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Midyear Review Chicago 2012 (3)
 

Midyear Review Chicago 2012 (3)

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Cushman & Wakefield Midyear Chicago Review

Cushman & Wakefield Midyear Chicago Review

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    Midyear Review Chicago 2012 (3) Midyear Review Chicago 2012 (3) Presentation Transcript

    • MIDYEAR 2012:Office – CBD/Suburban DivideIndustrial – Going StrongChicago Economic, Office & Industrial August 2nd 2012Market Overview
    • Presenters
    • Cushman & Wakefield ResearchAGENDA 2012 NATIONAL ECONOMIC OUTLOOK - KEN McCARTHY 2012 CHICAGO REGION ECONOMIC OUTLOOK - KEN McCARTHY NATIONAL OFFICE MARKETS – MARIA SICOLA NATIONAL INDUSTRIAL MARKETS – MARIA SICOLA CHICAGO OFFICE MARKETS – SIMONE SCHUPPAN CHICAGO INDUSTRIAL MARKET – AMANDA ORTIZ Q&A CUSHMAN & WAKEFIELD 3
    • NATIONAL AND CHICAGO ECONOMIC OUTLOOK
    • Cushman & WakefieldOVERVIEW Research2012: The year of government deleveraging■ Reasons for Optimism – Business, households, investors still cautious, but balance sheets continue to improve – Labor market fundamentals getting healthier – Tech, Tech, Tech■ Reasons for Concern – Uncertainty about taxes, regulations, financial, political, oil prices, Europe/U.S. – Election uncertainty – Fiscal Cliff – Business and Consumer confidence flagging – Europe■ Real Estate Impact – Cautious users – Risk Averse – Tech impacted markets among the best – Full recovery occurs in 2013 – Supply remains constrained in most markets■ Chi Chicago O tl k Outlook – Employment slow to recover – Industrial fundamentals healthier CUSHMAN & WAKEFIELD 5
    • Cushman & Wakefield U.S. GDP GROWTH IN RECOVERIES Research +14.0% 114 112 110 +9.4% h=100Trough 108 106 +6.7% 104 102 100 1 2 3 4 5 6 7 8 9 10 11 12 13 Average Recovery (8 previous) Average Recovery (2 previous) 2009 Recovery Source: U.S. Bureau of Economic Analysis CUSHMAN & WAKEFIELD 6
    • Cushman & Wakefield U.S. UNEMPLOYMENT RATE Research 11.0% 10.0% 9.0% rcePercent of Labor For 8.0% 7.0% t 6.0% 5.0% 4.0% 4 0% 3.0% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 CUSHMAN & WAKEFIELD 7
    • Cushman & U.S. PRIVATE SECTOR EMPLOYMENT GROWTH Wakefield Research Monthly Average-Preceding Three Months 250 225.7 200 212.3 183.7 150 158.0 156.7 147.7Thousands of Persons 100 123.0 111.7 75.0 50 24.7 0 50 -50 -100 -131.3 -150 150 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Source: U.S. Bureau of Labor Statistics CUSHMAN & WAKEFIELD 8
    • Cushman & U.S. WEEKLY UNEMPLOYMENT CLAIMS Wakefield Research650,000600,000550,000500,000450,000400,000350,000300,000250,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 National Recessions Unemployment Claims Healthy Labor Market Source: U.S. Bureau of Labor Statistics CUSHMAN & WAKEFIELD 9
    • Cushman & EMPLOYMENT CHANGE SINCE FEBRUARY 2010 Wakefield Research By Industry Sector 1,450 1,353 1,324 Total Increase: +3.8 mil. Private Sector: +4.4 mil. Pi t S 4 4 il 1,250 1,050 900 ersons 850 669 650 housands of Pe 500 450 353 236 250 77 50Th -150 -106 -350 -550 -528 528 Source: U.S. Bureau of Labor Statistics CUSHMAN & WAKEFIELD 10
