How To Sell A Building In A Suburbia Neighborhood

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1 Metropolitan Chicago Market Review Year-End Market Review & 214 Forecast

2 To our valued customers, partners and future clients My holiday shopping this year took me to a suburban outlet mall I hadn t visited since 29. The last time I was there, empty storefronts outnumbered the occupied spots two-to-one. Employees greeted rare customers with lonely desperation. In those days it seemed like there was a vacant retail center or abandoned housing development on every corner, in every city. I m happy to report that things were much different this year I had to search the aisles for a place to park, there were stores I d never heard of selling things I didn t know I needed, and every window was lit up. It was a good feeling. Our market review on the following pages reflects the recovery that has been underway for several quarters the Chicago industrial market has seen a steadily declining vacancy rate since the second quarter of 21. The downtown office market has experienced 14 straight quarters of positive absorption. It s one thing to see the charts moving in the right direction and another to start seeing and feeling the impact of what those numbers actually mean - packed parking lots, full restaurants and more traffic on our morning and evening commutes. It s inspiring to see how far we ve come in the past few years and will be exciting to see what lies ahead in the new year. NAI Hiffman is proud to provide our research and analysis of Chicagoland s real estate market. Best wishes for a fulfilling and prosperous 214! Regards, John R Picchiotti COO, Brokerage

3 Table of Contents NAI Hiffman Metropolitan Chicago Year-End Market Review & 214 Forecast 4 Local Economy 7 Office Statistics 8 Suburban Office Summary 1 Suburban Market Reviews 2 Downtown Office Summary 22 Downtown Submarket Reviews 32 Medical Office Review 34 Office Investment Review 1 North Suburban 12 Northwest Suburban 14 O Hare Area 16 East-West Corridor 18 I-55 Corridor 22 West Loop 24 Central Loop 26 East Loop 28 North Michigan Avenue 3 River North 37 Industrial Statistics 38 Industrial Market Summary 4 Industrial Construction 42 Industrial Submarket Reviews 72 Logistics Review 74 Industrial Investment Review 76 Retail Review 78 Methodology/NAI Global 8 NAI Hiffman 42 Southeast Wisconsin 44 Lake County 46 I-9 Northwest 48 Northwest Cook 5 North Cook 52 Fox Valley 54 Central DuPage 56 O Hare 58 West Cook 6 Chicago 62 I-88 Corridor 64 I-55 Corridor 66 South Cook 68 I-8/Joliet Corridor 7 Northwest Indiana

4 Overall Trend Local Economy Unemployment POPULATION (21 CENSUS) 9,461,15 8.3% POPULATION CHANGE (2-21) +4.% MEDIAN HOUSEHOLD INCOME (21) $57,14 GROSS METRO PRODUCT (213) $585.9 BILLION LABOR FORCE 4,12,117 TOTAL NONFARM JOBS GAINED (1/12-1/13) 56,5 Case-Schiller Home Price Index CHICAGO METRO UNEMPLOYMENT RATE ILLINOIS UNEMPLOYMENT RATE U.S. UNEMPLOYMENT RATE 8.3% 8.9% 6.7% Q3 213 US GDP Change 4.1% 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 5 companies to the fl ow of goods and services through airports 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. Year in Review The U.S. Economy fi nished the year strong, as it was announced in late December that last quarter's U.S. gross domestic product fi gures were revised to a 4.1% annual growth rate, a rate higher than projections and the strongest growth in nearly two years. Similarly, the International Monetary Fund raised its U.S. growth forecasts for the fi rst time