metropolitan chicago hiffman industrial report 3q… · nai hiffman is pleased to provide to you...

Metropolitan ChicagoNAI Hiffman Industrial Market ReportThird Quarter 2010

www.hiffman.com

Committed to Chicago.

Connected to the World.™

To our valued clients and partners...NAI Hiffman is pleased to provide to you our Metropolitan Chicago industrial market report for the third quarter of 2010. We trust you will fi nd it helpful as you review your real estate strategies and the relevant changes that are taking place within the Chicago marketplace. I am happy to say that we are seeing positive signs which are based not solely on hope but on statistics, suggesting that contrary to the naysayers’ predictions, the sky is NOT falling.

We are seeing an increase in our deal fl ow, as well as confi rmation from the investor community that there is an immense amount of money on the sidelines ready to be deployed, and we are seeing glimpses of activity in the sales of quality assets which will help to reestablish a benchmark on values and perhaps bring buyer and seller closer together. We also look forward to another election cycle, which we anticipate will return us to fi rm political gridlock, which is unfortunately needed to reestablish regulatory business “rules of the road.”

I am a big believer that history repeats itself, and in looking back, perhaps we are able to secure a keen perspective on what is to come, learning lessons and gaining experience from the hard times in each cycle. Maybe said another way, “there is nothing new under the sun.”

To jog your memory, here are the dates we survived to remember in retrospect:• 1973-1974 - Stock market collapse and oil crisis• 1980-1981 - Infl ation peaks over 14% and fed rate is at 16%• 1986 - Tax reform in our industry changes everything• 1987 - Black Monday• 1989 - RTC bail out• 2000 - The Dot Com bust• 2001 - The impact of 9/11 shuts down the world• 2007 - Credit Market Crisis• 2008 - Oil prices peak and fed rescue plan begins• 2009 - Banks fail, Tarp comes unemployment is over 10%• 2010 - We begin to shift, change and fi x the fundamentals

Through each setback, we were able to make forward progress, discovering new ways to conduct business and create profi t for partners and clients who were willing to have faith in our abilities - adapting and modifying their strategies as the market dictated.

We look forward to assisting you with creative adaptations, innovative strategies and successful outcomes as we continue to navigate the new normal for the real estate industry in the days and months ahead.

Regards,

David A. Petersen, RPACOO NAI HiffmanCEO, NAI Hiffman Asset Management

3 NAI HIFFMAN METROPOLITAN CHICAGO INDUSTRIAL MARKET REPORT – THIRD QUARTER 2010

Table o

f Co

ntents

Metropolitan ChicagoNAI HiffmanIndustrial Market ReportThird Quarter 2010

Local Economy. . . . . . . . . . . . . . . . . . . . . . 4

Industrial Market Statistics. . . . . . . . . . . . . 7

Industrial Market Summary . . . . . . . . . . . . 8

Industrial Submarket Overviews

Lake County . . . . . . . . . . . . . . . . . . . 10

Southeast Wisconsin . . . . . . . . . . . . 12

I-90/Northwest . . . . . . . . . . . . . . . . . 14

Northwest Cook . . . . . . . . . . . . . . . . 16

North Cook . . . . . . . . . . . . . . . . . . . . 18

Fox Valley . . . . . . . . . . . . . . . . . . . . . 20

Central DuPage . . . . . . . . . . . . . . . . 22

O’Hare. . . . . . . . . . . . . . . . . . . . . . . . 24

West Cook . . . . . . . . . . . . . . . . . . . . 26

I-88 Corridor . . . . . . . . . . . . . . . . . . . 28

I-55 Corridor . . . . . . . . . . . . . . . . . . . 30

South Cook. . . . . . . . . . . . . . . . . . . . 32

I-80/Joliet Corridor . . . . . . . . . . . . . . 34

Submarket Map . . . . . . . . . . . . . . . . . . . . . 36

Methodology / Defi nitions . . . . . . . . . . . . . 37

NAI Hiffman / NAI Global . . . . . . . . . . . . . . 38

1

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3

4

5

6

7

8

9

10

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NAI Hiffman understands that our success

is the direct result of creating successful

outcomes for our clients.

We build lasting relationships with our clients

and partners, engaging our individual initiative

joined with collaboration and teamwork.

Our unrelenting commitment to excellence

and integrity forms the foundation of our

guiding principles and shapes our strategies.

Committed to Chicago.


Build on the power of our network.

Local EconomyPOPULATION (2009 EST.) 9,804,845

POPULATION CHANGE (2000-2009 EST.) +5.3%

NUMBER OF HOUSEHOLDS (2008) 3,516,729

MEDIAN HOUSEHOLD INCOME (2008 EST.) $67,234

GROSS METRO PRODUCT (2008) $521 BILLION

LABOR FORCE 4,858,400

TOTAL JOBS GAINED (06/09-06/10) -71,600

CHICAGO AREA UNEMPLOYMENT RATE 10.5%

ILLINOIS UNEMPLOYMENT RATE 10.3%

U.S. UNEMPLOMENT RATE 9.6%

The third largest metropolitan area in the U.S. after New York and Los

Angeles, Chicago is the most infl uential economic region between

the East and West Coasts. Foreign Policy Magazine recently ranked

Chicago sixth among world competition, measuring econometrics

from the number of Fortune 500 companies to the fl ow of goods

and services through aiports and ports. Situated at the geographical

heart of the nation, Chicago’s locational advantages have fostered its

development into an international center for banking, securities, high

technology, air transportation, business services, wholesale and retail

trade, and manufacturing. In addition, Chicago is one of the principal

trading centers for commodities, fi nancial, and derivative futures

products with the Chicago Mercantile Exchange and Board of Trade.

Quarter in Review

All eyes are on the economic recovery, which, after recording an

optomistic GDP boost early in 2010, has slowed to a crawl when

compared to typical recovery periods. Real GDP, when chained to the

value of the 2005 dollar, has been positive for the past four quarters,

a sure sign that the recover is underway. GDP grew by 1.7% in the

second quarter according to the U.S. Department of Commerce, a

pace slower than the 3.7% increase recorded in the fi rst quarter of the

year and the 5.0% increase measured during the fi nal quarter of 2009.

Unemployment has been the sore spot in the ongoing recovery, with

local and national rates stubborn to budge from their recent highs

around 10%. However, in nearly every past recession period, the job

market was the last to recover, typically lagging other leading and

conincident economic indicators, including GDP growth, the stock

markets, changes in business inventories and industrial production.

50

100

150

200

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2010

Chicago Case-Shiller Index

U.S. National Case-Shiller Index

1987

Case-Shiller Home Price Indices

Source: Standard & Poor’s

0

2

4

6

8

10

1991

1993

1995

1997

1999

2001

2003

2005

2007

20102009

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

10-Year Treasury Note

198910-Year Treasury Note

Source: Commodity Systems, Inc. (CSI)

2%

4%

6%

8%

10%

12%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Metro ChicagoIllinoisU.S.

Local and National Unemployment

Source: Bureau of Labor Statistics

Local Economy Review


Despite reported job losses totaling 241,000 jobs between May

and June, the U.S. total nonfarm employment has increased by

751,000 jobs since the beginning of the year according to the

Bureau of Labor Statistics. While preliminary fi gures for August

and September point to additional losses, they are nowhere near

the rates at which jobs were being lost during the recession.

Barring any unforseen mass layoffs, job growth will likely be

positive for 2010 for the fi rst time since 2007.

Industrial production has grown every month for more than a

year, but experienced a slight decline in September compared

to the previous month. However, total industrial production was

still up 5.4% over a year ago, according to the Federal Reserve’s

September report. Retail sales and business inventories

continue to show strong growth, with monthly sales for retail

and food services increasing 7.3% and manufacturing and trade

inventories increasing 4.7% over a year ago. These are all signs

that the recovery, while it may be slowing, is still ongoing and

consumer spending is increasing.

Looking Forward

When measured by depth, duration and breadth, the U.S. is

only beginning to recover from the worst economic recession

since the Great Depression. The Bureau of Economic Research

recently declared June 2009 the end of the recession. The four

quarters that followed posted a 3% increase in real GDP, a rather

sluggish rebound when compared to other similar recovery

periods. Historically, deep recessions have been followed by

surprisingly strong recoveries. So far, this has not been the case.

There are many factors and hypotheses as to why the recovery

thus far has been sluggish. One of the factors involves the

residential real estate market that was overbuilt during the boom

period earlier in the decade resulting in less demand and limited

construction. Other factors include less consumer spending

following the steep decline compared to other severe recessions,

and a general sentiment of uncertainty and lack of confi dence in

the economy and the current administration’s policies.

The economy will likely continue to grow at a modest rate through

the end of the year, then begin to gradually accelerate in 2011 as

concerns of a double-dip recession ease, consumer spending

and confi dence pick up, and companies continue to hire and

expand. Hopefully, the unemployment rate will eventually begin

to decrease, reinforcing optimistic views, and speeding up the

pace of the economic recovery.

Local E

cono

my R

eview

-4%

-2%

0%

2%

4%

6%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

CPI 12-Month Percent Change

2000

Core CPI 12-Month Percent Change(excludes volatile food and energy prices)

Consumer Price Indices (CPI)

Source: Bureau of Labor Statistics

-50%

-30%

-10%

10%

30%

50%

$0

$30

$60

$90

$120

$150

1991

1993

1995

1997

1999

2001

2003

2005

2007

2010

2009

Crude Oil PriceMonthly Percent Change

1989

Crude Oil Prices

Source: WTRG Economics

-6%

-3%

0%

3%

6%

$8 T

$10 T

$12 T

$14 T

$16 T

1990

1994

1998

2002

2004

1992

1996

2000

2006

2008

1993

1997

2001

2003

1991

1995

1999

2005

2007

20102009

Adjusted GDP Growth (based on 2005 dollar) (%)

GDP Value (Trillions of $)