    • Cushman & Wakefield JOBS RECOVERED SINCE TROUGH Research As a Percent of Jobs Lost160.0%160 0%140.0% 150.9% 131.6%120.0% 30.3% 13100.0%100 0% 91.2%80.0% 87.4% 71.6%60.0% 70.5% 59.1% 55.6% 54.1% % 7 51.3% %40.0% 50.5% % 44.0% 46.2% 41.8% 39.9% 38.9% 31.9% 34.6% 19.3% 29.1% 27.3% 25.1%20.0% 0.0% Source: U.S. Bureau of Labor Statistics CUSHMAN & WAKEFIELD 11
    • Cushman & Wakefield INDUSTRIAL DRIVERS Research Manufacturers’ Shipments 475,000 425,000Millio of Dollars 375,000 ons 325,000 275,000 1995 1997 1999 2001 2003 2005 2007 2009 2011 National Recessions Mfg Shipments Source: U.S. Census Bureau, Cushman & Wakefield Research Services CUSHMAN & WAKEFIELD 12
    • Cushman & TRUCK TONNAGE INDEX Wakefield Research 125 120 115 110 1052000=100 100 95 90 85 80 75 1995 1997 1999 2001 2003 2005 2007 2009 2011 National Recessions Truck Tonnage Source: American Trucking Association, Cushman & Wakefield Research Services CUSHMAN & WAKEFIELD 13
    • Cushman & Wakefield U.S. IMPORTS AND EXPORTS OF GOODS Research Excluding Bulk Items 190,000 170,000 150,000Millio of Dollars 130,000 ons 110,000 90,000 70,000 1995 1997 1999 2001 2003 2005 2007 2009 2011 National Recessions Exports Plus Imports Source: U.S. Census Bureau, Cushman & Wakefield Research Services CUSHMAN & WAKEFIELD 14
    • Cushman & Wakefield ECONOMIC OVERVIEW & FORECAST Research Payroll Employment Chicago versus U.S.138,000 3,925137,000137 000136,000 3,875135,000 3,825 3 825134,000 3,775133,000132,000 3,725131,000 3,675130,000130 000 US Chicago 3,625129,000 12/07-2/10 -6.3% -7.3% 2/10-6/12 +3.0% +2.4%128,000 3,575 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 U.S. (Left Scale) Chicago Source: U.S. Bureau of Labor Statistics CUSHMAN & WAKEFIELD 15
    • Cushman & Wakefield EMPLOYMENT STRUCTURE Research U.S. versus Chicago Natural Resources InformationU.S. 2% 1% Construction 4% Trade; Transport; Financial Utilities 6% 20% Manufacturing 9% Government 17% Leisure and Hospitality 11% Construction Information Financial 3% 2% Education and 7% Professional and Business Services Health Services H lhS Trade; 14% 16% Transport; Manufacturing Utilities 9% 21% Professional Leisure and and Business Hospitality Services 10% 18% Chicago Education and Government Health Services 14% 16% Source: U.S. Bureau of Labor Statistics CUSHMAN & WAKEFIELD 16
    • Cushman & ECONOMIC OVERVIEW & FORECAST Wakefield Research Jobs Recovered Since February 2010 As a Percent of Jobs Lost J50.0%45.0% 44.0%40.0%35.0%35 0% 31.9% 31 9%30.0%25.0%20.0%15.0%10.0%5.0%0.0% U.S. US Chicago Source: U.S. Bureau of Labor Statistics CUSHMAN & WAKEFIELD 17
    • Cushman & WakefieldCHICAGO EMPLOYMENT CHANGE ResearchSince February 2010 , by Industry Sector 75 Total Increase: +92,400 65 Private Sector: +112 400 Pi t S +112,400 57 55 47Thousands of Persons 45 35 27 P 25 21 16 15 8 8 5T -5 0 -3 -15 -7 -25Source: U.S. Bureau of Labor Statistics CUSHMAN & WAKEFIELD 18
    • Cushman & Wakefield EMPLOYMENT FORECAST Research Payroll Employment Forecast: Chicago4,0003,950 Full3,900 recovery Q4-153,8503,8003,7503,7003 7003,6503,6003,5503,500 Source: U.S. Bureau of Labor Statistics, Moody’s Analytics CUSHMAN & WAKEFIELD 19
    • Cushman & MIDWEST MANUFACTURING INDEX Wakefield Research 115 110 105 100 952007=100 90 85 80 75 70 65 1995 1997 1999 2001 2003 2005 2007 2009 2011 National Recessions Midwest Manufacturing Index Source: Federal Reserve Bank of Chicago CUSHMAN & WAKEFIELD 20