in nearly two years to 2.8% for 214 largely due to rising demand and increasing inventories worldwide. The IMF predicts even more robust economic growth globally in 214, to the tune of 3.7%. Wall Street continued to reach record high after record high, with City vs. Suburban Population Change (2-21) 5% Unemployment and Work Force Participation 68% 12% 4% 67% 1% 3% 66% 8% 2% 1% 65% 64% 6% 4% % 63% 2% -1% New York City Los Angeles Chicago Dallas Houston Suburban Population Change Philadelphia Washington Miami Atlanta City Population Change Boston 62% % Metro Chicago Unemployment Rate U.S. Unemployment Rate U.S. Labor Force Participation Rate Source: Linneman Associates Source: Bureau of Labor Statistics 4 NAI Hiffman

5 the Dow Jones Industrial Average recently eclipsing 16,5, posting its biggest annual gain in 18 years. Local Economy While the markets may be performing well, the average American isn't doing as great. The unemployment rate continues to remain high and the work force participation rate, a measure of the percentage of civilians in the labor force, has dropped to 62.8%, the lowest level in 35 years. More than 91.8 million Americans are currently not part of the labor force. While jobs continue to be added at sluggish levels, the historically low work force participation rate continues to be the cause behind unemployment rate dropping to 6.7%. Of the 8.8 million jobs lost due to the recession, the country has only recovered about 86% of those jobs. Meanwhile, the population continues to grow and some job-seekers have given up. However, a few resource-rich states have regained all of the jobs lost due to the downturn, and cities such as Houston, New York City, and Dallas have more than doubled the amount of jobs present in those cities before the recession. Household debt has reached the lowest level since 26 and the housing market, a big part of what got this country in trouble in the fi rst place, continues to improve as the excess supply of single-family homes that was on the market has largely been absorbed and the fi rst seller's market in years has emerged. On average, the United States experiences an economic slowdown every four to six years and the current recovery is now in its fourth year. U.S. gross domestic product has grown at about 2.2% per year over the past four years, for a total of about 1% growth since the economy turned around. This rate is still well below past recoveries. The majority of economic outlooks continue to point to accelerated growth in 214, however, should another major world event or unforeseen political development push the country's economy into another downturn, it will not have recovered to the degree it has following similar recession periods in the past. U.S. Business Confidence Source: Tradingeconomics.com, Institute for Supply Management Average Weeks Unemployed Average weeks unemployed Corporate Profits vs. Job Openings Source: Bureau of Labor Statistics 6 MM $2. Trillion 5 MM $1.5 Trillion The Chicago Metropolitan Area continues to lag the rest of the country when it comes to the recovery with an 8.3% unemployment rate and a housing market that hasn't performed as well as most of the larger U.S. markets. While the local economy is expected to expand throughout 214, the Chicago area population growth rate is expected to remain well below the projected 29% national growth rate, suggesting that businesses may not choose to locate to a market that isn't expanding substantially. The ongoing recovery will have to shift into overdrive to regain additional lost ground before the next eventual downturn comes. 4 MM 3 MM 2 MM $1. Trillion $.5 Trillion Corporate Profits After Tax ($) U.S. Non-Farm Job Openings (#) Source: Bureau of Labor Statistics & Bureau of Economic Analysis 13 $ 5

