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FOURTH QUARTER

2 012 CHICAGO SUBMARKET SNAPSHOTS

TABLE OF CONTENTS SECTION ONE

CHICAGO CENTRAL BUSINESS DISTRICT CBD SUBMARKET SNAPSHOTS 01 Central Business District Map 02 Central Loop 03 East Loop 04 North Michigan Avenue 05 River North 06 South Loop 07 West Loop

SECTION TWO

SUBURBAN CHICAGO

08 09 10 11 12

SUBURBAN SUBMARKET SNAPSHOTS Suburban Map East-West North Northwest O’Hare

SE CT ION T H RE E

ABOUT MB REAL ESTATE 13 Company Overview

T h e C h ic a g o M a r ke t O v e r v i e w i s p ubl i s h e d q u a r t e r l y by M B R e a l E s ta te. To o b t a in ad d i ti o n a l co pi e s o r fo r fur the r in f or ma ti o n , p l e a s e c o nta c t:

JAC K GAV IN Senior Research Coordinator or

SC OT T M AS ON Research Coordinator 1 8 1 We st M a d i s o n S tre e t, S ui te 4 7 0 0 Ch ic a go, I l l i no i s 6 0 6 0 2 (312) 726-1700 w w w. m b r e s . c o m


CENTRAL BUSINESS DISTRICT

CENTRAL BUSINESS DISTRICT MAP

SUBMARKET SNAPSHOTS FOURTH QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS

1


Direct and sublease space post strong vacancy declines

The Central Loop outperformed all other submarkets in terms of net absorption and reduction in direct vacancy during the fourth quarter. Comprising 28 percent of the total CBD inventory, the Central Loop accounted for over 59 percent (148,000 square feet) of the market’s net absorption. This led direct vacancy to fall 40 basis points to 13.2 percent. The Central Loop saw sublease vacancy decrease 100,000 square feet to 919,000 square feet. This was largely due to Capital One Financial Corp. subleasing 65,000 square feet from United Airlines at 77 West Wacker. Despite this, the Central Loop has the second highest percentage of sublease vacancy in the CBD at 2.6 percent of inventory and United Airlines continues to market a 175,000 square foot block.

LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address

Size (sf)

Building Class B

222 N LaSalle St *

199,132

200 N LaSalle St

164,586

B

11 S LaSalle St

146,313

C

10 S Dearborn St *

139,165

A

1 N Dearborn St

97,261

B

120 S LaSalle St

94,995

B

175 W Jackson Blvd

68,539

B

175 W Jackson Blvd *

67,794

B

175 W Jackson Blvd

67,725

B

No buildings traded, but two properties went under contract in the fourth quarter. After Harbor Group International brought 111 West Washington to the market last quarter, the Shidler Group is moving forward to buy the Class C property for $79.5 million. Berkley Properties is now under contract with Gramercy Capital to purchase the Class B, 231 South LaSalle for a reported $97 million. The Central Loop’s boundaries are the Chicago River (North), Wells Street (West), State Street (East), and Van Buren Street (South).

CENTRAL LOOP SUMMARY

A

B

C

Total

13,573,287

14,242,003

8,628,797

36,444,087

94,785

(36,526)

105,661

325,211

Direct Vacancy Rate

9.0%

15.8%

15.7%

13.2%

Total Vacancy Rate (Direct + Sublease)

13.0%

18.1%

16.2%

15.8%

Inventory (square feet) Year to Date Absorption (square feet)

SUBMARKET SNAPSHOTS

77 W Wacker Dr 67,342 A Grant Thornton signed a new lease for 137,000 square feet and naming rights at 161 North Clark. The professional services firm will relocate * Indicates future available space from 175 West Jackson in what was the second largest transaction Italicized addresses indicate new blocks this quarter during the quarter. Greenberg Traurig renewed 112,000 square feet at 77 West Wacker and Heartland Alliance consolidated multiple suites at 208 South LaSalle into 37,000 square feet of contiguous space.

CENTRAL BUSINESS DISTRICT

CENTRAL LOOP

Numbers in parentheses are negative

CENTRAL LOOP SUBMARKET HISTORICAL DIRECT VACANCY

FOURTH QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS

2


Occupancy levels slowly rise

The East Loop experienced improvements in occupancy for Class A and C buildings. Their combined 49,000 square feet in positive quarterly absorption overshadowed slight quarterly negative absorption in Class B buildings. The East Loop’s direct vacancy rate continues to drop falling to 19.7 percent. However it is still well above the overall market with nearly a quarter of Class B space available for direct lease.

LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address

Building Class

200 E Randolph St

306,091

A

130 E Randolph St *

256,720

B

303 E Wacker Dr

182,782

B

130 E Randolph St *

155,829

B

130 E Randolph St

128,948

B

333 S Wabash Ave

112,000

B

401 S State St

110,898

C

303 E Wacker Dr

91,679

B

33 S State St

70,107

C

111 E Wacker Dr

67,216

B

* Indicates future available space

Contiguous blocks of at least 100,000 square feet decreased from eight to seven, but still constitute the highest concentration of blocks of this size in the CBD. No buildings were sold in the fourth quarter, but Michael Silberberg and Mark Karasick agreed to invest $100 million into the twobuilding Prudential Plaza (130 East Randolph and 180 North Stetson) in exchange for a controlling interest in the property. Current owner BentleyForbes had been seeking to recapitalize the building as it faced $470 million in maturing debt and a 21% occupancy loss over the next two years due to Baker McKenzie and Integrys vacating a combined 469,000 square feet. The East Loop is bordered by the Chicago River (North), State Street (West), Lake Shore Drive (East), and Van Buren Street (South). It is inhabited mostly by advertising and media firms and corporate tenants.

EAST LOOP SUMMARY

A

B

C

Total

4,044,233

10,537,769

8,370,899

22,952,901

119,587

55,356

(124,914)

50,029

Direct Vacancy Rate

17.8%

24.7%

14.2%

19.7%

Total Vacancy Rate (Direct + Sublease)

21.4%

26.1%

14.8%

21.2%

Inventory (square feet) Year to Date Absorption (square feet)

SUBMARKET SNAPSHOTS

After subleasing 396,000 square feet in its namesake building, AON signed a new direct deal at 200 East Randolph (AON Center), representing the market’s largest lease transaction of the quarter. Standard Parking signed a new lease at 200 East Randolph and will occupy 41,000 square feet. Other large transactions include Maximus signing a lease for 70,000 square feet at 303 East Wacker and Sears Online expanding by 27,000 square feet at 1 North State.

Size (sf)

CENTRAL BUSINESS DISTRICT

EAST LOOP

Numbers in parentheses are negative

EAST LOOP SUBMARKET HISTORICAL DIRECT VACANCY

FOURTH QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS

3


Large blocks of vacancy remain despite uptick in quarterly absorption

The North Michigan Avenue submarket experienced its second straight quarter of positive absorption after a steady two year decline in occupancy. Yet the 35,000 square foot quarterly occupancy increase coupled with a 60,000 square foot increase in the third quarter was not enough to achieve positive net absorption for the year. Total sublease vacancy increased just over 10,000 square feet in a relatively quiet fourth quarter for the North Michigan Avenue submarket. Large activity was once again muted as no new lease transactions over 20,000 square feet were signed in the fourth quarter. The submarket has lagged other submarkets in attracting new, large tenants to fill several sizable vacant spaces.

Size (sf)

515 N State St *

350,906

A

435-445 N Michigan Ave *

317,706

C

101 E Erie St *

217,569

A

410 N Michigan Ave *

214,849

B

401-465 E Illinois St

210,000

C

401 N Michigan Ave *

104,990

B

89,854

A

360 N Michigan Ave

76,855

C

740 N Rush St

71,501

C

444 N Michigan Ave *

67,575

B

455 N Cityfront Plaza Dr

Building Class

* Indicates future available space ** Indicates space available in current quarter Italicized addresses indicate new blocks this quarter

The North Michigan Avenue submarket is home to retailers, hotels, restaurants, entertainment venues, advertising and marketing agencies, and the large Northwestern Memorial Hospital campus. Its borders include Division Street (North), State Street (West), Lake Michigan (East), and the Chicago River (South).

NORTH MICHIGAN AVENUE SUMMARY

A

B

C

Total

3,949,554

4,704,471

4,316,814

12,970,840

128,641

71,533

(348,556)

(148,382)

Direct Vacancy Rate

17.8%

23.3%

19.8%

20.5%

Total Vacancy Rate (Direct + Sublease)

20.7%

24.1%

21.0%

22.0%

Inventory (square feet) Year to Date Absorption (square feet)

SUBMARKET SNAPSHOTS

With six contiguous blocks of at least 100,000 square feet, the North Michigan Avenue submarket has numerous availabilities for large users. The two largest contiguous blocks are 351,000 square feet at 515 North State and 318,000 square feet at Tribune Tower (435-445 North Michigan).

LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address

CENTRAL BUSINESS DISTRICT

NORTH MICHIGAN AVENUE

Numbers in parentheses are negative

NORTH MICHIGAN AVENUE SUBMARKET HISTORICAL DIRECT VACANCY

FOURTH QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS

4


Direct availability continues to fall, but sublease vacancy skyrockets

River North continues to have the lowest direct vacancy rate in the CBD and experienced positive quarterly absorption of 26,000 square feet. Class C performance lagged as it was the only class to have negative absorption. However, total vacancy in River North jumped 1.3 percent to 14.3 percent as sublease vacancy increased by almost 200,000 square feet. While having no contiguous direct blocks over 100,000 square feet, the River North submarket has three of the largest blocks of contiguous sublease space in the CBD. AT&T, Level 3 Communications and, most recently, Career Education Corporation are all marketing their respective spaces at 350 West Mart, 600 West Chicago and 222 Merchandise Mart.

LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address

Size (sf)

Building Class B

350 W Mart Ctr *

87,404

350 W Mart Ctr

87,393

B

222 Merchandise Mart Plz

68,829

B

350 W Mart Ctr

64,661

B

321 N Clark St

61,431

A

* Indicates future available space

There has been little investment activity since the second quarter, but two properties are being marketed. KBS REIT 2 is selling up to a 49 percent stake in the trophy tower at 300 North LaSalle, which could fetch upwards of $600 per square foot, and Joseph Lagoa has reduced the asking price for the loft building at 540 North LaSalle to $8.5 million. The borders of the River North submarket are defined as Division Street (North), Racine Avenue (West), State Street (East), Fulton Street, and the Chicago River (South). It has historically been home to small, older buildings catering to art galleries, furniture studios, and small businesses but has seen new development, which has brought law firms and financial institutions to the submarket.

A

B

C

Total

3,995,586

3,708,444

5,568,184

13,272,214

171,194

169,672

(22,129)

318,737

Direct Vacancy Rate

11.2%

5.8%

9.8%

9.1%

Total Vacancy Rate (Direct + Sublease)

12.4%

17.3%

13.6%

14.3%

Inventory (square feet) Year to Date Absorption (square feet)

SUBMARKET SNAPSHOTS

Fiserv renewed its lease of 50,000 square feet at 350 North Orleans, reinforcing River North’s stature as the technology hub of the Midwest. Insurance brokerage Hub International subleased 25,000 square feet at 300 North LaSalle.

RIVER NORTH SUMMARY

CENTRAL BUSINESS DISTRICT

RIVER NORTH

Numbers in parentheses are negative

RIVER NORTH SUBMARKET HISTORICAL DIRECT VACANCY

FOURTH QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS

5


Woes continue for the CBD’s smallest submarket

Comprised of just over 2.2 million square feet, the South Loop is the smallest submarket and is subject to large swings in vacancy rates. Several trading and financial firms that have historically occupied space in the South Loop have been reducing space requirements or relocating to other submarkets across the CBD. This has caused direct vacancy in the South Loop to increase over 100 basis points to 27.3 percent, by far the highest rate in the CBD.

LARGEST BLOCK OF DIRECT AVAILABILITY Building Address

Size (sf)

Building Class

440 S LaSalle St *

159,539

A

619 S LaSalle St

89,000

C

440 S LaSalle St *

67,322

A

440 S LaSalle St *

53,143

A

440 South LaSalle (One Financial Place), South Loop’s only Class A building, continues to struggle with the loss of MF Global in the second quarter. The building is marketing three contiguous blocks ranging from 53,000 to 163,000 square feet. Recent leasing activity and subsequent move-ins next quarter are expected to help lower the building’s roughly 30 percent direct vacancy rate.

* Indicates future available space

The boundaries of the South Loop include Van Buren Street (North), I-90/I-94 (West), Lakeshore Drive (East), and 16th Street (South). The South Loop is populated primarily with education, small businesses, and converted residential properties.