    • U.S. OFFICE MARKET
    • Cushman & U.S. OFFICE MARKET Wakefield Research Leasing activity totaled 29.8 msf in the CBDs; down 29% from 2q 2011 Suburban leasing was up marginally – by 3msf – to 61.7 msf San Francisco and New York remain strong especially in comparison to other markets Positive absorption in both CBD and suburban markets Rental increases are submarket and asset driven Oversupply is not the issue; the issue remains uncertainty in the global economy Investment activity remains extremely weak with exception of core and trophy assets but real estate remains attractive with low Treasury bond yields and volatile stock market CUSHMAN & WAKEFIELD 22
    • Cushman & NATIONAL OFFICE Wakefield Research CBD & Suburban Leasing Activity 200 180 160 140 etMillions Square Fee 120 100 80 60 40 20 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12 CBD Suburban Source: Cushman & Wakefield CUSHMAN & WAKEFIELD 23
    • Cushman & NATIONAL OFFICE Wakefield Research CBD & Suburban Overall Absorption 100 80 60 etMillions Square Fee 40 20 0 -20 -40 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12 CBD Suburban Source: Cushman & Wakefield CUSHMAN & WAKEFIELD 24
    • Cushman & Wakefield NATIONAL OFFICE Research Sublease Availabilities 90 80 70 60 etMillions Square Fee 50 40 30 20 10 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2Q12 CBD Suburban Source: Cushman & Wakefield CUSHMAN & WAKEFIELD 25
    • NATIONAL OFFICE Cushman & WakefieldConstruction Completions vs. Overall Vacancy Rates Research120 24.0% 22.0%100 20.0%80 18.0% 16.0%60 14.0%40 12.0% 10.0%20 8.0% 0 6.0% CBD Completions Suburban Completions CBD Vacancy Rate Suburban Vacancy Source: Cushman & Wakefield CUSHMAN & WAKEFIELD 26
    • U.S. INDUSTRIAL MARKET
    • Cushman & U.S. INDUSTRIAL MARKETS Wakefield Research Industrial Overall Leasing Activity 400 350 300million square feet f 250 200 354.5 326. 322.2 316 306.4 282.9 2 6.6 150 278.8 2 277.9 2 277.3 2 .2 268.8 230.8 100 152.8 50 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD12 *Data as of Second Quarter 2012 Source: Cushman & Wakefield Research CUSHMAN & WAKEFIELD 28
    • Cushman & Wakefield U.S. INDUSTRIAL MARKETS Research Overall Absorption 200 150million square feet 100 f 146.0 111.9 94.4 94.4 50 14.2 75.9 13.1 -6.4 39.7 0 -48.9 -50 -125.1 -100 100 -150 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD12 *Data as of Second Quarter 2012 Source: Cushman & Wakefield CUSHMAN & WAKEFIELD 29
    • Cushman & Wakefield U.S. INDUSTRIAL MARKETS Research Construction Completions versus Overall Vacancy Rates 14.0% 145.0 145 0 12.0% 125.0million square feet 10.0% 105.0 105 0 f vacancy 8.0% 85.0 65.0 65 0 6.0% 45.0 4.0% 25.0 25 0 2.0% 5.0 0.0% 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 YTD12 New Construction Overall Vacancy Rate *Data as of Second Quarter 2012 Source: Cushman & Wakefield Research CUSHMAN & WAKEFIELD 30
    • Cushman & Wakefield U.S. INDUSTRIAL MARKETS Research Warehouse Overall Vacancy Rates vs. Rental Rates $7.00 14.0% $6.51 $6.50 $6.45 $6.44 $6.00 12.0% $6.17 $5.89 $5.00 10.0% $4.96 $4.84 $4.70 $4.64 vacancy $4.62 $4.62 $4.61 $4.59 $4.58 $4.57 $4.57 $4.56$/psf $4.00 8.0% $ $3.00 6.0% $2.00 4.0% $1.00 2.0% $0.00 0.0% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Rental Rates R t lR t Overall V O ll Vacancy R t Rate *Data as of Second Quarter 2012 Source: Cushman & Wakefield CUSHMAN & WAKEFIELD 31