6 Chicago Office Markets Crystal Lake Dundee McHenry Elgin South Elgin Fox Lake Northwest Suburban Lake Zurich 9 Schaumburg Grayslake Vernon Hills Chicago Executive Airport Arlington Heights Gurnee Waukegan Regional Airport Buffalo Grove Ohare Int'l Airport Waukegan Libertyville North Suburban Lake Forest Highland Park Deerfield Northbrook Glenview 2 O Hare Area Niles Skokie Offi ce Market Overviews North Suburban Northwest Suburban O Hare Area East-West Corridor I-55 Corridor West Loop Central Loop East Loop North Michigan Avenue River North Evanston Dupage St CharlesAirport North Aurora Aurora Carol Stream Naperville 55 Bolingbrook Romeoville Addison Lombard East-West Corridor 29 2 Downers Grove Westmont I-55 Darien Corridor Burr Ridge CBD (Central Business District) Franklin Park Chicago Carpenter St Chicago Midway Airport Halsted St Ohio St Kinzie St 12 2 Oak Lawn 9 Chicago Ave Chicago Midway 5 Airport West Loop Wacker Dr Oak St River North Wells St 57 Congress Pky State St 57 Central Loop Harvey 9 East Loop Michigan Ave Michigan Ave North Michigan 12 Avenue 2 Wacker Dr Randolph St Gary/Chicago A 6 NAI Hiffman

7 Year-End 213 Office Market Statistics Market/ # Bldgs. Total RBA Direct Sublease Total Total 4Q13 Net Total 213 4Q13 Under Submarket (SF) Vacancy Vacancy Vacancy Available Absorption (SF) Absorption (SF) Constr. (SF) North Suburban Class A Class B Class C Northwest Suburban Class A Class B Class C O Hare Area Class A Class B Class C East-West Corridor Class A Class B Class C I-55 Corridor Class A Class B Class C Suburban Totals Class A Class B Class C , , ,321,585 17,318,27 1,85,362 2,917,953 33,746,831 16,635,158 14,96,648 3,15,25 15,25,637 8,131,341 6,16,692 1,12,64 42,96,999 21,12,182 16,844,42 4,996,775 4,19, ,578 2,685, ,73 126,299,37 63,93,529 49,818,718 12,577, % 15.66% 16.% 14.23% 21.15% 17.71% 25.7% 21.72% 19.24% 13.79% 26.46% 19.5% 18.32% 15.74% 22.52% 15.4% 12.62% 4.82% 14.9% 11.56% 18.43% 15.87% 22.18% 16.64% 1.5% 2.53%.18%.% 1.7%.71% 1.64%.41%.39%.48%.33%.% 2.11% 2.51% 2.22%.2% 1.9%.% 1.63%.% 1.45% 1.76% 1.38%.11% 17.45% 18.18% 17.12% 14.23% 22.22% 18.43% 26.72% 22.13% 19.63% 14.27% 26.79% 19.5% 2.42% 18.26% 24.74% 15.6% 13.7% 4.82% 16.52% 11.56% 19.88% 17.63% 23.56% 16.74% 23.48% 26.96% 19.35% 17.6% 28.5% 27.84% 3.21% 24.18% 23.34% 18.32% 3.65% 19.5% 25.16% 25.84% 26.42% 18.8% 15.52% 7.4% 18.61% 11.79% 25.12% 25.5% 26.16% 19.1% -36,431-52,231 11,991 3,89 63,733 18,523-5,177 5, , ,53-11,9 5,17 26,18 229,425-7,57 38,325 4,331 9,634-5, , ,881-63,6 52,743 4,39-75,885 75,831 4,363 35,8 281,38 77,141-8,441 87, ,253-4,921-36,28 39,816 35,938-52, ,991 91,976 52,4 42,339-3,37 96, ,558 12, , , 165, 72, 72, 237, 237, West Loop Class A Class B Class C Central Loop Class A Class B Class C East Loop Class A Class B Class C North Michigan Ave. Class A Class B Class C River North Class A Class B Class C ,399,37 3,193,318 11,234,46 3,971,673 39,6,748 19,661,779 15,79,58 3,554,389 23,768,36 1,864,735 7,588,848 5,314,723 13,141,925 6,22,259 6,131,682 87,984 13,53,272 4,88,938 5,798,248 3,643, % 11.% 9.89% 4.96% 1.7% 1.54% 11.39% 8.53% 15.14% 13.11% 15.17% 13.12% 15.79% 17.22% 14.71% 12.93% 7.33% 7.4% 7.53% 6.95%.81%.76% 1.22%.2%.%.63% 1.54%.1%.71% 1.11%.48%.23% 1.1% 1.46%.88%.% 2.62%.33% 5.87%.4% 11.