U.S. Gross Domestic Product

Source: Bureau of Economic Analysis

$100 B

$150 B

$200 B

$250 B

U.S. ExportsU.S. Imports

August 2010Trade Deficit -$46.3 B

TradeDeficit

May ‘08

Feb

‘08

Aug

‘07

No

v ‘07

May ‘09

Feb

‘09

Aug

‘08

No

v ‘08

May ‘10

Aug

‘10

Feb

‘10

Aug

‘09

No

v ‘09

U.S. Imports & Exports - Trade Balance

Source: U.S. Census Bureau

I l l i n o i sW i s c o n s i n

Ind

ian

a

Illi

no

is

WaukeganRegional Airport

OhareInt'l Airport

WestoshaAirport

Chicago ExecutiveAirport

DupageAirport

Gary/Chicago Airpo

Chicago MidwayAirport

94

94

90

94

94

94

90

90

90

80

57

57

80

80

55

55

5588

290

290

294

294

355

355

39

39

Aurora

Plainfield

Munster

Hammond

Elk Grove Village

Schererville

Lake Zurich

Monee

Crystal Lake

MontgomeryWoodridge

Minooka

Addison

Arlington Heights

Pleasant Prairie

Grayslake

Skokie

Northbrook

FranklinPark

Naperville

Highland Park

North Aurora

BedfordPark

Park Forest

Tinley Park

NilesSchaumburg Des

Plaines

St Charles

New Lenox

Romeoville

WestChicago

Geneva

M

MattesonMokena

CarolStream

Bolingbrook

Lake Forest

Waukegan

Joliet

Elgin

Elmhurst

Burr Ridge

Vernon Hills

BuffaloGrove

Wood Dale

La Grange

PalosHeights

Elwood

Rockford

CherryValley

Beloit

helle

La Salle

DeKalb

Chicago

Evanston

WillowSprings

DownersGrove

1

2

35

67

9

10

11

12

13

8

4


90

39

kford

CherryyyCCValleyyy

Beloit

DeKalbalb

Industrial Submarket Overviews

Lake County . . . . . . . . . 10

Southeast Wisconsin . . 12

I-90/Northwest . . . . . . . 14

Northwest Cook . . . . . . 16

North Cook . . . . . . . . . . 18

Fox Valley . . . . . . . . . . . 20

Central DuPage. . . . . . . 22

O’Hare. . . . . . . . . . . . . . 24

West Cook . . . . . . . . . . 26

I-88 Corridor . . . . . . . . . 28

I-55 Corridor . . . . . . . . . 30

South Cook. . . . . . . . . . 32

I-80/Joliet Corridor . . . . 34

1

2

3

4

5

6

7

8

9

10

11

12

13


Industrial M

arket Statistics

The data compiled in the Chicago Industrial Market Report is the legal property of NAI Hiffman. Reproduction or dissemination of the information contained herein is strictly prohibited

without the expressed written consent of NAI Hiffman. This report contains information, including information available to the public, which has been relied upon by NAI Hiffman

on the assumption that it is accurate and complete without independent verification by NAI Hiffman. NAI Hiffman accepts no responsibility if this should prove to be inaccurate

or incomplete. No warranty or representation, express or implied, is made by NAI Hiffman as to the accuracy or completeness of the information contained herein, and same is

submitted subject to errors, omissions, and changes in market conditions.

Industrial Market StatisticsNAI HiffmanIndustrial Market ReportThird Quarter 2010

Submarket # Bldgs. Total RBA Vacant Vacancy 3Q10 NET YTD Net New Supply Under Constr.

(SF) (SF) Rate (%) Absorption (SF) Absorption(SF) (SF) (SF)

Chicago North

Chicago South

North Cook

West Cook

Southwest Cook

South Cook

I-57/Will Corridor

Lake County

Northwest Cook

O’Hare

Central DuPage

I-55 Corridor

McHenry County

I-90/Northwest

Fox Valley

I-88 Corridor

I-80/Joliet Corridor

DeKalb County

I-39 Corridor

Southeast Wisconsin

Northwest Indiana

Flex Space Summary

Total Flex Space

Total Market

Summary

1,121

1,728

714

741

490

1,126

80

930

525

1,725

1,098

655

437

430

495

771

614

57

219

522

431

1,529

16,438

66,180,400

151,573,528

46,032,324

60,397,505

39,226,488

85,528,194

12,351,467

66,750,778

28,431,207

100,509,670

67,028,163

80,357,318

25,562,283

25,620,633

32,089,494

61,834,957

62,408,397

6,970,869

24,053,891

44,614,814

35,702,307

72,373,894

1,194,598,581

5,007,916

14,940,529

3,563,057

7,069,207

3,332,996

10,197,898

2,842,707

7,922,589

3,298,303

12,837,390

6,846,528

10,486,603

3,320,992

2,792,342

3,930,949

7,769,179

11,072,174

251,641

4,718,311

5,335,298

3,363,489

10,029,212

140,929,310

7.7%

9.9%

7.7%

11.7%

8.5%

11.9%

23.0%

11.9%

11.6%

12.8%

10.2%

13.0%

13.0%

10.9%

12.2%

12.6%

17.7%

3.6%

19.6%

12.0%

9.4%

13.9%

11.8%

-654,614

-941,163

-253,485

332,212

273,382

619,352

49,000

-267,097

113,182

-309,760

131,055

714,448

80,881

195,591

-128,882

363,396

-168,031

-13,863

-378,977

983,661

163,557

159,750

1,063,595

-891,939

-1,207,386

-1,048,697

76,474

115,998

578,225

-498,236

-529,531

326,375

-1,325,594

54,578

410,470

-12,878

29,522

-186,501

989,967

249,307

43,441

-389,040

1,893,642

861,791

-746,363

-1,206,399

0

0

0

0

0

137,078

0

0

0

0

0

0

0

0

0

0

0

0

0

1,000,000

0

0

1,317,078

0

91,000

0

0

0

514,000

0

214,000

0

0

0

53,000

42,000

52,000

0

0

217,712

0

0

0

0

30,000

1,213,712

Metropolitan ChicagoNAI HiffmanIndustrial Market Report Mid-Year 2010

Market Summary

Chicago is the second largest industrial market in the U.S. with over

1.15 billion SF of inventory. The Chicago industrial market remains the

most infl uential in the Midwest, due to its growing prominence as an

inland port and its diverse, comparatively low-cost labor force. It has the

second largest workforce in the country and is the largest manufacturing

market. Chicago’s strategic location and transportation infrastructure

make it the most important transportation center in the country. Located

in the path of three of the nation’s busiest transcontinental expressways

(I-80, I-90 and I-94), Chicago also claims 70 percent of the nation’s rail

and intermodal activity. The metropolitan area sits at the convergence

of all six class-one railways and within a day’s drive of one-third of the

country’s population.

Quarter in Review

For the fi rst time in nearly two years, overall conditions improved

throughout the Chicago Industrial Market. The vacancy rate decreased

30 basis points to 11.8% compared to last quarter’s 12.1% rate. A

year ago, the vacancy rate was in similar territory, at 11.7%, but was

still on its way up and many were unsure of how high it would reach

and when it would peak. It now appears the peak occurred mid-2010,

about 12 months after the recession ended according to the Bureau of

Economic Research. The coming quarters may still experience minor

vacancy increases, as the industrial real estate market typically lags

the economy by about 18 to 24 months, but another period of steadily

rising vacancies and negative net absorption is unlikely. Although overall

vacancy decreased for the market, a few submarkets continued to post

rises in vacancies for the third quarter, most notably the Lake County,

Fox Valley and I-39 Corridor submarkets.

Net absorption, the change in occupied space that is used to measure

demand, was positive for the fi rst time in eight quarters, totaling

1,063,595 SF for the quarter. The tally year-to-date, however, remains

in negative territory, totaling negative 1,206,399 SF for 2010, due to the

-10,000,000

-6,000,000

-2,000,000

2,000,000

6,000,000

10,000,000

0%

3%

6%

9%

12%

15%

3Q07

4Q07

1Q08

2Q08

3Q10

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

Net Absorption (SF)Vacancy Rate (%)

Vacancy and Absorption

# INDUSTRIAL BUILDINGS 16,438

MARKET SIZE (SF) 1,194,598,581

VACANCY 140,929,310 SF (11.8%)

3Q10 NET ABSORPTION (SF) 1,063,595

2010 YTD NET ABSORPTION (SF) -1,206,399

NEW SUPPLY (SF) 1,317,078

UNDER CONSTRUCTION (SF) 1,213,712

Pictured Above: 6755 W. 65th St. in Bedford Park, where end-to-end supply chain

solutions provider M. Block & Sons leased 341,114 SF during the third quarter

Total Sale Transactions and Price PSF

0

200

400

600

800

$20.00

$30.00

$40.00

$50.00

$60.00

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010*

Total Sales

Average Price PSF

Total Sales (Annualized)

Source: CoStar$1,000,000+ Transactions

Historical Deliveries

0 MM

5 MM

10 MM

15 MM

20 MM

25 MM

30 MM

1990

1992

1994

1996

1998

2000

2002

2004

20062007

1991

1993

1995

1997

1999

2001

2003

2005

200820092010*

Total Deliveries (SF)

Average (SF)

Source: CoStar

* total through 3Q10

* total through 3Q10


effects of the fi rst two quarters of the year. By the third quarter of

2009, the outlook was far more grim, with more than negative 14

million SF of net absorption for the fi rst three quarters of the year.

Leasing activity continues to increase in both quantity and deal

size market-wide. More than a year into the economic recovery,

companies are beginning to feel demand to restock their

inventories, and are addressing their real estate expansion plans

now to take advantage of competitive rental rates and generous

concessions available in today’s market. The majority of the

quarter’s largest lease transactions (many greater than 200,000 SF

in size) were new leases, as opposed to lease renewals, aiding in

the positive absorption witnessed for the period. Sales activity is

on pace to nearly match last year’s paltry totals, but continues to

increase each quarter, with average sales price per square foot

slightly increasing after nose-diving in 2009.

Looking Forward

While it appears vacancy rates have reached their peak, minor

fl uctuations over the coming quarters may still occur as the market

responds to the sluggish economy. Port activity, imports, industrial

production, and trucking and rail volumes continue to show positive

year-to-year growth. This translates to more product fl owing

through the system and increased demand. Improvement in

Chicago’s Industrial Market will continue to accelerate throughout

2011 as the market and economy recover from the worst recession

since the Great Depression in the 1930s.

O’Hare

South Cook

I-55 Corridor

Central DuPage

Lake County


I-88 Corridor

West Cook

North Cook

Southeast Wisconsin

Southwest Cook

Northwest Indiana

Fox Valley

Northwest Cook

McHenry County

I-90/Northwest

I-39 Corridor

I-57/Will Corridor

DeKalb County

100,509,670 SF

85,528,194 SF

80,357,318 SF

67,028,163 SF

66,750,778 SF

62,408,397 SF

61,834,957 SF

60,397,505 SF

46,032,324 SF

44,614,814 SF

39,226,488 SF

35,702,307 SF

32,089,494 SF

28,431,207 SF

25,562,283 SF

25,620,633 SF

24,053,891 SF

12,351,467 SF

6,970,869 SF

Suburban Submarkets by Size

Capitalization Rate and Properties Sold

Total Industrial Base

0

20

40

60

80

100

120

6%

7%

8%

9%

10%

11%

12%

2002

2003

2004

2005

2006

2007

2008

2009

2010

Cap Rate (%)# of Properties Sold

0.7 Billion

0.8 Billion

0.9 Billion

1.0 Billion

1.1 Billion

1.2 Billion

1.3 Billion

1990

1992

1994

1996

1998

2000

2002

2004

20062007

1991

1993

1995

1997

1999

2001

2003

2005

200820092010

Total Industrial Base (SF)

Industrial Market Trends

VacancyRate

NetAbsorption

AskingRents

Signifi cant Industrial Lease Transactions 3rd Qtr. 2010

Property Address Submarket City Leased (SF) Tenant Comments

2805 Duke Pky. I-88 Corridor Aurora 549,588 Midwest Warehouse Lease renewal

6755 W. 65th St. South Cook Bedford Park 341,114 M. Block & Sons New lease

11801 S. Central Ave. South Cook Alsip 284,356 California Cartage New lease

7557-7575 S. 78th Ave. South Cook Bridgeview 254,425 Oak Creek Distribution (HOBO) New lease

26416 Centerpoint Dr. I-80/Joliet Corridor Elwood 160,000 ITL New lease

Industrial M

arket Sum

mary

Italics denotes NAI Hiffman transaction



22

176

120

21

176

83

60

22

173

12

12

45

4145

41

294

94

Zion

Lake Zurich

ake

Grayslake

Highland Park

P l ti

Fox Lake

Lake Forest

Waukegan

cHenry

Vernon Hills

BuffaloGrove

MundeleinLibertyville

Gurnee

NorthChicago

Lake County

Submarket Trends

VacancyRate

NetAbsorption

AskingRents

33%

7%7% 9%

10%

11%

23%Waukegan

North Chicago

Buffalo Grove

Gurnee

Libertyville

Other Lake County Suburbs

Lake Zurich

Inventory By City

POPULATION 712,567 (est.)

