0.1% 9.9% 10.6% $3.51 0 0 497,934 Flex / R&D 2,780,385 5,000 5,000 0.2% 4.3% 13.2% $7.33 0 0 0 Southeast Wisconsin Warehouse / Distribution 27,314,215-449,649-449,649-1.6% 5.3% 7.3% $4.60 81,900 81,900 356,451 Manufacturing 25,175,595 716,585 716,585 2.8% 2.8% 4.1% $3.23 629,585 629,585 600,539 General 43,624 0 0 0.0% 0.0% 0.0% $0.00 0 0 0 industrial 52,533,434 266,936 266,936 0.5% 4.1% 5.8% $4.42 711,485 711,485 956,990 Flex / R&D 1,630,168-3,097-3,097-0.2% 9.2% 13.1% $7.84 0 0 0 Overall Market Warehouse & Distribution 588,256,874 2,495,219 2,495,219 0.4% 7.4% 9.7% $4.85 2,083,822 2,083,822 12,956,626 Manufacturing 533,825,388 1,372,952 1,372,952 0.3% 6.4% 7.7% $4.67 1,139,105 1,139,105 1,798,730 General 2,250,492 0 0 0.0% 8.7% 8.7% $0.00 0 0 311,680 s 1,124,332,754 3,868,171 3,868,171 0.3% 6.9% 8.7% $4.79 3,222,927 3,222,927 15,067,036 Flex / R&D 67,194,423 409,731 409,731 0.6% 10.3% 13.6% $10.79 0 0 133,000 37
About JLL JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $5.2 billion and gross revenue of $6.0 billion, JLL has more than 230 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment Management, has $56.4 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com. JLL Research JLL's research team delivers intelligence, analysis, and insight through market leading reports and services that illuminate today's commercial real esatate dynamics and identify tomorrow's challenges and opportunities. Our 300 professional researchers track and analyze economic and property trends and forecast future conditions in over 60 countrieds, producing unrivalled local and global perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advanatage for our clients and drives successful strategies and optimal real estate decisions. Christian Beaudoin christian.beaudoin@am.jll.com +1 312 228 2020 Geroge Cutro george.cutro@am.jll.com +1 773 458 1433 Chad Buch chad.buch@am.jll.com +1 773 458 1405 Paul Marsh paul.marsh@am.jll.com +1 773 458 4108 Copyright (c) Jones Lang LaSalle IP, Inc. 2016. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle IP, Inc. Jones Lang LaSalle Brokerage, Inc., California license # 01856260. Jones Lang LaSalle Americas, Inc., California license # 01223413