% 11.75% 11.1% 4.97% 11.64% 11.18% 12.93% 8.53% 15.85% 17.22% 15.64% 13.35% 16.88% 18.68% 15.59% 12.93% 9.96% 7.72% 13.4% 6.98% 18.54% 18.63% 22.11% 7.76% 17.22% 16.26% 2.4% 1.3% 22.89% 23.64% 25.85% 17.15% 24.84% 26.61% 24.45% 14.24% 12.4% 7.% 17.79% 8.55% 247,131 73,64 163,489 1,38 121,752 18,331 2,16-6, ,84-64,478-41,98-91,454 33,395 29,19 5,847-1,471 37,23 6,132-53,269 3, , , ,651 69,38 241,86 157, ,55-92,525-2,72 16,824-26,93 6,567 31,454 15,157 13,723 2, ,855 63,213-11,69 171,711 1,55,67 1,55,67 Downtown Totals Class A Class B Class C ,846,288 71,11,29 46,543,44 17,291, % 11.99% 11.6% 8.99% 1.4%.81% 1.74%.8% 12.51% 12.8% 13.34% 9.7% 18.89% 18.77% 21.79% 11.58% 241,668 26,68,265-59,25 1,122,79 671,15 293, ,77 1,55,67 1,55,67 Metro Chicago Totals Class A Class B Class C 2, , ,145, ,914,558 96,362,122 29,868, % 13.83% 17.7% 12.21% 1.24% 1.26% 1.55%.9% 16.7% 15.9% 18.63% 12.3% 21.96% 22.14% 23.% 14.77% 699, ,489 31,25-6,462 2,82,312 1,399, , ,15 1,787,67 1,787,67

8 Overall Trend Suburban Office Market Vacancy Rate # OFFICE BUILDINGS 2,31 MARKET SIZE (SF) 126,299, % TOTAL VACANCY 25,18,995 SF (19.88%) DIRECT VACANCY 23,282,22 SF (18.43%) SUBLEASE VACANCY 1,826,793 SF (1.45%) AVAILABLE SPACE 31,728, SF (25.12%) Net Absorption 457,564 SF 4Q13 NET ABSORPTION (SF) 457,564 TOTAL 213 NET ABSORPTION (SF) 96,233 UNDER CONSTRUCTION (SF) 237, 4Q13 NEW SUPPLY (SF) 18, Asking Rents $19.65 Pictured above: 3 Westbrook Corporate Center in Westchester, where Follet Corporation leased 136,212 SF during the third quarter Comprised of several scattered pockets of offi ce developments, corporate parks and high-rise offi ce towers, the suburban offi ce market has experienced historically higher vacancy rates, larger swings in absorption, and lower rents than Chicago s downtown offi ce market. The 15 largest suburban offi ce complexes are at least 1.1 million SF, which is about the average size of an offi ce tower in the Central Business District. Year in Review Although the pace of absorption in the Suburban Offi ce Market slowed during 213, it was still positive, as 96,233 SF of vacant space was removed from the market over the course of the year through continued leasing activity. The fourth quarter of the year posted the greatest tally, as 457,564 SF of vacant space was absorbed, pushing the overall vacancy rate down 25 basis points to 19.88%, the fi rst time this rate has been below 2% in over fi ve years. A year ago, 2.57% of the market sat vacant, an improvement of 69 basis points during 213. The East-West Corridor and Northwest Suburban offi ce markets witnessed the most activity this year, absorbing 74,824 SF of vacant space combined. Zebra Technologies Corporation signed the largest new lease of the year, subleasing 233,286 SF from Aon PLC at Three Overlook Point in Lincolnshire and moving their operations to the building from their existing offi ces elsewhere in Lincolnshire. All fi ve suburban offi ce markets posted positive absorption in 213, a sign that the offi ce market recovery has become increasingly broad. Suburban Vacancy Absorption Suburban Direct & Overall Vacancy 9, 24% 22.22% 3, 22% 17.45% 21.15% 19.63% 19.24% 2.42% 18.32% 19.88% 18.43% -3, 2% 15.95% 13.7% 12.62% -9, 18% -15, % Vacancy Rate (%) Net Absorption (SF) North Suburban Northwest Suburban O Hare Area East-West Corridor I-55 Corridor Overall Suburban 8 NAI Hiffman Direct Vacancy Sublease Vacancy