2000–2009 POPULATION CHANGE +10.6% (est.)

# INDUSTRIAL BUILDINGS 930

MARKET SIZE (SF) 66,750,778

VACANCY 7,922,589 SF (11.9%)

3Q10 NET ABSORPTION -267,097

YTD NET ABSORPTION -529,531

NEW SUPPLY (SF) 0

UNDER CONSTRUCTION (SF) 214,000

The Lake County industrial submarket is notable for its roster of

corporate headquarters and heavy concentration of owner–occupied

real estate, all located within close proximity to the I-94 Tri-State Tollway.

Entrepreneurial owners and corporate managers residing along the

lakefront and northwest Lake County make this area attractive for

investment. Corporate neighbors including Abbott, Baxter, Caremark,

Takeda, Walgreens and WMS join privately held companies such as

CDW, Medline and ULINE to form a vibrant base of employment. Lake

County’s relatively low property tax rates attract companies from Cook

County, although infrastructure demands have begun to slightly even

the playing fi eld.


Vacancy continued to climb through the third quarter as additional

vacancy space was added to market, the largest being ULINE leaving

397,000 SF in North Chicago for their brand new facility in Southeast

Wisconsin. The overall vacancy rate reached 11.9% by the end of

September, up from 11.5% last quarter and far above the 8.5%

recorded two years ago. Net absorption totaled negative 267,097 SF

for the quarter, bringing the tally for the fi rst three quarters of 2010 to

negative 529,531 SF.

“Vacany increased to 11.9% by the end of September, up more than 300 basis points

from 8.5% two years ago.”

Lake County Overview

-800,000

-600,000

-400,000

-200,000

0

200,000

400,000

0%

2%

4%

6%

8%

10%

12%

3Q07

4Q07

1Q08

2Q08

3Q08

1Q10

4Q08

1Q09

2Q09

3Q09

4Q09

2Q10

3Q10



0

200,000

400,000

600,000

800,000

1,000,000

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

Deliveries (SF)

Under Construction (SF)

Under Construction & Recent Deliveries

Pictured Above: 1081 Northpoint Blvd. in Waukegan, a 62,822 SF building

purchased by router bit manufacturer Onsrud Cutter in August.


0

20

40

60

80

100

120

1,000 – 19,999

SF Available

20,000 – 49,999

SF Available

50,000 – 99,999

SF Available

100,000 – 199,999

SF Available

200,000+

SF Available

# of Buildings

2.1 MM

2.0 MM

2.5 MM

2.3 MM

1.0 MM1,000 – 19,999 SF Available

20,000 – 49,999 SF Available

50,000 – 99,999 SF Available

100,000 – 199,999 SF Available

200,000+ SF Available

Available Space Profi leConstruction

The only new signifi cant new construction project broke ground

late this summer off Route 83 in Grayslake, where FedEx is

building a new 214,000 SF distribution facility on 33 acres.

The new facility will be the shipping company’s second in Lake

County, where they already have a 67,550 SF truck terminal in

Zion’s Trumpet Park.

Transaction Activity

The most signifi cant sale transaction of the quarter involved

power tool bit manufacturer Onsrud Cutter purchasing the

62,822 SF building at 1081 Northpoint Blvd. in Waukegan. The

facility, built in 2001 and situated on 6 acres of land, sold for

about $65.00 PSF. The company plans to move their operations

to the building from their former Libertyville location.

Furniture polish manufacturer Weiman Products signed the

largest lease of the quarter for 64,148 SF at 1655 S. Waukegan

Rd. in Waukegan’s Amhurst Lakes Business Park. Similar in size,

Leica Microsystems leased 63,610 SF in the Aptakisic Creek

Corporate Park in Buffalo Grove. The company plans to build

out 47,000 SF of offi ce space for their headquarters operations.

Looking Forward

Vacancy rates should remain elevated in Lake County until job

growth and demand return in earnest, resulting in a sustained

period of absorption. The worst is apparently over, but the

time frame of the eventual recovery is still uncertain due to the

sluggish economy.

Signifi cant Lake County Sale Transactions 3rd Qtr. 2010

Property Address City Size (SF) Sale Price Price PSF Buyer Seller

1081 Northpoint Blvd. Waukegan 62,822 $4,100,000 $65.00 Onsrud Cutter LP Goodman Packing Equipment

191 Ambrogio Dr. Gurnee 14,095 $820,000 $58.00 Quest Products, Inc. Wayne Hummer Trust Co.

645 Heathrow Dr. Lincolnshire 71,556 $3,200,000 $45.00 Glentronics Inc. Wrightwood Capital

1260 Rowena Rd. Grayslake 33 AC $4,159,480 $126,045/acre Scannell Properties Delos LLC

Lake Co

unty Overview

Signifi cant Lake County Lease Transactions 3rd Qtr. 2010

Property Address City Leased (SF) Tenant Comments

1655 S. Waukegan Rd. Waukegan 64,148 Weiman Products Lease renewal

1700 Leider Ln. Buffalo Grove 63,610 Leica Microsystems Inc. New lease

1175 Lakeside Dr. Gurnee 59,981 Select Marketing Solutions, Inc. New lease

921 Sherwood Dr. Lake Bluff 33,700 The Garrett McKenzie Encironmental Group, Inc. New lease

570-580 Capital Dr. Lake Zurich 29,250 Continental Automotive Systems New lease


WestoshaAirport

KenoshaRegional

Airport

83

50

142

31

32

16541

4594

Zi

Pleasant Prairie

Kenosha

RacineSturtevantBurlington

Southeast Wisconsin

Submarket Trends

VacancyRate

NetAbsorption

AskingRents

Inventory By City





VACANCY 5,335,298 SF (12.0%)

3Q10 NET ABSORPTION 983,661

YTD NET ABSORPTION 1,893,642

NEW SUPPLY (SF) 1,000,000

UNDER CONSTRUCTION (SF) 0

The primary advantages of the Southeast Wisconsin submarket are

the availability of affordable land for “big box” development as well

as lower utility costs, property taxes and workers’ compensation

when compared to submarkets in Illinois. The Lakeview Corporate

Park in Pleasant Prairie, Wisconsin accounts for the lion’s share of our

statistical tracking in the Southeast Wisconsin industrial submarket.

This 1,500-acre business park boasts 25 million SF of industrial space

and is home to an international roster of companies including S.C.

Johnson, IRIS, Yamaha and Jelly Belly.


Vacancy continued to decline in Southeast Wisconsin during the third

quarter, perpetuating a recent trend in the submarket opposite of the

majority of other industrial submarkets. Vacancy rates peaked at 14.2%

during the second quarter of 2009, and have since steadily declined,

reaching 12% at the end of September. The lower costs associated

with doing business in Southeast Wisconsin have attracted companies

looking to lower occupancy and operational costs, resulting in fi ve

consecutive quarters of positive absorption. The most recent quarter

was no exception, with absorption totalling 983,661 SF largely due to

the completion of ULINE’s new 1 million SF headquarters facility.

“Companies looking to lower occupancy and

operational costs have been attracted to Southeast Wisconsin, resulting in positive absorption.”

Southeast Wisconsin Overview

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

0%

3%

6%

9%

12%

15%

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q10

3Q10

1Q10



0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q10

3Q10

1Q10

Deliveries (SF)



6%

16%

17%

27%

34%Racine

Burlington

Kenosha

Sturtevant

Pleasant Prairie

Pictured Above: 212 Hamilton St. in Racine, a 23,898 SF industrial

warehouse building purchased by Patrick O’Neil during the third quarter


0

8

16

24

32

1,000 – 19,999

SF Available

20,000 – 49,999

SF Available

50,000 – 99,999

SF Available

100,000 – 199,999

SF Available

200,000+

SF Available

# of Buildings

2.3 MM

2.1 MM

1.3 MM

0.7 MM

0.3 MM

1,000 – 19,999 SF Available

20,000 – 49,999 SF Available

50,000 – 99,999 SF Available

100,000 – 199,999 SF Available



Following the completion of ULINE’s new 1 million SF distribution

facility and 200,000 SF offi ce headquarters in Pleasant Prairie, no

new build-to-suit or speculative projects are under construction

in Southeast Wisconsin.


Largely composed of “big-box” distribution facilities with large

spaces catering to tenants requiring substantial square footage

for their operations, signifi cant transactions don’t occur as often

in the Southeast Wisconsin submarket due to the typical large

size of transactions and the comparatively long-term leases these

tenants sign. Following several quarters of sizeable lease and

sale transactions, several of which were hundreds of thousands

of SF in size, no signifi cant transactions occurred during the

third quarter. Instead, deals were much smaller in size, such as

the sale of a 23,898 SF building purchased by a container and

packaging company in Racine.

Looking Forward

Lower taxes, utility costs, rental rates and land values found

in Southeast Wisconsin will continue to draw companies from

south of the border. Much of the industrial inventory in the

submarket is modern, with high clear heights and excellent

loading specifi cations. These high cube properties will continue

to make Southeast Wisconsin attractive to large distributors.

So

utheast Wisco

nsin Overview

Signifi cant Southeast Wisconsin Lease Transactions 3rd Qtr. 2010


3122 14th Ave. Kenosha 20,000 Undisclosed New lease

1611-1691 Renaissance Blvd. Sturtevant 5,292 Probuild New lease

Signifi cant Southeast Wisconsin Sale Transactions 3rd Qtr. 2010


212 Hamilton St. Racine 23,898 Undisclosed Undisclosed Patrick O’Neil 212 Hamilton LLC

72

2531

31

4720

90

South Elgin

EastDundee

Elgin

Hampshire Carpentersville

I-90/Northwest

Submarket Trends

NetAbsorption

AskingRents

Inventory By City





VACANCY 2,792,342 SF (10.9%)


YTD NET ABSORPTION 29,522

NEW SUPPLY (SF) 0


The I-90/Northwest industrial submarket is attractive to companies

looking for excellent interstate access, relatively low taxes, potential

incentives and a strong labor pool. Most of the industrial inventory

base in the submarket is located within minutes of a 4-way

intersection with I-90. This serves to make the I-90/Northwest

submarket a good distribution point for companies that are serving the

I-90/upper-midwest supply chain. Relatively low taxes are a benefi t

throughout the submarket and TIF incentives are available in some

areas. Additionally, the Elgin area provides an abundant, educated

labor pool. Population along and near the Fox River has increased

dramatically over the past decade. More than 76% of the total

submarket inventory is located in Elgin.


Following the trend of the overall industrial market, vacancy decreased

during the third quarter to 10.9%, down from the 11.7% rate witnessed

during the past two quarters. Increased transaction velocity and fewer

new vacancies being introduced to the market resulted in the decrease

in the vacancy rate and positive absorption totaling 195,591 SF for the

quarter. Vacancy in the I-90/Northwest submarket has held between

10% and 12% for the past two years.