A

C

Total

1,019,325

1,166,135

2,185,460

(92,006)

(67,287)

(159,293)

Direct Vacancy Rate

29.7%

25.2%

27.3%

Total Vacancy Rate (Direct + Sublease)

30.8%

25.4%

27.9%

Inventory (square feet) Year to Date Absorption (square feet)

SUBMARKET SNAPSHOTS

The South Loop, while farther from the major commuter train stations than the West Loop and Central Loop, has direct access to the CTA trains. It is also closest to the residential area of the South Loop, an up and coming location for young professionals. Yet with only one Class A and no Class B buildings and tenants looking to upgrade their office space to take advantage of attractive rents, it will likely trail the recovery because of its limited options.

SOUTH LOOP SUMMARY

CENTRAL BUSINESS DISTRICT

SOUTH LOOP

Numbers in parentheses are negative

SOUTH LOOP SUBMARKET HISTORICAL DIRECT VACANCY

FOURTH QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS

6


Demand for Class A returns as occupancy improves in CBD’s largest submarket

Buoyed by a return of positive absorption in Class A buildings, the West Loop saw direct vacancy drop 30 basis points to its lowest level in over three years. Its proximity to major transportation and its inventory of some of the newest buildings in the CBD has made the West Loop the premier submarket in Chicago. With 133,000 square feet of net positive absorption, only the Central Loop outperformed the CBD’s largest submarket.

Size (sf)

Building Class

500 W Monroe St

338,131

A

233 S Wacker Dr

285,910

A

311 W Monroe St

214,490

C

300 S Riverside Plz *

198,302

B

540 W Madison St *

166,522

A

233 S Wacker Dr *

125,553

A

227 W Monroe St *

117,053

A

91,807

A

233 S Wacker Dr 30 S Wacker Dr

85,831

A

540 W Madison St

84,031

A

* Indicates future available space Italicized addresses indicate new blocks this quarter Even so, Class B is the only class to see net positive absorption during 2012, with a yearly occupancy increase of roughly 300,000 square feet. Class A and C posted slightly negative net absorption during the past year despite positive fourth quarters.

Investment activity in the West Loop continued to be robust in the fourth quarter as Harbor Group International finalized their acquisition of 1 South Wacker for $221 million. The American Recovery Property Trust partnered with Northwood Investors to acquire and recapitalize 525 West Van Buren for $95 million. In addition, two buildings were put on the market in the fourth quarter. JP Morgan Chase is marketing 225 West Wacker for $175 million and Kuchner Companies is seeking $275 million for 225 West Randolph. The West Loop’s borders are defined as the Chicago River (North), I-94/I-90 (West), Wells Street (East), and Van Buren Street (South).

WEST LOOP SUMMARY

A

B

C

Total

27,129,650

9,739,144

6,350,345

43,219,139

(26,220)

302,265

(28,277)

247,768

Direct Vacancy Rate

14.5%

10.8%

15.8%

13.9%

Total Vacancy Rate (Direct + Sublease)

17.6%

12.3%

17.2%

16.3%

Inventory (square feet) Year to Date Absorption (square feet)

SUBMARKET SNAPSHOTS

Class A buildings rebounded from a disappointing third quarter, posting 120,000 square feet in positive absorption. Much of this absorption came from 233 South Wacker (Willis Tower), as its occupancy increased by over 60,000 square feet. Two of the largest transactions in the West Loop include Presence Health signing a 44,000 square foot lease at 200 South Wacker and Zones signing a 29,000 square foot lease (includes 19,000 square feet of sublease space) at Willis Tower.

LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address

CENTRAL BUSINESS DISTRICT

WEST LOOP

Numbers in parentheses are negative

WEST LOOP SUBMARKET HISTORICAL DIRECT VACANCY

FOURTH QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS

7


SUBURBAN CHICAGO

SUBURBAN MAP

SUBMARKET SNAPSHOTS FOURTH QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS

8


Widespread move-outs and space reductions in Class A lead to net negative absorption

Class B buildings in the East-West submarket experienced strong demand in the fourth quarter. But Class A buildings had the worst quarter of any segment throughout the market, experiencing negative absorption of 300,000 square feet. This offset the 250,000 square feet of net positive absorption seen in Class B and C buildings. As a whole, the East-West submarket was the worst performing submarket for the second straight quarter and will end 2012 with net negative absorption of 370,000 square feet.