9 Suburban Office Market New Development Two new buildings were completed in the suburbs during the fourth quarter, including Hub Group s 13, SF build-to-suit facility in Oak Brook and a build-to-suit offi ce building for the Big Ten Conference at in Rosemont. Construction continues on the American Academy of Orthopaedic Surgeons 165, SF build-to-suit headquarters and ground was broken during the fourth quarter on the 72, SF imed Medical Offi ce Campus in Naperville. The Alter Group recently announced plans to build four more build-to-suit buildings in Downers Grove s Corridors campus once tenants are in place. Largest Blocks of Available Space Building Name Building Address Block Size (SF) AT&T 2 W AT&T Dr, Hoffman Estates 1,27,245 Motorola Mobility Campus 6 N US Highway 45, Libertyville 1,121,186 Woodland Falls II N Riverwoods Blvd, Mettawa 492,8 AON Office Building 1 Milwaukee Ave, Glenview 45,39 Continental Deer Park 2144 Lake Cook Rd, Deer Park 277,2 Oakmont Centre 7 Oakmont Ln, Westmont 256,767 Meadows Corporate Center 285 W Golf Rd, Rolling Meadows 252,266 Cantera 421 Winfield Rd, Warrenville 249,996 AT&T Business Park 21 Lakewood Blvd, Hoffman Estates 239,25 24 Cabot 24 Cabot Dr, Lisle 25,633 Suburban Office Buildings On the Market 4th Quarter 213 Market Building Address Size (SF) Asking Price Price PSF Seller Status North Suburban 6 N US Highway 45, Libertyville 1,121,186 S.T.O. S.T.O. Motorola Mobility Inc New on market East-West Corridor 1415 W Diehl Rd, Naperville 8, $15,, $183 Marlin Equity Under contract Northwest Suburban 255 & 285 Golf Rd, Rolling Meadows 569,531 $25,, $44 Intercontinental Real Estate Corp On market Northwest Suburban 999, 1, & Plaza Dr, Schaumburg 389,153 $9,725, $25 CW Capital On market O Hare Area 855 W Bryn Mawr Ave, Chicago 32,88 $3,28, $1 CW Capital On market East-West Corridor 281 Torch Pky, Warrenvile 23,842 $28,, $137 Cargill Value/M & J Wilkow Ltd Under contract Suburban Office Significant Sale Transactions 4th Quarter 213 Market Building Address Size (SF) Sale Price Price PSF Buyer Seller East-West Corridor 4225 Naperville & 3333 Warrenville, Lisle 622,287 $116,25, N/A 1 The Blackstone Group White Oak/Fulcrum/Angelo Gordon North Suburban 1 Kraft Ct, Glenview 53,961 $25,,5 $5 Illinois Tool Works Inc Kraft Foods, Inc North Suburban 1 Milwaukee Ave, Glenview 45,39 Undisclosed 2 Undisclosed 2 American Realty Capital CapLease, Inc Northwest Suburban 19 E Golf Rd, Schaumburg 384,12 $21,5, $56 Sovereign Partners, LLC Pearlmark Real Estate Partners North Suburban 163 Orrington Ave, Evanston 339,318 $63,, $186 Investcorp/Golub & Co Lowe Enterprises Northwest Suburban 17 E Golf Rd, Schuamburg 221,177 $19,, $86 Sovereign Partners, LLC Pearlmark Real Estate Partners East-West Corridor 1751 & 1771 W Diehl Rd, Naperville 22,461 $22,95, $14 Stabilis Capital Mgmt Wells Fargo Bank East-West Corridor 215 Shuman Blvd, Naperville 21,775 $24,, $114 Beacon Investment TA Associates Realty Suburban Office Significant Lease Transactions 4th Quarter 213 Market Property Address Leased (SF) Tenant Lease Type North Suburban 3 Overlook Pt, Lincolnshire 233,286 Zebra Technologies Corporation Sublease Northwest Suburban 95 W Algonquin Rd, Arlington Heights 14,58 AT&T Lease expansion/renewal Northwest Suburban 3 Park Blvd, Itasca 75, Flexera Software, LLC New lease Northwest Suburban 2895 Greenspoint Pky, Hoffman Estates 71,139 Omron Corporation New lease East-West Corridor 1245 E Diehl Rd, Naperville 54,857 KeHe Distributors New lease Northwest Suburban 425 N Martingale Rd, Schaumburg 41,332 Advanced Technology Services Sublease East-West Corridor 71 E 22nd St, Lombard 4,662 Emdeon New lease North Suburban 11 W Lake Cook Rd, Buffalo Grove 31, Ceannate Corp New lease Northwest Suburban 171 Golf Rd, Rolling Meadows 23,682 Ceannate Corp Lease expansion 1 Sale included 7.47-acre land parcel 2 Part of a national 72-property office/retail portfolio sold for a published price of $2.2 billion Entries highlighted in red denote NAI Hiffman transactions 9