    • Cushman & WakefieldU.S. INDUSTRIAL MARKETS ResearchWarehouse/Distribution Cycle ORABLE Slow Growth Accelerating LANDLORD FAVO Palm Beach, FL Chicago, Houston, Inland Empire LTENANT FAVORABLE Baltimore, Long Island NY, PA I-81/I-78 Corridor, Orange County Philadelphia, Silicon Valley, Seattle Denver, Greater LA Sacramento Atlanta, Dallas, Miami Ft. Lauderdale, Portland, New Jersey Central Valley CA, Suburban MD Minneapolis, Orlando, Phoenix, Tampa eapo s, O a do oe , a pa T Oakland, North Bay CA, Jacksonville Boston, Northern VA San Diego Downturn Recovering Rent still elevated but falling from top of Rent growth accelerating Ideal for owners of property market cycle Falling rents promise future opportunity for tenants Rent at or near bottom of market cycle Rent growth slowing Ideal for tenants leasing or seeking to lease property Still landlord favorable but growth is down from peak*Data as of Second Quarter 2012Source: Cushman & Wakefield CUSHMAN & WAKEFIELD 32
    • Cushman & Wakefield NATIONAL INDUSTRIAL Research Second Quarter 2012 Industrial Stats D irect Overall Annual D irect Under YTD 2012 Total YTD 2012 Total Total Industrial Vacancy Vacancy Asking Rent Construction Leasing Overall NetMarket Inventory Rate Rate (NNN) Activity AbsorptionGreater Los Angeles 1,068,818,710 4.3% 4.6% $6.34 2,327,316 18,872,249 1,288,544Inland Empire 415,478,185 7.4% % 7.6% % $4.53 $ 6,642,648 12,876,110 5,115,073Orange County 275,686,012 5.5% 5.6% $7.94 26,000 6,324,863 865,070LOS ANGELES BASIN* 1,745,270,256 5.2% 5.5% $6.12 8,995,964 37,723,218 7,253,356CH ICAGO 1,148,952,426 8.9% 9.4% $4.10 3,683,246 18,171,803 6,078,532CentralC t l NJ 327,076,264 327 076 264 8.0% 8 0% 8.6% 8 6% $5.28 $5 28 864,000 864 000 6,635,679 6 635 679 2,789,636 2 789 636Northern NJ 284,938,891 9.3% 9.9% $6.08 567,639 3,460,048 (1,817,530)Long Island NY 126,195,121 11.9% 12.5% $6.99 196,000 980,212 (853,249)NEW YORK/NEW JERSEY 738,210,276 9.2% 9.8% $5.97 1,627,639 11,075,939 118,857Miami , , 160,875,806 7.4% 7.4% $5.24 189,906 , 1,433,878 , , 510,664 ,Orlando 105,579,186 12.1% 12.4% $5.35 237,960 2,444,058 633,394Jacksonville 100,687,468 11.0% 11.1% $3.80 0 609,026 (101,596)FLORIDA* 659,073,817 8.5% 8.7% $5.31 1,307,935 8,793,529 3,067,552ATLANTA 516,011,066 9.7% 9.8% $3.75 2,325,047 9,069,777 3,017,391D ALLAS/FORT WORTH 514,412,336 10.8% 11.2% $4.18 2,955,146 9,766,869 4,075,023PA I-81/I-78 Distribution Corridor 215,270,850 8.6% 9.1% $3.79 6,044,673 4,250,909 1,997,175Philadelphia, PA 277,464,546 6.0% 6.4% $4.94 1,348,000 3,229,224 1,903,090PH ILADELPH IA 492,735,396 7.1% 7.6% $4.33 7,392,673 7,480,133 3,900,265H OUSTON 353,750,019 7.3% 7.6% $4.70 2,087,404 9,130,399 700,914PH OENIX 263,298,403 11.7% 12.2% $6.96 237,992 5,233,062 2,528,122 Not all large markets are included on this list. LA Basin: two markets are included in both LA and Orange Counties - LA Basin total reflects adjusted 33 CUSHMAN & WAKEFIELD figures; Florida total also includes Ft Lauderdale, Tampa, Palm Beach & Pinellas Counties and Lakeland Area.