“Increased transaction velocity and fewer new vacancies resulted in decreased vacancy and

positive absorption.”

I-90/Northwest Overview

-400,000

-200,000

0

200,000

400,000

0%

3%

6%

9%

12%

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

2Q10

3Q10

1Q10

3Q09

Net Absorption (SF)Vacancy Rate (%)4Q

09


0

250,000

500,000

750,000

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q10

3Q10

1Q10

Deliveries (SF)



VacancyRate

9%3%

5%

7%

76%

Elgin

Dundee, Genoa, Marengo, Hampshire, etc.

East Dundee

South Elgin

Carpentersville

Pictured Above: 2700 Alft Ln., Elgin, where grill manufacurer

Weber-Stephen Products Co. has leased 174,212 SF


0

10

20

30

40

50

1,000 – 19,999

SF Available

20,000 – 49,999

SF Available

50,000 – 99,999

SF Available

100,000 – 199,999

SF Available

200,000+

SF Available

# of Buildings

0.3 MM

0.6 MM

0.9 MM

0.9 MM

0.5 MM1,000 – 19,999 SF Available

20,000 – 49,999 SF Available

50,000 – 99,999 SF Available

100,000 – 199,999 SF Available



The only building under construction in the submarket remains a

52,000 SF speculative project on North Lancaster Road in South

Elgin. Scheduled to deliver during the fourth quarter of the year,

8,000 SF of the building is pre-leased. Otherwise, construction

will likely remain limited until demand returns in earnest.


Transaction activity picked up during the third quarter. In the

largest lease of the quarter, grill manufacturer Weber-Stephen

Products Co., better known as Weber Grill, leased 174,212

SF of space in Elgin’s Randall Crossings Business Park. The

new lease adds to their footprint in the submarket, where the

expanding company signed a lease for over 250,000 SF a year

ago. Wind turbine manufacturer Suzlon leased 62,792 SF in

Elgin’s Northwest Corporate Park X, a 250,3000 SF warehouse

building constructed in 2001.

Rubber products supplier Ebco Inc. purchased a 51,000 SF

building located at 1330 Holmes Rd. in Elgin from American

Chartered Bank for about $29.00 PSF. Their current 12,000

SF facility at 1371 Brummel Ave. in Elk Grove Village is on the

market for sale.

Looking Forward

The I-90/Northwest submarket will remain an attractive location

for businesses due to the lower tax base, strong labor pool

and interstate access. Tenants will continue to fi nd leasing

opportunities such as incentives and aggressive rates.

Signifi cant I-90/Northwest Sale Transactions 3rd Qtr. 2010


1330 Holmes Rd. Elgin 51,000 $1,490,000 $29.00 Ebco, Inc. American Chartered Bank

I-90/No

rthwest O

verview

Signifi cant I-90/Northwest Lease Transactions 3rd Qtr. 2010


2700 Alft Ln. Elgin 174,212 Weber-Stephen Products Co. New lease

2581-2589 Technology Dr. Elgin 62,792 Suzlon New lease

1360 Madeline Dr. Elgin 41,447 Top Flight Volleyball New lease

1600 Big Timber Rd. Elgin 40,872 Private partnership New lease

OhareInt'l Airport

Chicago Executive

Airport

53

72

68

62

58

19

59 12

14

20

355

290

294

90

Elk Grove Village

Lake Zurich

Arlington Heights

gin

F kli

Palatine

Schaumburg Des Plaines

Bloomingdale

EastDundee

gin

BuffaloGrove

Wood Dale

Streamwood

Barrington

HoffmanEstates

Mt. Prospect

Bartlett

Northwest Cook

Submarket Trends

NetAbsorption

AskingRents

Inventory By City





VACANCY 3,298,303 SF (11.6%)



NEW SUPPLY (SF) 0


The Northwest Cook submarket is a desirable business location for

entrepreneurial owners and corporate managers who reside in the area’s

suburban communities. The submarket is conveniently located close

to Chicago’s O’Hare International Airport and has excellent access to

Chicago and the western suburbs using I-90, I-290 and Route 53. The

user base generally consists of specialized manufacturing and service

companies. Many international companies, particularly Asian and

European, have located their North American headquarters here due

to the proximity to the airport. Few distribution facilities exist relative

to neighboring submarkets. Many users come from the comparatively

cramped O’Hare submarket looking for more space or a location closer

to their residences, but don’t want to move all the way west to Elgin

or beyond. While high Cook County taxes may be prohibitive to some

users, landlords continue to offer lower net rents to attract tenants.


Vacancy continued to decline throughout the Northwest Cook

submarket through the third quarter as transactional activity outweighed

the effects of few new signifi cant vacancies being added to the market.

The overall vacancy rate dipped to 11.6% by the end of September,

marking the fourth consecutive quarter of declining vacancy rates, a

“The vacancy rate dipped to 11.6%, marking the fourth consecutive quarter of declining

vacancy rates.”

Northwest Cook Overview

-750,000

-500,000

-250,000

0

250,000

500,000

750,000

0%

3%

6%

9%

12%

15%

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q08

2Q09

3Q09


09

2Q10

3Q10

1Q10


0

100,000

200,000

300,000

400,000

500,000

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q10

1Q10

Deliveries (SF)



VacancyRate

14%

7%

7%

10%

15%19%

28%Schaumburg

Bartlett, Hoffman Estates, Roling Meadows, etc.

Palatine

Mt. Prospect

Northlake

Barrington

Streamwood

Pictured Above: 1900-2000 S. Carboy Rd., Mt. Prospect, purchased by

Chicago-based Brennan Investment Group during the third quarter


0

15

30

45

60

75

1,000 – 19,999

SF Available

20,000 – 49,999

SF Available

50,000 – 99,999

SF Available

100,000 – 199,999

SF Available

200,000+

SF Available

# of Buildings

1.0 MM

1.4 MM1.0 MM

0.9 MM

0.6 MM1,000 – 19,999 SF Available

20,000 – 49,999 SF Available

50,000 – 99,999 SF Available

100,000 – 199,999 SF Available


Available Space Profi letrend opposite to other area submarkets that have witnessed

several quarters of rising vacancy rates. Net absorption was

positive, totaling 113,182 SF for the quarter, bringing the 2010

tally year-to-date to 326,375 SF.

Construction

Largely a developed “infi ll market”, the majority of construction

projects are building additions, but these have been few and far

between due to economic concerns and limited fi nancing.


The Chicago-based private investment fi rm Brennan Investment

Group acquired a 217,000 SF building on Carboy Rd. in Mt.

Prospect this September. The building, built in the 1980s, was

partially leased at the time of the sale.

Part of a seven property portfolio sale, private equity real estate

investment fi rm High Street Equity Advisors, LLC purchased the

59,500 SF industrial warehouse building located at 901 Phoenix

Lake Ave. in Streamwood from Boston-based TA Associates

Realty for about $66.00 PSF.

Looking Forward

Although improvements have been witnessed in the Northwest

Cook submarket during recent quarters, vacancy will remain in

the double-digits for the foreseeable future until job growth and

consumer buying power increase demand market-wide. Until

demand returns, landlords will continue to push aggressive rental

rates and signifi cant concession packages for tenants.

Signifi cant Northwest Cook Sale Transactions 3rd Qtr. 2010


1900-2000 S. Carboy Rd. Mt. Prospect 217,000 Undisclosed Undisclosed Brennan Investment Group Principal Financial Group

901 Phoenix Lake Ave. Streamwood 59,500 $3,950,000 $66.00 High Street Equity Advisors TA Associates Realty

No

rthwest C

oo

k Overview

Signifi cant Northwest Cook Lease Transactions 3rd Qtr. 2010


707 Remington Rd. Schaumburg 5,000 Fireguy Graphics New lease

3701 Berdnick St. Rolling Meadows 3,006 Luxury Auto Group Inc. New lease

OhareInt'l Airport

ago ExecutiveAirport

43

21

58

68

4114

294

94

90

Glencoe

e

n s

Skokie

Northbrook

Park Ridge

NilesDes Plaines

Grove

Lincolnwood

MortonGrove Evanston

Wheeling

Chicago

North Cook

Submarket Trends

NetAbsorption

AskingRents

Inventory By City





VACANCY 3,563,057 SF (7.7%)


YTD NET ABSORPTION -1,048,697

NEW SUPPLY (SF) 0


Desirable for users seeking quick access to Chicago, major area

expressways, and the northern suburbs, the North Cook Submarket

is also attractive to long-term Chicago-based users looking to stay

close to the city while escaping Chicago congestion. The area has

the advantage of an inventory of buildings with better specifi cations

than many of the antiquated buildings found in the city of Chicago.

It tends to be a primarily user/buyer market, with limited leasing

opportunities. The user base generally consists of service providers

and light manufacturers who tend to remain in their locations for

extended periods of time, resulting in limited transaction velocity in the

submarket. The inventory base is mostly comprised of 1960s–1970s-

era buildings with lower ceilings and low parking ratios. Higher taxes

may be a deterrent for some users, while others are willing to pay the

price for the location.


Vacancy decreased slightly during the third quarter for the fi rst time

in two years. The vacancy rate fell to 7.7% by the end of September,

but still remains elevated well above the rates seen at this time last

year and especially two years ago. Net absorption, normally inversely

related to the vacancy trend, was negative for the quarter due to the

“Historically an owner-user submarket, vacancy rates have not reached levels

experienced in neighboring submarkets.”

North Cook Overview

-500,000

-300,000

-100,000

100,000

300,000

500,000

0%

2%

4%

6%

8%

10%

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09


09

2Q10

3Q10

1Q10


14%

8%

13%

17%20%

28%Wheeling

Evanston, Glenview, Lincolnwood, Northfield, etc.

Northbrook

Skokie

Niles

Morton Grove

VacancyRate

Pictured Above: 92-154 Messner Dr., Wheeling purchased in an

investment sale by ATG Trust Company during the third quarter


0

20

40

60

80

100

1,000 – 19,999

SF Available

20,000 – 49,999

SF Available

50,000 – 99,999

SF Available

100,000 – 199,999

SF Available

200,000+

SF Available

# of Buildings

0.2 MM

1.7 MM

1.3 MM

1.1 MM

0.8 MM1,000 – 19,999 SF Available

20,000 – 49,999 SF Available

50,000 – 99,999 SF Available

100,000 – 199,999 SF Available


Available Space Profi ledemolition of a couple buildings in the submarket affecting the

total inventory.

Construction

The North Cook submarket has experienced very little new

development in recent years due to its status as a mature market.


Deals were limited to smaller spaces during the third quarter.

Clock parts manufacturer Timetek Corp. purchased a 35,682

SF warehouse building in Skokie for about $50.00 PSF and

expanded their business by relocating from a 11,500 SF building

in Harwood Heights.

Classic car refurbisher RPM Redline leased 34,350 SF at 6143

W. Howard St. in Niles. The deal was an “as-is” transaction.

Also leasing space, Hasley Warehousing and Distribution leased

26,316 SF in Morton Grove during the third quarter. The food

distributor built out two offi ces and a conference room as part of

the transaction.