City

Size (sf)

Building Class

700 Oakmont Ln

Westmont

256,767

A

3075 Highland Pky *

Downers Grove

241,519

A

2400 Cabot Dr

Lisle

217,718

A

28100 Torch Pky

Warrenville

79,830

A

500 Joliet Rd

Willowbrook

78,400

B

2000 S Finley Rd

Lombard

78,300

B

2655 Warrenville Rd

Downers Grove

76,691

A

2245 Sequoia Dr *

Aurora

76,126

A

4343 Commerce Ct *

Lisle

74,855

A

333 E Butterfield Rd

Lombard

70,897

B

* Indicates future available space

Asking rental rates continue to drop, down another 2.7 percent on a year-over-year basis, as landlords compete for tenants facing a large supply of blocks greater than 50,000 square feet of vacant space. The East-West submarket has 27 such blocks of direct vacant space and another seven of sublease availability. Three of the four largest blocks of direct vacant space in the Suburban market are in the East-West submarket. In addition to the direct space, Navistar is marketing 250,000 square feet of their space for sublease at 4201 Winfield Road in Warrenville. A joint venture of Investcorp International and Golub & Co. purchased the 11 property Oak Creek Center (2050-2080 Finley Road) in Lombard from KBS Realty Advisors for $92 per square foot. Arthur Goldner & Associates purchased 40 Shuman Boulevard in Naperville from KBS Real Estate Investment Trust for $80 per square foot. Both properties are approximately 87 percent leased.

SUBMARKET SNAPSHOTS

Widespread move-outs and downsizing occurred in Class A buildings. Two of the largest tenants to eliminate space were Crowe Horwath giving back 56,000 square feet at 1 Mid America Plaza in Oakbrook Terrace and Unilever giving back 23,000 square feet at 2200 Cabot Drive in Lisle.

LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address

SUBURBAN CHICAGO

EAST-WEST

The East-West submarket encompasses Cook, DuPage, Kane, Kendall, and Will Counties, with major cities including Downers Grove, Lisle, Naperville, and Oak Brook.

EAST-WEST SUMMARY

A

B

C

Total

20,627,288

14,510,194

5,180,619

40,318,101

(457,450)

92,876

(5,912)

(370,486)

Direct Vacancy Rate

21.1%

23.0%

25.7%

22.4%

Total Vacancy Rate (Direct + Sublease)

23.7%

27.8%

21.8%

24.9%

Inventory (square feet) Year to Date Absorption (square feet)

Numbers in parentheses are negative

EAST-WEST SUBMARKET HISTORICAL DIRECT VACANCY

FOURTH QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS

9


Class B leads rebound after dismal third quarter

The North submarket’s direct vacancy rate remained at 20.7 percent as an increase in Class A vacancy was offset by a decrease in Class B vacancy. Despite having the lowest direct vacancy rate in the Suburban market, landlords continue to cut asking rental rates, which are down 2.7 percent over last year.

LARGEST BLOCKS OF DIRECT AVAILABILITY City

Size (sf)

Building Class

1 Overlook Pt

Lincolnshire

117,798

A

2355 Waukegan Rd

Bannockburn

106,495

A

544 Lakeview Pky

Vernon Hills

84,237

B

75 Tri State International **

Lincolnshire

79,449

A

2-4-6 Genesee St

Waukegan

75,996

C

333 Knightsbridge Pky

Lincolnshire

74,728

A

2100 Sanders Rd

Northbrook

67,681

A

4201 Lake Cook Rd

Northbrook

66,000

A

1200 Lakeside Dr

Bannockburn

63,738

A

540 Lake Cook Rd **

Deerfield

63,298

A

** Indicates space available in current quarter

Fresenius Kabi signed the largest lease transaction of the quarter in the Suburban market. The international healthcare company will move mid-2013 into 101,000 square feet at 1 Corporate Drive in Long Grove. Brightstar signed a 48,000 square foot lease at 85060 Technology Way in Libertyville, adding to the over 45,000 square feet they already occupy in a neighboring building. After signing its single tenant, Aon Hewitt, to the largest suburban lease transaction in the past four years, Retail Properties of America sold the 819,000 square foot 4 Overlook Point in Lincolnshire to American Realty Capital Trust for $181 per square foot. The North submarket is located within portions of Cook and Lake Counties, with major cities including Bannockburn, Deerfield, Evanston, Glenview, Highland Park, Lake Forest, Northbrook, and Vernon Hills.