    • CHICAGO OFFICE MARKET
    • Cushman & Wakefield 24 CHICAGO CBD Research Market Trends and Indicators TOTAL MARKET SIZE = 218.7 MILLION SQUARE FEET CBD = 123.1 MILLION SQUARE FEET SUBURBAN = 95.6 MILLION SQUARE FEET• Overall vacancy dropped 0.7 percentage points to 14.2% year-over-year.• New leasing activity slowed during the second quarter. Year-to-date activity quarter Year to date 12 Month M th equaled approximately 2.4 msf, 41.5% less CHICAGO YTD 2012 Forecast than the 4.1 msf reported at mid-year 2011. Total Absorption 639,425 sf• Investment activity totaled 8.2 msf, more than d bl th th double the amount recorded at this t d d t thi Leasing Activity 2.4 msf time last year. Overall Vacancy 14.2%• Many renewals, which do not count towards Rate leasing activity, were signed in the second Overall Asking $31.79 quarter. Rents R Under 0 msf Construction CUSHMAN & WAKEFIELD 35
    • Cushman & Wakefield CHICAGO CBD Research Class A Direct Vacancy vs. Asking Rental Rates$40.00 14.0% 12.0% 12 0%$38.00 $38.45 $38.41 $38.28 $38.28 $38.17 $38.05 $38.02 $38.01 $38.00 $37.78 $37.65 10.0% $37.63 $37.55 $37.3 5 32$36.00 8.0% 6.0%$34.00 4.0%$32.00 2.0% 2 0%$30.00 0.0% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Class A Asking Rent Class A Vacancy Rate CUSHMAN & WAKEFIELD 36
    • Cushman & Wakefield CHICAGO CBD Research New Leasing Activity 14 12 10 5.4Millions Square Feet 8 8.9 4.6 3.6 4.9 3.3 6 6.7 5.0 3.1 2.8 3.9 5.1 51 5.3 53 3.4 34 5.1 51 4 4.3 4.2 4.2 2.2 3.6 3.6 8.7 3.0 2 2.4 2.4 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD 2012 1H 2H 12-year historical average for 1H CUSHMAN & WAKEFIELD 37
    • Cushman & Wakefield CHICAGO CBD Research Renewal Activity 8.0 70.0% 60.0% 60 0% 6.0 50.0% 5.3 5.1 5.1 5.0 onsSquare Feet in Millio 4.4 4.2 40.0% 4.2 4.0 3.6 3.6 30.0% 3.0 2.4 24 2.4 2.3 20.0% 2.0 1.4 1.4 1.4 1.3 0.9 1.1 1.1 0.8 10.0% 0.6 0.7 0.5 05 0.0 0.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD 2012 Leasing Activity 1st Half L i A i i 1 H lf Renewal Activity 1 H lf R l A i i 1st Half 1st H lf 1 Half renewal activity as % of overall leasing activity l i i f ll l i i i CUSHMAN & WAKEFIELD 38
    • Cushman & Wakefield 26 CHICAGO CBD Research YTD 2012 Leasing by Industry g y y g Building Legal Services Construction/General 28% Contractors Government 2% 4% Non-profits/ Associations 5% Other 5%Engineers/Architects/ Accountants 6% Business Services Education Health & 21% Social Services 6% FIRE Technology 11% 12% Source: Cushman & Wakefield NOTE: Includes renewals CUSHMAN & WAKEFIELD 39
    • Cushman & Wakefield CHICAGO CBD Research Investment Activity 30 25 14.1 20 13.2Millions Square Feet 15 10 14.2 6.2 12.9 5 1.6 0.3 8.2 4.0 3.1 31 0.2 02 4.0 0 0.9 2006 2007 2008 2009 2010 2011 YTD 2012 1H 2H CUSHMAN & WAKEFIELD 40
    • Cushman & CHICAGO CBQuarter Lease Comps Selected 4th Wakefield 27 D Research Top Q1 & Q2 2012 Leasing and Sales Transactions Type Address Submarket Tenant SF IndustryRenewal 321 North Clark River North Foley Lardner 169,000 Legal 330 North Wabash N hW b hNew River North Latham & Watkins LLP 137,000 Legal Avenue SmithBucklinNew 330 North Wabash River North 111,081 Business Services Corporation U.S. Securities andRenewal 175 West Jackson Blvd Central Loop 102,613 Government Exchange CommissionNew 10 South LaSalle Central Loop Chicago