Looking Forward

Vacancy rates are likely near their peak in the North Cook

submarket, but should remain elevated over the coming quarters

until confi dence in the economy improves, driving industrial

production and demand. Historically an owner-user submarket,

area vacancy rates have not reached levels experienced in

neighboring submarkets where large institutionally-owned multi-

tenant buildings prevail.

Signifi cant North Cook Sale Transactions 3rd Qtr. 2010


92-154 Messner Dr. Wheeling 62,229 $2,068,000 $33.00 ATG Trust Company Chicago Title Trust Company

6666 W. Howard St. Niles 50,256 $2,300,000 $46.00 Angelo D’Angelov Oakley Industries, Inc.

7650 Austin Ave. Skokie 35,682 $1,800,000 $50.00 Timetek Corp. Erell Manufacturing

201-203 Northfield Rd. Northfield 20,055 $1,835,000 $92.00 Fidelity Energy, LP Josephine Louis

No

rth Co

ok O

verview

Signifi cant North Cook Lease Transactions 3rd Qtr. 2010


6143 W. Howard St. Niles 34,350 RPM Redline New lease

8220 N. Austin Ave. Morton Grove 26,316 Hasley Warehousing and Distribution New lease

7007 Austin Ave. Niles 21,682 Intelligent Spaces by Design, LLC New lease

2165 Shermer Rd. Northbrook 11,283 Undisclosed New lease

811 St. Louis Ave. Skokie 10,553 Mounsef International New lease

DupageAirport

31

25

64

38

59

64

3847

30

88

Aurora

Batavia

South Elgin

Naperville

North Aurora

St Charles

West ChicagoCa

Sugar Grove

Elgin

Geneva

Streamwoo

Fox Valley

Submarket Trends

NetAbsorption

AskingRents

Inventory By City





VACANCY 3,930,949 SF (12.2%)


YTD NET ABSORPTION -186,501

NEW SUPPLY (SF) 0


The Fox Valley submarket lies between the I-90/Northwest submarket

to the north and the I-88 Corridor submarket to the south and has

limited access to major expressways. It is primarily an owner/user

market with leasing opportunities in the small to mid-size range. The

user base generally consists of manufacturing companies that serve

the area within close proximity to users’ homes. Much of the inventory

is composed of mid-1980s buildings in contrast to the modern “big-

box” distribution warehouses of neighboring submarkets. Many users

choose to be in the Fox Valley submarket due to need and remain in

the submarket long-term, resulting in limited transaction velocity.


The Fox Valley’s vacancy rate climbed above 12% during the third

quarter for the fi rst time in the submarket’s history. The rate had been

hovering around the 12% for the past several quarters, but a handful

of new vacancies and net absorption totaling negative 128,882 SF for

the quarter was enough to push it to 12.2% by the end of September.

Although vacancy has reached a new high point, demand is typically

limited in the Fox Valley submarket, and large swings aren’t common.

“Negative net absorption and new vacancies pushed the Fox Valley’s

vacancy rate above 12% for the fi rst time in the submarket’s history.”

Fox Valley Overview

-800,000

-600,000

-400,000

-200,000

0

200,000

400,000

0%

3%

6%

9%

12%

15%

18%

4Q09

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

2Q10

1Q10

3Q10



0

100,000

200,000

300,000

400,000

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q10

3Q10

1Q10

Deliveries (SF)



11%

26%

28%

35% West Chicago

Geneva

Batavia

St. Charles

VacancyRate

Pictured Above: 525 Shingle Oak Dr., West Chicago, purchased by KTR Capital Partners

during the third quarter and subsequently leased to McCollister’s Transportation Group, Inc.


0

20

40

60

80

1,000 – 19,999

SF Available

20,000 – 49,999

SF Available

50,000 – 99,999

SF Available

100,000 – 199,999

SF Available

200,000+

SF Available

# of Buildings

0.8 MM

1.4 MM

0.8 MM

1.0 MM

0.7 MM1,000 – 19,999 SF Available

20,000 – 49,999 SF Available

50,000 – 99,999 SF Available

100,000 – 199,999 SF Available



Due to the relatively large amount of vacant space on the market,

negative absorption trends and limited access to the area, new

development projects have been nonexistent. As the market

begins to turn around and vacant space is gradually absorbed,

construction activity will eventually pick up in and around

communities west of the Fox River, as few industrial-zoned land

sites remain near the river.


Real estate services and investment company JSQ Commercial

LLC acquired a 146,000 SF manufacturing building in St. Charles

for $7.125 million during the third quarter from global investment

management company Invesco. Private equity fund manager

KTR Capital Partners purchased an 150,000 SF industrial

building in West Chicago’s Crossroads of DuPage business park

for $3.9 million. The transaction also included a neighboring

11.6-acre parcel of land and two industrial condominium units

totaling 6,491 SF. The original asking price was $9.75 million. As

part of the same transaction, KTR was able to secure a long-term

lease from McCollister’s Transportation Group in the 150,000 SF

building located at 525 Shingle Oak Drive.

Looking Forward

Vacancy is likely near its peak and should level off over the

coming quarters, but will remain elevated until demand returns

in earnest. Transaction velocity is typically low in the Fox Valley

submarket, so it may take longer for conditions to improve

compared to the characteristically more active submarkets.

Signifi cant Fox Valley Sale Transactions 3rd Qtr. 2010

Signifi cant Fox Valley Lease Transactions 3rd Qtr. 2010


525 Shingle Oak Dr. West Chicago 150,000 McCollister’s Transportation Group, Inc. New lease

701 N. Raddant Rd. Batavia 27,000 BCT Printing New lease

900-940 Paramount Pky. Batavia 7,500 Batavia Youth Baseball New lease

1183 Pierson Dr. Batavia 5,900 Fastenal New lease


3825 Ohio Ave. St. Charles 146,000 $7,125,000 $49.00 JSQ Commercial, LLC Invesco

Multi-property sale West Chicago 156,491 $3,899,000 N/A KTR Capital Partners TCB Development

555 Kirk Rd. St. Charles 62,400 $3,419,520 $55.00 Kristel Corporation ML Realty Partners

1100 Kingsland Dr. Batavia 52,475 $2,650,000 $51.00 Gibraltar Properties Group Hopper Investment Inc.

Fo

x Valley Overview

OhareInt'l Airport

53

19

64

83

53

20

294

88

355

290

Elk Grove Village

Addison

Schaumburg

Bloomingdale

est ChicagoCarol Stream

Elmhurst

W

LombardGlen Ellyn

GlendaleHeights

Central DuPage

Submarket Trends

NetAbsorption

AskingRents

Inventory By City





VACANCY 6,846,528 SF (10.2%)



NEW SUPPLY (SF) 0


The well-positioned Central DuPage industrial submarket benefi ts from

advantages including relatively low taxes, newer building inventory and

an educated workforce. The recent completion of the I-355 extension,

Chicago’s newest expressway, has improved access to the area and

spurred interest in the mature market. Users in the Central DuPage

submarket vary by type and are not limited to primarily distribution like

other nearby submarkets.


The uptick in transactional activity witnessed in the Central DuPage

submarket over the past few quarters has helped to stabilize the

vacancy rate. Vacancy decreased during the second quarter, ending

September with a rate of 10.2%, down slightly from 10.4% last quarter

and comparable to the 10.3% rate witnessed a year ago. The active

marketplace pushed net absorption positive for the quarter, totaling

131,055 SF, and bringing the year-to-date tally to 54,578 SF.

Construction

New development will be limited as very little land remains for new

speculative construction in the submarket. Construction projects are

limited to building renovations and expansions.

“Vacancy in the submarket has likely peaked and will begin to improve as elevated transactional

activity continues and demand picks up.”

Central DuPage Overview

-800,000

-400,000

0

400,000

800,000

1,200,000

0%

3%

6%

9%

12%

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

2Q10

1Q10

3Q10


09


0

100,000

200,000

300,000

400,000

500,000

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q10

3Q10

1Q10

Deliveries (SF)



18%

7%

9%

10% 29%

27%Addison

Hanover Park

Elmhurst

Glendale Heights

Carol Stream

Bloomingdale, Lombard, Roselle, Vill Park, Wheaton

VacancyRate

Pictured Above: 1150 N. Swift Rd., Addison, where restaurant equipment

parts supplier Parts Town leased 63,455 SF during the third quarter


0

30

60

90

120

150

1,000 – 19,999

SF Available

20,000 – 49,999

SF Available

50,000 – 99,999

SF Available

100,000 – 199,999

SF Available

200,000+

SF Available

# of Buildings

2.3 MM

1.2 MM

2.2 MM

1.9 MM

1.1 MM1,000 – 19,999 SF Available

20,000 – 49,999 SF Available

50,000 – 99,999 SF Available

100,000 – 199,999 SF Available


Available Space Profi leTransaction Activity

The most signifi cant sale of the quarter involved manufacturing

company Startex Industries purchasing a 54,770 SF building in

Addison from Vacumet, a subsidiary of the Schoelle Corporation

for about $56.00 PSF. Shoelle, a packaging supply manufacturer

closed their Addison Vacumet location and a location in New

Jersey, consolidating operations at their Austell, Georgia location.

The company is headquartered in nearby Northlake.

The largest lease transaction of the quarter was the long term

lease of 63,455 SF at 1150 N. Swift Rd. in Addison from Dallas-

based landlord Lincoln Property Company. The restaurant

equipment parts provider Parts Town will use the space for storage

and distribution throughout the local market. Computer and

equipment dealer COM2 Computers & Technologies LLC signed

a lease for 52,218 SF at 140 E. Fullerton Ave. in Carol Stream.

The landlord of the property is Finch & Barry Properties, LLC.

Looking Forward

Vacancy in the submarket has likely peaked and will begin to

recover as elevated transactional activity continues and demand

picks up. As companies become increasingly confi dent in the

eventual economic recovery, they will begin to readdress their

real estate expansion needs. The advantageous location of

the Central DuPage submarket, combined with its variety of

industrial product, ensure the submarket will be quick respond

to improving economic conditions and industry expansion, and

one of the fi rst to recover.

Signifi cant Central DuPage Sale Transactions 3rd Qtr. 2010

Signifi cant Central DuPage Lease Transactions 3rd Qtr. 2010


31 Mitchell Ct. Addison 54,770 $3,087,000 $56.00 Startex Industries Inc. Schoelle Corporation

455 W. Kay Ave. Addison 20,880 $1,350,000 $65.00 David Hennicke Not listed

1220 Capitol Dr. Addison 15,500 $1,256,500 $81.00` Gelatin Innovations, Inc. Colony Capital

Central D

uPag

e Overview


1150 N. Swift Rd. Addison 63,455 Parts Town New lease

140 E. Fullerton Ave. Carol Stream 52,218 COM2 Computers & Technologies, LLC New lease

945 N. Larch Ave. Elmhurst 51,023 Garland Converting New lease

50 W. North Ave. Lombard 48,000 Overton Gear & Tool New lease

146 Alexandra Way Carol Stream 42,341 Target Marketing Lease renewal

50 Commercial Ave. Addison 37,500 Great Kitchens, Inc. New lease


OhareInt'l Airport

83

19

72

45

355290 294

90

Elk Grove Village

Addison

Heights

Park Ridge

Franklin Park

Bensenville

Nmburg Des Plaines

ngdale

Elmhurst Melrose

MortoGrov

Wood Dale

daleghts

Itasca

O’Hare

Submarket Trends

NetAbsorption

AskingRents

Inventory By City


2000–2009 POPULATION CHANGE -2.6% (est.)