10 173 North Suburban Waukegan Regional Airport # OFFICE BUILDINGS Gurnee Waukegan MARKET SIZE (SF) 3,321,585 Grayslake 12 TOTAL VACANCY 5,29,89 SF (17.45%) 21 DIRECT VACANCY 4,835,27 SF (15.95%) SUBLEASE VACANCY 455,539 SF (1.5%) AVAILABLE SPACE 7,118,79 SF (23.48%) Vernon Hills Libertyville Lake Forest 4Q13 NET ABSORPTION (SF) -36,431 ke Zurich TOTAL 213 NET ABSORPTION (SF) 4,39 Buffalo Grove Highland Park UNDER CONSTRUCTION (SF) 21 Deerfield 68 4Q13 NEW SUPPLY (SF) Chicago Executive Airport Northbrook Vacancy Rate Net Absorption Asking Rents haumburg Arlington Heights 2 Glenview 43 Niles Skokie Evanston 17.45% -36,431 SF Ohare Int'l Airport The North Suburban market is diverse in industry, but best known as a headquarters solution to many of Chicagoland s largest employers. With an unparalleled, qualifi ed workforce, the north suburbs also lay claim to Chicago s popular North Shore communities where many of the area s chief executives and advisors choose to reside. In previous years, the market has fallen victim to large reductions in size from companies such as Allstate and Hewitt & Associates, but historically the market has been better served by its pharmaceutical-related staples including Walgreens, Baxter and Abbott Laboratories. Vacancy Absorption Inventory by City 4, 25% Deerfield (14%) 2, 22% Other Suburbs (27%) 19% Northbrook (12%) -2, 16% Vernon Hills (5%) Skokie (1%) -4, 13% Glenview (5%) -6, % Vacancy Rate (%) Net Absorption (SF) Buffalo Grove (5%) Bannockburn (5%) Evanston (8%) Lincolnshire (9%) 1 NAI Hiffman The vacancy rate held between 17% and 18% during 213, not making much headway in terms of improvement

11 North Suburban Year in Review Conditions in the North Suburban offi ce market were relatively fl at during 213, as the vacancy rate ended the year at 17.45%, similar to the rate recorded at the same time last year. This rate held between 17% and 18% throughout the year. A net total of only 4,39 SF was absorbed during the year, as absorption was positive during the fi rst and third quarter, but turned negative during the second and fi nal quarter of the year. While leasing activity continued, other companies continued to consolidate, giving back space. During the fourth quarter, net absorption totaled negative 36,431 SF, and the vacancy rate increased by 1 basis points. Global diversifi ed industrial manufacturer Illinois Tool Works purchased the 53,961 SF offi ce portion of the former Kraft Headquarters campus in Glenview consisting of three buildings for just over $25 million, or about $5 PSF. Kraft Foods, Inc had previously vacated the campus as a part of the splitting of its grocery and snack businesses. Zebra Technologies Corporation signed the largest lease of the fourth quarter, subleasing 233,286 SF from Aon PLC at Three Overlook Point in Lincolnshire, the largest new offi ce lease signed in the suburban offi ce market in over a year, since Catamaran Corp leased 3, SF in Schaumburg. Zebra will be moving their operations to the building from the 475 Half Day Rd in Lincolnshire. Looking Forward Recent trends should continue through 214 in the North Suburban offi ce market. The area has the lowest vacancy rates among the major suburban offi ce markets at 17.45%, but improvement of that rate slowed a bit over the past few