Title & Trust 86,207 FIRE Sales Price Address Price Seller Buyer y Buyer Type y yp Comments PSF (Millions) Civic Opera, 75% occupied,20 North Wacker Dr $126 $149 Tishman Speyer Berkley Properties Institutional renovations planned500 North Michigan The Macerich New owner plans to $71 $222 Zeller Realty Group U.S. InvestorAve Company convert to retail space350 North Orleans St 96% leased; Chicago Sun- $228 $190 Vornado Realty Trust Shorenstein Properties U.S. Investor Times major tenant Partial sale-leaseback by the141 West Jackson Blvd GlenStar Properties JV Regional Private $151 $120 CME Group Chicago Mercantile USAA Real Estate Investor Exchange Foreign Private Onni Development Loan on building was past200 North LaSalle St $101 $161 Younan Real Estate Capital Corp due Developer Source: Cushman & Wakefield Research & Real Capital Analytics CUSHMAN & WAKEFIELD 41
    • Cushman & Wakefield 36 CHICAGO SUBURBAN Research Market Trends and Indicators TOTAL MARKET SIZE = 95.6 MILLION SQUARE FEET• Year-to-date leasing activity is at 2.5 msf, SUBURBAN YTD 12 Month 10.7% higher than the 2.3 msf recorded at CHICAGO 2012 Forecast mid-year 2011. Total Absorption p ( (355,075) sf , )• Mid-year investment sale activity increased to 1.7 msf in 2012 from 1.2 msf in 2011. Leasing Activity 2,539,175 sf Overall Vacancy• Direct weighted average asking rents 22.5% Rate stood at $21.74 psf b the end of Q2 d $21 74 f by h d f Overall Asking 2012, an increase of 1% from $21.53.Q2 $21.56 Rents 2011. Under 0 msf Construction CUSHMAN & WAKEFIELD 42
    • Cushman & Wakefield CHICAGO SUBURBAN Research Class A Direct Vacancy vs. Rental Rates$30.00 20.5%$28.00$28 00 20.0% $26.67$26.00 $2 $2 $2 25.52 25.50 25.32 $25.00 19.5% $24.94 $24.90 $24.76$24.00 $24.53 $24.45 $24.41 $24.37 $24.28 $24.19$22.00 19.0%$20.00 18.5%$18.00$18 00$16.00 18.0% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Class A Asking Rent Class A Vacancy Rate CUSHMAN & WAKEFIELD 43
    • Cushman & Wakefield CHICAGO SUBURAN Research New Leasing Activity 12 10 8 4.9 49Millions Square Feet 8.9 3.7 6 4.6 2.9 3.1 3.5 3.1 4.9 2.6 4 4.4 44 2.6 26 1.7 3.7 3.8 3.5 3.6 1.9 3.3 2.8 2.9 2 8.7 2.5 2.5 1.9 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD 2012 1H 2H 12-year historical average for 1H CUSHMAN & WAKEFIELD 44
    • Cushman & Wakefield CHICAGO SUBURBAN Research Renewal Activity 6.0 70.0% 60.0% 60 0% 4.4 4.1 50.0% 4.0 3.8 3.8 3.7 3.6 ons 3.5Square Feet in Millio 3.3 40.0% 2.9 2.8 2.5 30.0% 1.9 19 2.0 20.0% 1.1 1.1 1.1 1.1 1.0 0.6 0.6 10.0% 0.5 0.4 0.2 0.2 0.2 0.0 0.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD 2012 Leasing Activity 1st Half L i A i i 1 H lf Renewal Activity 1 H lf R l A i i 1st Half 1st H lf 1 Half renewal activity as % of overall leasing activity l i i f ll l i i i CUSHMAN & WAKEFIELD 45
    • Cushman & SUBURBAN CHICAGO Wakefield Research 38 2012 YTD Leasing by Industry Building Construction/General Printing, Publishing and Manufacturing/Industrial Contractors Related 29% 1% 2%Communications 3% Technology 4% LegalServices 4% Other 4% Non-profits/Associations Education Health & Social 5% Services FIRE 18% Business Services 13% 17% Source: Cushman & Wakefield NOTE: Includes renewals CUSHMAN & WAKEFIELD 46