NORTH SUMMARY

A

B

C

Total

16,858,000

7,374,024

2,518,166

26,750,189

(365,450)

131,363

8,074

(226,013)

Direct Vacancy Rate

21.6%

17.9%

22.9%

20.7%

Total Vacancy Rate (Direct + Sublease)

26.1%

21.1%

24.6%

24.6%

Inventory (square feet) Year to Date Absorption (square feet)

SUBMARKET SNAPSHOTS

High sublease availability is hampering the direct market and pressuring direct asking rental rates. Last quarter’s reduction in sublease availability was erased in the fourth quarter as Class A and B buildings added over 100,000 square feet in new sublease availability. The 1 million square feet in Class A sublease vacancy constitutes 6 percent of total inventory, which is well above the market average.

Building Address

SUBURBAN CHICAGO

NORTH

Numbers in parentheses are negative

NORTH SUBMARKET HISTORICAL DIRECT VACANCY

FOURTH QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS

10


Little activity in most distressed submarket The fourth quarter brought little change to the Northwest submarket’s occupancy as direct vacancy stayed at a Suburban market high of 25.8 percent. Class B buildings continued to struggle, experiencing net negative absorption of 90,000 square feet and a direct vacancy rate of 33.6 percent.

City

Size (sf)

Building Class

21440 Lake Cook Rd

Deer Park

351,425

A

1299 Algonquin Rd

Schaumburg

195,393

C

5550 Prairie Stone Pky **

Hoffman Estates

193,601

A

3501 Algonquin Rd

Rolling Meadows

186,432

C

1701 Golf Rd

Rolling Meadows

183,506

A

3890 Salem Lake Dr

Long Grove

150,000

B

3333 Beverly Rd

Hoffman Estates

129,000

A

2895 Greenspoint Pky

Hoffman Estates

127,941

A

700 N Wood Dale Rd

Wood Dale

125,328

B

2850 W Golf Rd **

Rolling Meadows

110,941

B

** Indicates space available in current quarter

Lemko signed the largest lease transaction and will occupy 22,000 square feet at 1 Pierce Place in Itasca. However, the new lease will not immediately result in positive absorption for the submarket, as the wireless networking firm is relocating from a similarly sized space at 1700 East Golf Road in Schaumburg. Investment activity was minimal during the fourth quarter, with no new listings on the market and only one notable sale. 3030 Salt Creek Atrium purchased the Class B building at 3030 West Salt Creek Lane in Arlington Heights for $23 per square foot from Equity Office.

SUBMARKET SNAPSHOTS

Tenants continue to have the upper-hand in lease negotiations, which has translated into landlords lowering asking rental rates by 4.6 percent on a year-over-year basis. Additionally, there are 27 direct contiguous blocks of at least 50,000 square feet available for lease; 13 of which are greater than 100,000 square feet. The largest blocks in each of the Suburban market’s three building classes are located in the Northwest submarket, with the largest being a 351,000 square foot block at 21440 Lake Cook Road in Deer Park.

LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address

SUBURBAN CHICAGO

NORTHWEST

The Northwest submarket is located within the portions of Cook, Kane, Lake, and McHenry Counties, with major cities including Arlington Heights, Itasca, Rolling Meadows, and Schaumburg.

NORTHWEST SUMMARY

A

B

C

Total

18,500,654

9,669,129

2,348,148

30,517,931

379,728

(19,395)

41,909

402,242

Direct Vacancy Rate

21.1%

33.6%

30.0%

25.8%

Total Vacancy Rate (Direct + Sublease)

25.3%

35.5%

32.2%

29.0%

Inventory (square feet) Year to Date Absorption (square feet)

Numbers in parentheses are negative

NORTHWEST SUBMARKET HISTORICAL DIRECT VACANCY

FOURTH QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS

11


Smallest submarket outperforms the overall market

Suburban Chicago’s smallest submarket was the exception to an otherwise unremarkable fourth quarter for the Suburban market. With net positive absorption of 117,000 square feet, the O’Hare submarket outperformed all other submarkets combined and saw direct vacancy fall 80 basis points to 24.9 percent. Class A buildings made up most of this positive absorption and remain one of the tightest segments in Suburban Chicago. While Class B and C direct vacancy rates remain above 30 percent, they fell from their third quarter rates.