quarters. There remain plenty of options for tenants large or small, and a large tenant moving into the market would have an appreciable effect on the vacancy rate. Rental rates will increase as this demand picks up. Largest Blocks of Available Space Building Name Building Address Block Size (SF) Motorola Mobility Campus 6 N US Highway 45, Libertyville 1,121,186 Woodland Falls II N Riverwoods Blvd, Mettawa 492,8 AON Office Building 1 Milwaukee Ave, Glenview 45,39 Bannockburn Centre at College Park 12 Lakeside Dr, Bannockburn 17,165 Landmark of Lake Forest II 15 S Saunders Rd, Lake Forest 126,595 One Overlook Point 1 Overlook Pt, Lincolnshire 111,327 Bannockburn Lake Office Plaza 2355 Waukegan Rd, Bannockburn 16,495 Contiguous Block Analysis 2,+ SF Contig. Blocks 5,+ SF Contig. Blocks 1,+ SF Contig. Blocks Class A Blocks Class B Blocks Class C Blocks Significant North Suburban Sale Transactions 4th Quarter 213 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller Former Kraft Headquarters 1 Kraft Ct, Glenview 53,961 $25,,5 $5 Illinois Tool Works Inc Kraft Foods, Inc AON Office Building 1 Milwaukee Ave, Glenview 45,39 Undisclosed 1 Undisclosed 1 American Realty Capital Properties, Inc CapLease, Inc 163 Orrington Ave, Evanston 339,318 $63,, $186 Investcorp International/Golub & Co Lowe Enterprises Prairie Glen Corp Campus Patriot Blvd, Glenview 176, $26,2, $149 Globe Corporation H Ruskin & M Lustbader Abbott Laboratories 185 Norman Dr, Waukegan 131,341 Undisclosed 1 Undisclosed 1 American Realty Capital Properties, Inc CapLease, Inc 111 Pfingsten Rd, Deerfield 12,927 $15,565, $129 Adventus Realty Trust Saban Capital Group, Inc 44 N Fairway Dr, Vernon Hills 99,579 $18,, $181 Select Income REIT Dividend Capital Federal Express Building 11 W Lake Cook Rd, Buffalo Grove 96,731 $3,, $31 Hamilton Partners Global Securitization Svs Significant North Suburban Lease Transactions 4th Quarter 213 Building Name Property Address Leased (SF) Tenant Lease Type Three Overlook Point 3 Overlook Pt, Lincolnshire 233,286 Zebra Technologies Corporation Sublease Federal Express Building 11 W Lake Cook Rd, Buffalo Grove 31, Ceannate Corp New lease 1717 Deerfield Rd, Deerfield 29,327 Warady & Davis LLP Lease expansion/renewal 1 Part of a national 72-property office/retail portfolio sold for a published price of $2.2 billion 11

12 173 Northwest Suburban Fox Lake 45 Wau Region # OFFICE BUILDINGS 584 MARKET SIZE (SF) 33,746,831 McHenry TOTAL VACANCY 7,498, SF (22.22%) 176 Libertyville DIRECT VACANCY 7,136,223 SF (21.15%) SUBLEASE VACANCY 362,681 SF (1.7%) AVAILABLE SPACE 9,617,489 SF (28.5%) 4Q13 NET ABSORPTION (SF) 63,733 TOTAL 213 NET ABSORPTION (SF) 35,8 UNDER CONSTRUCTION (SF) 4Q13 NEW SUPPLY (SF) Vacancy Rate Net Absorption Asking Rents 22.22% 63,733 SF 176 Crystal Lake Dundee Elgin 72 2 South Elgin Dupage Airport St Charles 59 Hoffman Estates 14 Lake Zurich 62 Hanover Park Palatine Schaumburg Bloomingdale Wood Dale 2 29 Addison 355 Chicago Executive Airport Arlington Heights Elk Grove Village Buffalo Grove L 29 Ohare R Int'l Airport Frank The Northwest Suburban market is highly infl uenced by activity in the Schaumburg Area submarket, which includes the municipalities of Schaumburg, Hoffman Estates, Rolling Meadows, Arlington Heights and Palatine (65% of total market inventory). Recently, big companies such as Catamaran Corporation and Capital One have leased signifi cant space in the submarket. The vacancy rate in the Northwest Suburban market increased dramatically in 29 and 21 to more than 27%, but has since dropped nearly 5% due to more than 1.6 million SF of net absorption over the past three years. Vacancy Absorption Inventory by City 4, 2, 3% 28% Other Suburbs (22%) Schaumburg (29%) 26% Long Grove (4%) -2, 24% Elgin (7%) -4, 22% Arlington Heights (1%) -6, % Vacancy Rate (%) Net Absorption (SF) Hoffman Estates (8%) Rolling Meadows (1%) Itasca (1%) 12 NAI Hiffman Although absorption slowed during the last three quarters of the year, the vacancy rate is more than 1% below a year ago