    • Cushman & Selected CHICAGO SUBURBAN 4th Quarter Lease Comps Wakefield Research 33 Top Q1 & Q2 2012 Leasing and Sales Transactions Type Address Submarket Tenant SF Industry 3800 Golf Rd, New Atrium Corporate Center Northwest Capital One 158,582 FIRE Rolling Meadows 75 North Fairway Manufacturing/Industrial New Central North/Tri-State Carefusion 150,000 Vernon Hills (medical) 3 Parkway North Mondelez International Manufacturing/Industrial New Central North/Tri-State 105,000 Deerfield (Kraft) (food) 5550 Prairie Stone Parkway American Continental Renewal Northwest 74,000 Education Hoffman Estates. University Columbia Centre III Manufacturing/Industrial New O’Hare World Kitchen 55,000 Rosemont (kitchenware) Sales Address Price Price PSF Seller Buyer Type Comments (Millions) 100% occupied; CF 4 Parkway North, Institutional $40.9 $238 John Buck Company Wells Core Office REIT Industries, Lundbeck Deerfield Investor main tenants Continental E C l Executive National private N l $27.5 $123 PacTrust PWA Real Estate Park, Vernon Hills investor Caremark Towers I White Oak Realty Partners Regional private $21 $123 Fulcrum Asset Services Northbrook JV Syndicated Equities investor 67% leased; building 6400 Shafer Ct, Crossroads Development Regional private $10.8 $66 Ruben Ybara traded for 3rd time in Rosemont Partners investor 5 yearsSource: Cushman & Wakefield Research & Real Capital Analytics CUSHMAN & WAKEFIELD 47
    • CHICAGO INDUSTRIAL MARKET
    • Cushman & CHICAGO INDUSTRIAL Wakefield Research 48 Market Trends and Indicators TOTAL MARKET SIZE = 1.1 BILLION SQUARE FEET 11• Leasing activity gaining momentum YTD 12 Month• Large leasing transactions have fueled CHICAGO 2012 Forecast recovery in the region Total Absorption 6.1 msf• Asking rental rates have yet to Leasing Activity 18.2 msf increase significantly, still favorable climate for tenants Overall Vacancy y 9.4% 9 4% Rate• New construction is on the rise and Overall Asking Rents $4.05 some speculative projects have begun in the Chicago market Under Construction 3.7 msf CUSHMAN & WAKEFIELD 49
    • Cushman & CHICAGO INDUSTRIAL Wakefield Research 48 Market Trends and Indicators Chicago MSA Employment (% Change)0.200.100.000 00 • Business sectors impacting industrial-0.10 activity added jobs in recent months-0.20-0.30 • Local economy slowly improving-0.40-0.50-0 50-0.60-0.70 Chicago Fed Midwest Manufacturing Index (CFMMI) Manufacturing Output Indexes % Change from 1 month ago 3 months ago 1 year ago Chicago Fed Midwest Manufacturing Index (CFMMI) 1.1 2.1 11.0 US Industrial Production-Manufacturing (IPMFG) 0.7 0.8 5.6 CUSHMAN & WAKEFIELD 50
    • Cushman & CHICAGO INDUSTRIAL Wakefield Research 49 Overall Vacancy Rates vs. Asking Rents $4.50 12.0% $4.45 11.5% $4.36 $4.33 $4.25 11.0% $4.2 26 $4.19 $ 10.5% $4.09$ /sf/yr $4.06 $4.00 10.0% $4.05 $4.04 $4.04 $4.04 $4.01 $4.01 $3.98 9.5% $3.75 9.0% 8.5% $3.50 $3 50 8.0% 8 0% Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Asking Rent Vacancy Rate CUSHMAN & WAKEFIELD 51
    • Cushman & CHICAGO INDUSTRIAL Wakefield Research Mid-Year Leasing and Renewal Activity25.0 70.0% 60.0%20.0 19.4 18.5 18.2 17.6 16.5 50.0% 15.4 15.215.0 14.1 13.9 13.9 40.0% 11.7 11.5 30.0%10.0 7.0 20.0% 5.4 5.1 4.9 5.0 4.2 3.7 3.3 3.2 2.5 10.0% 2.1 1.7 17 2.1 0.0 0.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD 2012 Leasing Activity 1st Half Renewal Activity 1st Half 1st Half renewal activity as % of overall leasing activity CUSHMAN & WAKEFIELD 52