VACANCY 12,837,390 SF (12.8%)


YTD NET ABSORPTION -1,325,594

NEW SUPPLY (SF) 0


The O’Hare submarket is unique due to its close proximity to O’Hare

International Airport and its central location at the crossroads of

Chicago’s expressway system. The O’Hare submarket holds the most

industrial inventory of all of the Chicagoland submarkets. Elk Grove

Village alone is the nation’s largest industrial park, boasting more than

40 million SF of industrial and fl ex space. Many of the buildings in the

submarket are older and functionally obsolete. Redevelopment and

construction has slowed dramatically since the economic downturn

took hold in 2008.


The O’Hare vacancy rate was unchanged in the third quarter, with

12.8% of space in submarket vacant at the end of September, the

same percentage posted last June. While the vacancy rate didn’t

change, net absorption totaled negative 309,760 SF for the quarter,

largely due to the demolition of a handful of buildings in the submarket,

including several industrial buildings on O’Leary Drive in Bensenville.

The buildings were leveled to make way for the eventual relocation

of Irving Park Road to the south of the recently demolished industrial

park, as part of the O’Hare Modernization Program.

“Vacancy is likely near its peak in the O’Hare submarket but will only slowly improve until the economy and demand signifi cantly rebound.”

O’Hare Overview

-1,500,000

-800,000

-100,000

600,000

1,300,000

2,000,000

0%

3%

6%

9%

12%

15%

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q10

3Q10

1Q10



0

200,000

400,000

600,000

800,000

3Q07

4Q07

1Q08

2Q09

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q10

3Q10

1Q10

Deliveries (SF) Under Construction (SF)


1%9%

11%

18%

18%

42%

Elk Grove Village

Wood Dale

Itasca

Bensenville

Des Plaines

Rosemont

VacancyRate

Pictured Above: 560-590 Supreme Dr. in the Bensenville Industrial Park,

where Henderson Transport Inc. leased 115,000 SF during the third quarter


0

50

100

150

200

250

1,000 – 19,999

SF Available

20,000 – 49,999

SF Available

50,000 – 99,999

SF Available

100,000 – 199,999

SF Available

200,000+

SF Available

# of Buildings

2.7 MM

4.9 MM

4.5 MM

3.4 MM

2.1 MM1,000 – 19,999 SF Available

20,000 – 49,999 SF Available

50,000 – 99,999 SF Available

100,000 – 199,999 SF Available



Development activity, so prevalent a few years ago, has come to

a standstill in the submarket. Many of the projects completed

during recent years were speculative facilities, and they still sit

vacant today due to depressed demand and low rental rates.


Printer cartridge manufacturer RPT Toner, Inc. purchased the the

50,000 SF building located at 475 Supreme Dr. in Bensenville

in August for $2.75 million. The building had been vacant and

available on the market for 18 months prior to the sale. The buyer

is in the process of building out the space prior to moving in.

The largest leases of the third quarter involved trucking company

Henderson Transport Inc. leasing 115,000 SF in the Bensenville

Industrial Park and the third-party logistics arm of FedEx Corp.

leasing 104,619 SF in Elk Grove Village. Color Concepts also

leased the full 93,380 SF building at 1201 Kirk St. in the Elk Grove

Industrial Park.

Looking Forward

Vacancy is likely near its peak in the O’Hare submarket and will

slowly begin to improve over coming quarters, but should remain

elevated until the economy signifi cantly rebounds and demand

returns. The premier location of the submarket close to O’Hare

International Airport with easy access to the nation’s longest

interstate highway (I-90) and several other area expressways,

will help the submarket bounce back more readily than other

submarkets.

Signifi cant O’Hare Sale Transactions 3rd Qtr. 2010

Signifi cant O’Hare Lease Transactions 3rd Qtr. 2010


560-590 Supreme Dr. Bensenville 115,000 Henderson Tranport Inc. New lease

1001 Busse Rd. Elk Grove Village 104,619 FedEx Corp. New lease

1201 Kirk St. Elk Grove Village 93,380 Color Concepts New lease

595-601 Supreme Dr. Bensenville 63,618 Shenkers International Forwarders New lease

1120-1144 Ellis St. Bensenville 59,372 KW International New lease


475 Supreme Dr. Bensenville 50,000 $2,750,000 $55.00 RPT Toner, Inc. Value Industrial Partners

2020 Touhy Ave. Elk Grove Village 35,000 $1,312,500 $38.00 Permatron Corporation Derrick Hesser

O’H

are Overview


OhareInt'l Airport

64

19

43

45

20

290

29494

90

90

290

k Grove Village

Skokie

Oak Park

Franklin Park

Bensenville

Niles

Elmhurst MelrosePark

Bellwood

SchillerPark

Chicago

West Cook

Submarket Trends

NetAbsorption

AskingRents

Inventory By City





VACANCY 7,069,207 SF (11.7%)



NEW SUPPLY (SF) 0


The West Cook submarket draws companies from the city of Chicago

looking for a more functional building and additional amenities

compared to the aging, often obsolete inventory of properties in

Chicago. Additionally, companies migrate to the area from the nearby

O’Hare submarket where interstate and airport access is similar, but

rental rates tend to be higher. The West Cook submarket benefi ts from

good access to the city of Chicago, close proximity to area interstates

and rail providers and relatively low rental rates. It is primarily an owner/

user market, but leasing opportunities have increased as institutional

and private owners have entered the submarket.


After briefl y peaking above 12% last quarter, the West Cook vacancy

rate dipped again during the third quarter to 11.7%, a rate similar to

the same time a year ago. The vacancy rate responded quickly to

the economic downturn in the second half of 2008, rising from 8% to

nearly 12% in less than a year. It has held around that 12% rate ever

since. Net absorption was positive for the quarter, totaling 332,212

SF for the period between July and September, the most signifi cant

positive traction witnessed in the submarket in more than two years.

“Net absorption was positive between July and September, marking the most signifi cant quarter

of improvement in more than two years.”

West Cook Overview

-1,500,000

-1,000,000

-500,000

0

500,000

1,000,000

0%

3%

6%

9%

12%

15%

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

2Q10

2Q10

3Q10


09


0

200,000

400,000

600,000

800,000

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q10

3Q10

1Q10

Deliveries (SF)



12%

5%

8%

9%

29%

37%

Franklin Park

Harwood Heights, Hillside, Maywood, Norridge, River Grove

Schiller Park

Bellwood

Melrose Park

Berkeley

VacancyRate

Pictured Above: 4201 Raymond Dr., Franklin Park, purchased by automotive parts

remanufacturer Dynamic Manufacturing Corporation during the third quarter


0

10

20

30

40

50

1,000 – 19,999

SF Available

20,000 – 49,999

SF Available

50,000 – 99,999

SF Available

100,000 – 199,999

SF Available

200,000+

SF Available

# of Buildings

2.8 MM

3.0 MM

2.4 MM

1.4 MM

0.4 MM


20,000 – 49,999 SF Available

50,000 – 99,999 SF Available

100,000 – 199,999 SF Available



The most desirable development property in the submarket sits

just south of O’Hare International Airport and was the former

home to Central Grocers 800,000 SF facility. Molto Capital LLC

purchased the site this past June and is waiting for a build-to-suit

opportunity. The 25-acre property can accommodate a building

up to 700,000 SF in size.


The most signifi cant sale transaction of the quarter involved

Dynamic Manufacturing Corporation, a remanufacturer of

torque converters and automotive transmissions, purchasing

the 173,000 SF building located at 4201 Raymond Dr. in Hillside.

The seller, book and magazine distributor Chas. Levy Circulating

Company, moved out of the facility more than two years ago

when they leased space in the I-55 submarket. The building had

been vacant since. Dynamic Manufacturing plans to consolidate

their locations into the Hillside building over the next few years.

Metal bookcase and stereo cabinet manufacturer Metal Box

International leased 90,097 SF at 3400 Powell St. in Franklin

Park, expanding their operations in the area.

Looking Forward

Plagued by high vacancy, the West Cook and O’Hare submarkets

will continue to experience the same vacancy concerns until

demand picks up and institutional owners respond to the market

by leasing spaces in their buildings at a discount.

West C

oo

k Overview

Signifi cant West Cook Sale Transactions 3rd Qtr. 2010


4201 Raymond Dr. Hillside 173,000 $4,000,000 $23.00 Dynamic Manufacturing, Inc. Chas. Levy Circulating Company

Signifi cant West Cook Lease Transactions 3rd Qtr. 2010


3400 Powell St. Franklin Park 90,097 Metal Box International Lease renewal

2407-2457 W. North Ave. Melrose Park 49,763 WEG Electric Motors Corporation New lease

9501-9503 Winona Ave. Schiller Park 17,779 LAS Hardwoods Inc. New lease

5200 Proviso Dr. Melrose Park 10,080 Maritime Delivery Services New lease

3701-3749 N. 25th Ave. Schiller Park 9,257 Medtronic New lease


DupageAirport

56

2531 59

59

53

8356

3430

30

55

294

88

355

290

Aurora

MontgomeryWoodridge

Batavia

Naperville

North Aurora

St Charles

West ChicagoCarol Stream

Bolingbrook

Sugar Grove

Elmhurst

DownersGrove

Oak Brook

Lisle

I-88 Corridor

Submarket Trends

NetAbsorption

AskingRents

Inventory By City





VACANCY 7,769,179 SF (12.6%)



NEW SUPPLY (SF) 0


The I-88 Corridor industrial submarket has witnessed increased

demand and speculative development during the past few years,

due to the lack of land for development in feeder submarkets such

as Central DuPage and West Cook. Developers were drawn to the

large available land sites and easy access to major expressways that

the I-88 submarket has to offer. This rapid pace of development has

slowed over the past couple years as obtaining project fi nancing has

become diffi cult, vacancy has increased and demand has been limited.


Vacancy improved again for the third consecutive quarter, dropping

to 12.6% at the end of September, down 60 basis points from last

quarter’s rate of 13.2%. At its peak at the end of 2009, vacancy had

reached more than 14%, a steep climb from the 8.2% witnessed before

the economic downturn began in early 2008. Net absorption was once

again positive for the quarter, totaling 363,936 SF, bringing the year-to-

date tally to nearly 1 million SF of positive absorption.

Construction

New construction activity in the I-88 Corridor is limited to the potential

construction of a new warehouse facility for U.S. Foodservice.

“Net absorption was positive for the third consecutive quarter, pushing the year-to-date

absorption tally to nearly 1 million SF.”

I-88 Corridor Overview

-1,000,000

-600,000

-200,000

200,000

600,000

1,000,000

0%

3%

6%

9%

12%

15%

3Q07

4Q07

1Q08

2Q08

3Q08

2Q10

3Q10

1Q10

4Q08

1Q09

2Q09

3Q09


09


0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q10

3Q10

1Q10

Deliveries (SF) Under Construction (SF)


17%

7%

15%

18%

43%

Aurora

Oswego, Westmont, North Aurora, Hinsdale, Lisle, etc.