City

Size (sf)

Building Class

5450 N Cumberland Ave 2350-2360 E Devon Ave

Chicago

143,525

A

Des Plaines

142,596

B

8420 W Bryn Mawr Ave

Chicago

104,164

A

4242 N Harlem Ave

Norridge

93,155

B

5100 River Rd **

Schiller Park

74,988

A

1350 E Touhy Ave

Des Plaines

71,367

B

9801 W Higgins Rd

Rosemont

70,926

B

9500 W Bryn Mawr Ave

Rosemont

69,701

A

10255 W Higgins Rd

Rosemont

69,695

A

8550 W Bryn Mawr Ave *

Chicago

66,895

B

* Indicates future available space ** Indicates space available in current quarter Italicized addresses indicate new blocks this quarter

The largest lease transaction of the quarter involved Brunswick Corporation relocating 70,000 square feet within the O’Hare submarket from 5100 River Road in Schiller Park to 9525 West Bryn Mawr in Rosemont. O’Hare saw one notable sale in the fourth quarter. Owner-occupier Americaneagle.com purchased the 65,000 square foot building at 2600 South River Road in Des Plaines from Property Casualty Insurers Association of America for $58 per square foot. The O’Hare submarket is located in northwestern Cook County surrounding O’Hare International Airport, with major cities including northwestern Chicago, Elk Grove Village, and Rosemont.

O'HARE SUMMARY Inventory (square feet)

A

B

C

Total

7,863,219

4,328,987

2,533,399

14,725,605

Year to Date Absorption (square feet)

81,456

26,266

17,442

125,164

Direct Vacancy Rate

18.2%

30.2%

36.9%

24.9%

Total Vacancy Rate (Direct + Sublease)

21.1%

31.5%

37.6%

27.0%

SUBMARKET SNAPSHOTS

Asking rental rates are down 2.2 percent on a year-overyear basis, including a 5.8 percent reduction in Class A. This suggests that increased occupancy in Class A buildings is likely a result of significantly lower asking rental rates rather than a pure demand increase.

LARGEST BLOCKS OF DIRECT AVAILABILITY Building Address

SUBURBAN CHICAGO

O’HARE

O’HARE SUBMARKET HISTORICAL DIRECT VACANCY

FOURTH QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS

12


Our mission is to provide clients and investors with extraordinary real estate value and unlimited support

M B R E A L E S TAT E

ABOUT MB REAL ESTATE

At MB Real Estate, our corporate mission is to maximize the value of our clients’ real estate by creating timely and innovative solutions that meet their unique needs and objectives. We offer the highest level of real estate support with our team of committed, resultsdriven experts in asset and facilities management, leasing, tenant representation, development, project management, and investment services. Supported by dedicated accounting, marketing, human resources, and information technology teams, our unique full-service firm is an industry leader in local and national corporate real estate.

MB REAL ESTATE HEADQUARTERS

DEPARTMENT LEADERSHIP

181 West Madison, Suite 4700 Chicago, Illinois 60602 phone: 312.726.1700 fax: 312.807.3853

PATRICIA ALUISI Executive Vice President & Chief Administrative Officer/General Counsel

MARK A. BUTH Executive Vice President & Managing Director of Leasing Services

EAST COAST REGIONAL HEADQUARTERS 335 Madison Avenue, 14th Floor New York, New York 10017 phone: 212.350.2300 fax: 212.350.2301

ANDREW J. DAVIDSON Executive Vice President & Managing Director of Corporate Services & Tenant Advisory

GARY A. DENENBERG Executive Vice President & Managing Director of Leasing Services

DAVID R. GRAFF Senior Vice President of Project Services

COMPANY LEADERSHIP

MAUREEN G. GROVE

PETER E. RICKER

Vice President & Managing Director of Accounting Services

Chairman & CEO

JOHN T. MURPHY

DANIEL J. NIKITAS Executive Vice President of Corporate Services & Tenant Advisory Services

President

KEVIN M. PURCELL Executive Vice President & Chief Operating Officer

PETER J. WESTMEYER Senior Vice President & Managing Director of Investment Services

FOURTH QUARTER 2012 | CHICAGO SUBMARKET SNAPSHOTS

13

MB Real Estate's 2012 4th Quarter Chicago Market Overview Submarket Snapshots  

MB Real Estate's Chicago Market Overview Submarket Snapshots breakdown CBD and Suburban office market conditions by submarket. Our Research...

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