    • Cushman & WakefieldCHICAGO INDUSTRIAL Research2012 Leasing by Industry Manufacturing M f Communications 27% Construction 0% 1% Business Services 7% Other 10% Retail Trade Wholesale Trade 11% 25% Transportation/Public Utilities 19% NOTE: Includes renewals CUSHMAN & WAKEFIELD 53
    • Cushman & Selected CHICAGO INDUSTRIAL 4th Quarter Lease Comps Wakefield Research 33 Top Q2 12 Leasing and Sales Transactions Type Address Submarket Tenant SF Industry New Home Depot BTS Interstate 80 Home Depot 1,600,000 1 600 000 Retail Trade New Tinley Park Corporate Center Interstate 80 M. Block & Sons 915,643 Wholesale Trade New Heartland Corporate Center Interstate 80 Wilton Industries 492,869 Wholesale Trade New Joliet Distribution Center Interstate 80 Ozburn-Hessey Logistics 476,965 Transportation Renewal Butterfield Center Southern Fox Valley Nippon Express USA 410,000 Transportation Sales Price Address SF Price PSF Seller Buyer Buyer Type Comments (Millions Benderson Portfolio Sale, CenterPoint 1,789,819 $87.0 $48.61 Development Investor Fully leased 6 Buildings Properties Company CBRE Global 2400 Dralle Road 1,350,000 1 350 000 $64.3 $64 3 $47.59 $47 59 USAA Real Estate Investor Fully leased Investors 1860 W Jefferson 828,748 $46.4 $55.99 RREEF Duke Realty Investor Fully leased Ave. Home Depot to901 Carlow Drive 747,152 $34.6 $46.26 TIAA-CREF Heitman Investor vacate at end of 2013 702 Commerce 696,540 $25.1 $36.04 USAA Real Estate Koch Industries Investor Fully leased Center DriveSource: Cushman & Wakefield Research & Real Capital Analytics CUSHMAN & WAKEFIELD 54
    • Cushman & CHICAGO Wakefield Research Construction Completions vs. Overall Vacancy Rates(000s sf) Vacancy Rate25,000 12.0% 11.0% 10.0%20,000 9.0% 8.0%15,000 7.0% 6.0%10,00010 000 5.0% 5 0% 4.0% 3.0% 5,000 2.0% 1.0% 0 0.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD12 New Construction Overall Vacancy Rate CUSHMAN & WAKEFIELD 55
    • Cushman & Wakefield 54 LOOKING FORWARD Research Chicago AreaOFFICE CBD• Vacancy down slightly• Overall new leasing activity expected to remain slow for the remainder of the election year (some g y p y ( exceptions• Investment activity – additional buildings trading in the second half• Asking rates overall flat to slight increase; landlords have leverage depending on specific building/space• One or two high-rises to break ground late 2012/early 2013OFFICE Suburban• Vacancy improving slightly as tenants move to new locations (however muted by musical chairs and consolidations)• Leasing activity slow for rest of year• Investment activity slow with still unstable market fundamentalsINDUSTRIAL• Vacancy to improve further• Leasing activity solid; expected to remain stable through year-end• Speculative construction p p picking up specifically in the I-80 Corridor g p p y CUSHMAN & WAKEFIELD 56
    • Q&AMARIA SICOLA KEN McCARTHY415-773-3542 212-698-2502One Maritime Plaza, Suite 900 1290 Avenue of the AmericasSan Francisco, CA 94111 New York, NY 10104maria.sicola@cushwake.com ken.mccarthy@cushwake.comSIMONE SCHUPPAN AMANDA ORTIZ312-470-1891 847-518-3235200 South Wacker, Suite 2800 6133 North River Road,Chicago, IL 60606 Rosemont, IL 60018simone.schuppan@cushwake.com amanda.ortiz@cushwake.comwww.cushmanwakefield.com