Downers Grove

Montgomery

Naperville

VacancyRate

Pictured Above: 2380 Diehl Rd., in Aurora, purchased by Jel Sert in July, will allow the

dessert and beverage manufacturer to expand their warehousing operations in the area


0

20

40

60

80

100

1,000 – 19,999

SF Available

20,000 – 49,999

SF Available

50,000 – 99,999

SF Available

100,000 – 199,999

SF Available

200,000+

SF Available

# of Buildings

3.5 MM

2.4 MM

1.7 MM

1.7 MM

0.7 MM1,000 – 19,999 SF Available

20,000 – 49,999 SF Available

50,000 – 99,999 SF Available

100,000 – 199,999 SF Available



Dessert and beverage manufacturer Jel Sert purchased the

304,482 SF building at 2380 Diehl Rd. in Aurora from Teachers

Retirement System of Illinois this July for $10.5 million. At

the time of the sale, the building was half occupied by SYX

Distribution. Jel Sert will assume occupancy of the entire building

when SYX Distribution’s lease expires in February, expanding

their warehousing capabilities in the area. The company is

headquartered in nearby West Chicago.

One of the largest land sales of the year, U.S. Foodservice, the

biggest privately held company based in the Chicago area,

purchased a nearly 50-acre parcel of land in Aurora this July.

The large land site could accommodate a warehouse building up

to 1 million SF.

Supply chain management service provider Midwest Warehouse

signed a short-term lease renewal and expansion to expand into

the full 549,588 SF building located at 2805 Duke Pky. in Aurora

during the third quarter. The company currently occupies about

350,000 of the facility.

Looking Forward

Conditions will continue to improve in the I-88 Corridor as

companies look to take advantage of the current market through

new leases and signifi cant expansions. One of the largest news

stories of the quarter, truck and truck engine manufacturer

Navistar has agreed to move their corporate headquarters to the

former Alcatel-Lucent East campus in Lisle.

Signifi cant I-88 Corridor Sale Transactions 3rd Qtr. 2010


2380 Diehl Rd. Aurora 304,482 $10,500,000 $35.00 Jel Sert Teachers Retirement System of Illinois

Duke Pky. Aurora 49.8 acres $8,243,500 $3.80 U.S. Foodservice, Inc. Duke Realty Corporation

2100 Ogden Ave. Lisle 101,876 $4,365,000 $43.00 ROC Companies Wrightwood Capital

2225 White Oak Cir. Aurora 32,000 $900,000 $28.00 Chicago Title Land Trust Supermax, Inc.

I-88 Co

rrido

r Overview

Signifi cant I-88 Corridor Lease Transactions 3rd Qtr. 2010


2805 Duke Pky. Aurora 549,588 Midwest Warehouse Lease renewal

901 Bilter Rd. Aurora 195,000 Kohler New lease

3920 Enterprise Ct. Aurora 175,000 Cano Container New lease

940 N Enterprise St. Aurora 88,436 Demand One New lease

5400-5408 Janes Ave. Downers Grove 44,372 Undisclosed New lease


171

59

59

53

30 55

355

294

88

Plainfield

Woodridge

Naperville

aHinsdale

Romeoville

Bolingbrook

Burr Ridge

WiSpr

DownersGrove

I-55 Corridor

Submarket Trends

VacancyRate

NetAbsorption

AskingRents

9%5%

5%

10%

34%

37%

Bolingbrook

Plainfield

Lemont

Woodridge

Romeoville

Burr Ridge, Forest View,Willowbrook

Inventory By City





VACANCY 10,486,603 SF (13.0%)



NEW SUPPLY (SF) 0


Of all of the Chicago area industrial submarkets, the I-55 Corridor has

seen the most activity and development interest over the past several

years. As a result, the majority of the available land parcels are either

already developed or are controlled by developers, rendering the

I-55 Corridor an “infi ll market” with little additional land available for

signifi cant new development.


The vacancy rate dropped nearly 1% during the third quarter from

13.9% at the end of June to 13.0% by the opening days of the third

quarter. This decrease, the fi rst appreciable drop in nearly two years,

is due to signifi cant absorption of vacant space, totaling 714,448 SF

for the quarter. Sprawling vacant spaces were absorbed, such as the

506,777 SF building located at 821 Bluff Rd. in Romeoville, which had

sat vacant since 2008. The facility was purchased by user Midwest Air

Technologies, Inc. during the third quarter.

Construction

New construction in the submarket remains limited to expansions such

as 53,000 SF being added at 510 Woodcreek Drive in Bolingbrook.

“The vacancy rate dropped nearly 1% during the third quarter, the fi rst appreciable

decrease in nearly two years.”

I-55 Corridor Overview

-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000

0%

4%

8%

12%

16%

20%

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q10

1Q10

2Q09

3Q09


09

3Q10


0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q10

3Q10

1Q10

Deliveries (SF)



Pictured Above: 821 Bluff Rd. in Romeoville’s Bluff Point Business Park, purchased by fencing,

lawn care and hardware products company Midwest Air Technologies during the third quarter


0

10

20

30

40

50

1,000 – 19,999

SF Available

20,000 – 49,999

SF Available

50,000 – 99,999

SF Available

100,000 – 199,999

SF Available

200,000+

SF Available

# of Buildings

8.6 MM2.7 MM

1.8 MM

1.0 MM0.5 MM


20,000 – 49,999 SF Available

50,000 – 99,999 SF Available

100,000 – 199,999 SF Available



One of the largest sale transactions in the submarket in recent

history, Midwest Air Technologies, Inc. purchased the vacant

506,777 SF distribution building located at 821 Bluff Rd. in

Romeoville’s Bluff Point Business Park. This fall, the company

will take occupancy of the building which was completed last

year and plans to use the space for distribution of fencing,

hardware and lawn and garden products.

A specialized freezer/cold storage building was purchased by

food distributor Supreme Lobster & Seafood Co. this September.

The building sold for $106.00 PSF, a comparatively high amount

due to the specialized nature of the facility. Supreme Lobster

plans to soon take occupancy of the 101,088 SF building.

The largest leases of the quarter involved ATI Fabricated

Components leasing 138,741 SF at 340 W. Crossroads Pky. and

warehousing company Dedicated Logistics leasing 106,733 SF at

1450 Remington Rd. in Bolingbrook’s Carlow Corporate Center.

Looking Forward

Demand should continue to pick up as companies look to

take advantage of the competitive rental rates and generous

concession packages being offered by area institutional landlords.

Due to the comparatively large size of the average transaction

in the I-55 Corridor, signifi cant absorption will be realized more

quickly than other submarkets where spaces tend to be smaller

in size and less desirable in amenities. The I-55 Corridor will

likely be one of the leaders in the recovery of Chicago’s Industrial

Market in the years to come.


340 W. Crossroads Pky. Bolingbrook 138,741 ATI Fabricated Components New lease

1450 Remington Rd. Bolingbrook 106,733 Dedicated Logistics, Inc. Lease renewal

1215 101st St. Lemont 100,800 Consolidated Distribution New lease

500 Territorial Dr. Bolingbrook 77,751 D&D Manufacturing Lease renewal

14420 Van Dyke Rd. Plainfield 73,753 Logoplaste New lease

400 Crossroads Pky. Bolingbrook 64,101 IFCO Systems Lease expansion

Signifi cant I-55 Corridor Sale Transactions 3rd Qtr. 2010


821 Bluff Rd. Romeoville 506,777 $15,264,123 $30.00 Midwest Air Technologies, Inc. Land and Lake Development

279 Marquette Dr. Bolingbrook 101,088 $10,750,000 $106.00 Supreme Lobster & Seafood Co. M&E Cold Storage

175 E. Crossroads Pky. Bolingbrook 102,936 $7,895,000 $77.00 Steve Kersten IDI

I-55 Co

rrido

r Overview

Signifi cant I-55 Corridor Lease Transactions 3rd Qtr. 2010


nais

Gary/Chi


394

43 50

1

1

7

83

45

30

12 20

55

57

90

9480

80

294

355South

Holland Hammond

Schererville

Monee

WoodridgeBedford Park

Bridgeview

Park Forest

Tinley Park

le

Matteson SaukVillage

Mokena

BlueIsland

AlsipPalos

Heights

South Cook

Submarket Trends

VacancyRate

NetAbsorption

AskingRents

35%

5%8% 11%

14%

26%Bedford Park

South Holland

Bridgeview

Chicago Heights

Alsip

Other Southern CookCommunities

Inventory By City





VACANCY 10,197,898 SF (11.9%)



NEW SUPPLY (SF) 137,078


The South Cook submarket is one of the Chicago metropolitan area’s

largest in terms of geographic size and total square footage. The area

benefi ts from a good mix of manufacturing and distribution facilities

due to an abundance of skilled, educated labor, and excellent access

to several major expressways, train lines and public transportation.

The submarket consists of primarily older product with scattered

modern infi ll developments of around 2 million SF in Bedford Park

and additional projects in Alsip and Sauk Village. Ownership is mixed,

including institutional, owner/user and both national and local private

owners. While its location close to Chicago is key, Cook County taxes

can be a fi nancial burden.


The South Cook vacancy rate dropped below 12% during the third

quarter for the fi rst time since the end of 2008. September ended

with a rate of 11.9%, down from 12.5% last quarter, a difference of

60 basis points. Vacancy had held between 12% and 13% for the

duration of the economic durntown, so this adjustment is an important

step towards recovery. This decrease is due to signifi cant absorption,

totaling 619,352 SF for the quarter.

“Vacancy dropped below 12% for the fi rst time since the end of 2008 due to signifi cant

absorption totaling 619,352 SF.”

South Cook Overview

-2,000,000

-1,400,000

-800,000

-200,000

400,000

1,000,000

0%

3%

6%

9%

12%

15%

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

2Q10

1Q10

3Q10


09


0

300,000

600,000

900,000

1,200,000

1,500,000

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q10

3Q10

1Q10

Deliveries (SF)



Pictured Above: 6755 W. 65th St., Bedford Park, where M. Block & Sons leased

341,114 SF of vacant space, representing the largest lease in submarket this year


0

20

40

60

80

100

120

1,000 – 19,999

SF Available

20,000 – 49,999

SF Available

50,000 – 99,999

SF Available

100,000 – 199,999

SF Available

200,000+

SF Available

# of Buildings

4.0 MM

2.8 MM

2.1 MM

1.8 MM

1.1 MM1,000 – 19,999 SF Available

20,000 – 49,999 SF Available

50,000 – 99,999 SF Available

100,000 – 199,999 SF Available



The 135,708 SF 1970’s-era building located at 8687 S. 77th Ave.

in Bridgeview was recently rebuilt into a 137,078 SF facility and

was completed during the second quarter. Ongoing projects

include building expansions, such as the doubling of 16100

Lathrop Ave. in Harvey. The building is being expanded to

roughly 1 million SF in order to accommodate tenants Allied Tube

& Conduit Corp. and Tyco Electrical & Metal Products.


The largest sale of the third quarter involved private equity fi rm

KTR Capital Partners purchasing the 201,424 SF building located

at 6006 W. 73rd St. in Bedford Park for $7.4 million. The building

is fully leased to helicopter and plane engine parts manufacturer

Northstar Aerospace Inc.

In the largest lease transaction in the South Cook submarket

this year, end-to-end supply chain solutions provider M. Block

& Sons leased the 341,114 SF industrial facility located at 6755

W. 65th St. in Bedford Park. The warehouse building was built

in 2006.

Looking Forward

Vacancy rates should begin to fall as some of the more than

10 million SF of vacant space continues to be absorbed over

coming quarters if demand picks up and large transactions occur.

Until consecutive quarters of positive absorption are realized,

landlords will keep offering low lease rates and substantial

concession packages to attract tenants.


6755 W. 65th St. Bedford Park 341,114 M. Block & Sons New lease

11801 S. Central Ave. Alsip 284,356 California Cartage New lease

7557-7575 S. 78th Ave. Bridgeview 254,425 Oak Creek Distribution (HOBO) New lease

5139 W. 73rd St. Bedford Park 72,330 Undislosed New lease

South Cook Sale Transactions 3rd Qtr. 2010


6006 W. 73rd St. Bedford Park 201,424 $7,400,000 $37.00 KTR Capital Partners American Realty Advisors

12500-12520 S. Lombard Ln. Alsip 86,200 $1,715,000 $20.00 Venture One Real Estate Freis Family Ventures

So

uth Co

ok O

verview

South Cook Lease Transactions 3rd Qtr. 2010


A

53

53

59

102

113

71

126

23

47

113170

30

30

34

6

5252

6

45

655 355

294

88 55

55

80

57

Aurora

Plainfield

Minooka

North Aurora

Tinley Park

New LenoxMokena

Kankakee

Bolingbrook

Joliet

Elwood

le Ottawa

Seneca

DownersGrove

Channahon

Shorewood


Submarket Trends

NetAbsorption

AskingRents

Inventory By City





VACANCY 11,072,174 SF (17.7%)



NEW SUPPLY (SF) 0


The I-80/Joliet Corridor submarket has historically catered to multi-

state “big box” distribution. Its access to I-80 and I-55 position the

corridor well for distribution operations. In addition, the nation’s

largest inland port is located in Elwood. This intermodal development,

also known as CenterPoint Intermodal Center, has remained a bright

spot not only in the corridor, but for the entire Chicago market. The

reason for its continued success is the development’s ability to offer

tremendous transportation savings to importing operations as well as

being a pre-approved Foreign Trade Zone. In addition, CenterPoint

Intermodal Center announced the much anticipated opening of a new

intermodal facility that began operations this quarter. CenterPoint

Intermodal Center now offers intermodal service with both the BNSF

and Union Pacifi c Railroads.


The vacancy rate climbed slightly to 17.7%, up from 17.5% last

quarter, but down signifi cantly from 19.3% a year ago. Net absorption

totaled negative 168,031 SF for the quarter, the fi rst period of negative

net absorption seen in the submarket in the past three years. This

is deceiving, however, as the delivery of several million SF of new

“Vacancy and absorption will improve over coming quarters as tenants take occupancy

of recently lease space.”

I-80/Joliet Corridor Overview

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

7%

10%

13%

16%

19%

22%

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09


09

2Q10

3Q10

1Q10


0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

2Q10

3Q10

1Q10

Deliveries (SF)



25%

5%

10%

16%

44%

Joliet

Mokena, New Lenox, Shorewood, Frankfort, etc.

Ottawa

Minooka

Elwood

VacancyRate

Pictured Above: An artist’s rendering of 21228 Frontage Rd. in Shorewood, where

logistics firm Jacobson Companies leased 507,187 SF during the third quarter


0

20

40

60

80

100

1,000 – 19,999

SF Available

20,000 – 49,999

SF Available

50,000 – 99,999

SF Available

100,000 – 199,999

SF Available

200,000+

SF Available

# of Buildings

8.6 MM

1.7 MM

0.6 MM

0.9 MM0.8 MM


20,000 – 49,999 SF Available

50,000 – 99,999 SF Available

100,000 – 199,999 SF Available


Available Space Profi leconstruction during 2008 offset the effects of new vacancies.

Without the completion of these new buildings, net absorption

would have been strongly negative during that period, as vacancy

had climbed from around 15% to over 20% in just over a year.

Construction

A 217,712 SF build-to-suit building is still under construction at

the new 800-acre intermodal facility in Joliet.


Following a very quiet second quarter for signifi cant transactions,

the third quarter featured several sale and lease deals well over

100,000 SF in size. High speed internet, television and voice

satellite solution manufacturer KVH Industries purchased the

100,415 SF building located at 8400-8412 W. 185th St. in Tinley

Park, where it had been the sole tenant and leased about 40%.

The building was taken into receivership in February.

The I-80/Joliet corridor’s largest leases of the year took place

during the third quarter and included logistics fi rm Jacobson

Companies servicing New Zealand dairy company Fonterra

leasing 507,187 SF at 21228 Frontage Rd. in Shorewood.

Looking Forward

Vacancy will decrease and net absorption will turn positive

again over coming quarters as tenants take occupancy of

recently leased space. Additionally, the submarket’s intermodal

developments play a key role in the future of the I-80/Joliet

Corridor. Increased interest in the cost-saving locational

advantages of these facilities will continue to drive demand.

I-80/Joliet C

orrid

or O

verview

I-80/Joliet Corridor Sale Transactions 3rd Qtr. 2010


8400-8412 W. 185th St. Tinley Park 100,415 $4,262,358 $42.00 KVH Industries, Inc. Lincoln Financial Group

23315 S. Youngs Rd. Channahon 167,282 $3,050,000 $18.00 Siwin Corporation Smurfit-Stone Container

I-80/Joliet Corridor Lease Transactions 3rd Qtr. 2010


21228 Frontage Rd. Shorewood 507,187 Jacobson Companies New lease

1695-1701 Crossroads Dr. Joliet 266,680 Castle & Cooke Cold Storage Lease renewal

26416 Centerpoint Dr. Elwood 160,000 ITL New lease

23315 S. Youngs Rd. Channahon 158,850 Siwin Corporation New lease

4001 Olympic Blvd. Joliet 121,450 Smurfit-Stone Container New lease

4001 Rock Creek Rd. Joliet 100,060 Touchpoint Logistics New lease



Ind

ian

a

Illi

no

is


Ohare

WestoshaAirport

Chicago ExecutiveAirport

DupageAirport

Gary/Chicago Airp


171

43

22

53

1

176

1

72

38

38

21

120

21

59

176

72

64

120

25

64

50

25

60

83

83

31

31

43

59

53

60

31

47

22

83

23

53

173

173

25

59

53

47

23

53

64

176

76

83

38

173

47

71

23

75

394

20

30

12

41

30

12

34

52

6

52

45

20

30

41

45

30

30

52

14

30

30

45

6

12

14

41

51

51

355

90

55

90

94

94

9094

9480

80

80

55

55

57

57

88

294

294

294

290

290

35539

39

90

Aurora

Plainfield

Hazel Crest

Munster

Glencoe

Hammond

Elk Grove Village

Zion

Lake Zurich

Monee

Crystal Lake

MontgomeryWoodridge

Minooka

Batavia

Arlington Heights

South Elgin

Pleasant Prairie

Grayslake

Skokie

Northbrook

Park Ridge

Franklin Park

Naperville

Highland Park

North Aurora

BedfordPark

Hinsdale

Park Forest

Bensenville

East Chicago

Tinley Park

NilesSchaumburgDes Plaines

St Charles

New Lenox

Romeoville

Bloomingdale

West Chicago

Fox Lake

Dundee

MattesonMokena

Blue Island

Carol Stream

Bolingbrook

Lake Forest

Waukegan

Joliet

Oak Lawn

Sugar Grove

Elgin

Elmhurst

Burr Ridge

MelroseParkGeneva

McHenry

Vernon Hills

BuffaloGrove

Mundelein

MortonGrove

Wood Dale

Cicero

La Grange

Westchester

PalosHeights

Elwood

Rockford

Belvidere

CherryValley

Beloit

elle

La SalleOttawa

Seneca

DeKalb

Hampshire

Chicago

Evanston

WillowSprings

DownersGrove

Streamwood

1

2

3

4

5

6

8

9

10

19

12

13

14

15

16

5317

18

19

11

20

21

7

vansnstonv n

Chicago North1

Chicago South2

North Cook3

West Cook4

Southwest Cook5

South Cook6

I-57/Will Corridor7

Lake County8

Northwest Cook9

O’Hare10

Central DuPage11

I-55 Corridor12

McHenry County13

I-90 Northwest14

Fox Valley15

I-88 Corridor16

I-80/Joliet Corridor17

DeKalb County18

I-39 Corridor19

Southeast Wisconsin20

Northwest Indiana21

Industrial Submarket Map

© 2009 NAI Hiffman


Sub

market M

ap / M

ethod

olo

gy / D

efi nitions

The information included in this report is the result of a compilation

and analysis of data from various sources on class A, class B and

class C offi ce and industrial properties located in the metropolitan

Chicago area defi ned by the submarket map on page 36. NAI

Hiffman obtained the information from property representatives,

CoStar Group, RealCapital Analytics, industry periodicals and

magazines, our in-house property database, and other sources.

NAI Hiffman greatly appreciates the participation of all individuals,

companies and resources, whose contributions helped make this

report possible.

All of the information detailed throughout this report is saved and

organized in our own in-house database and is regularly updated.

By utilizing this database, we can analyze, calculate and report

demographic information, inventory, vacancy, availability, net

absorption, and transactional information.

Methodology &Defi nitions

Methodology

Defi nitionsThe NAI Hiffman Industrial Market Report tracks several measures

of market conditions. This information is collected for individual

properties then consolidated, organized and analyzed for

submarket and market totals. These terms, used throughout the

report, are defi ned below according to NAIOP Terms & Defi nitions.

Total Inventory (Market Size) The total square footage of gross

rentable area in a specifi c market. It includes the gross rentable

area in buildings that have received a certifi cate of occupancy.

Total inventory increases when a new building is delivered and

decreases when an existing building is destroyed, demolished or

its use changes.

Vacancy Rate A measurement expressed as a percentage of

the total amount of vacant space divided by the total amount of

inventory. Vacant space is inventory that is not currently occupied.

Net Absorption The net change in occupied space

in a given market between the current measurement

period and the last measurement period. Net

absorption can be either positive or negative and must

include decreases as well as increases in inventory

levels. For the purpose of this report, sublease space

is included in the calculation of net absorption.

New Supply The total inventory delivered to the

market since the last measurement period. Delivered

is defi ned as total square footage and/or number

of buildings that has completed construction and

received a certifi cate of occupancy during a stated

period.

Under Construction Buildings where either: a)

actual ground breaking has occurred (site excavation

or foundation work) and construction is ongoing (not

abandoned or discontinued) but for which a certifi cate

of occupancy has not yet been issued; or b) properties

undergoing conversion to offi ce from another use or

c) properties undergoing a major renovation where

75 percent or more of the building is not available for

lease and building generally requires a certifi cate of

occupancy to be made available for lease.

Available Space The total amount of space that is

currently being marketed as available for lease in a

given time period. It includes space that is available,

regardless of whether the space is vacant, occupied,

available for sublease, or available at a future date.

Available space excludes shadow space.

Shadow Space That portion of leased space which

is vacant but not available space. Shadow space is

diffi cult to measure. (Synonym: phantom space)

NAI Hiffman & NAI Global

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NAI Hiffman delivers world-class, results-oriented, offi ce, industrial, retail, and investment brokerage and management services including:

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