13 Northwest Suburban Year in Review Following the past two quarters of modest, yet positive change, the Northwest Suburban vacancy rate declined 19 basis points during the fourth quarter to 22.22%, and dropped to the lowest rate this area has seen in more than fi ve years. This rate is more than a full percentage point below the rate recorded a year ago. During the fourth quarter, 63,733 SF of vacant space was absorbed, bringing the tally for 213 to 35,8 SF of vacant space removed from the market. New York-based investment fi rm Sovereign Partners, LLC purchased two Schaumburg class A offi ce buildings in October. The 384,12 SF building known as Centennial Center and located at 19 E Golf Rd in Schaumburg sold for $21.5 million, or $56 PSF, and the 221,177 SF building located at 17 E Golf Rd and known as Two Century Center sold for $16.5 million, or $75 PSF. Both buildings were acquired from Pearlmark Real Estate Partners. AT&T signed the largest lease of the fourth quarter, expanding its footprint from 8, SF to 14,58 SF and renewing its existing lease at 95 W Algonquin Rd in Arlington Heights. AT&T has been in the building since the mid-199s, and will soon be moving out of their sprawling 1.2 million SF Hoffman Estates campus. The company will use the expansion space at 95 W Algonquin Rd to accommodate some of the employees from their Hoffman Estates campus. Looking Forward Continuing the absorption success witnessed over the past year, the overall trend in the Northwest Suburbs remains positive and demand is expected to increase as the economy improves and employment continues to recover. Tenants looking for contiguous spaces 5, SF or larger currently have 22 options in the Northwest Suburbs, while spaces 1, SF or larger number 11, demonstrating that the market still has the capacity to accommodate large tenants. Largest Blocks of Available Space Building Name Building Address Block Size (SF) AT&T 2 W AT&T Dr, Hoffman Estates 1,27,245 Continental Deer Park 2144 Lake Cook Rd, Deer Park 277,2 Meadows Corporate Center 285 W Golf Rd, Rolling Meadows 252,266 AT&T Business Park 21 Lakewood Blvd, Hoffman Estates 239,25 Fischer Corporate Center 177 N Randall Rd, Elgin 196,88 Two Park Center 555 Prairie Stone Pky, Hoffman Estates 193,61 Woodfield Corporate Center 2 N Martingale Rd, Schaumburg 186,74 Contiguous Block Analysis 2,+ SF Contig. Blocks 5,+ SF Contig. Blocks 1,+ SF Contig. Blocks Class A Blocks Class B Blocks Class C Blocks Significant Northwest Suburban Sale Transactions 4th Quarter 213 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller Centennial Center 19 E Golf Rd, Schaumburg 384,12 $21,5, $56 Sovereign Partners, LLC Pearlmark Real Estate Partners Two Century Center 17 E Golf Rd, Schuamburg 221,177 $19,, $86 Sovereign Partners, LLC Pearlmark Real Estate Partners Significant Northwest Suburban Lease Transactions 4th Quarter 213 Building Name Property Address Leased (SF) Tenant Lease Type 95 W Algonquin Rd, Arlington Heights 14,58 AT&T Lease expansion/renewal Hamilton Lakes 3 Park Blvd, Itasca 75, Flexera Software, LLC New lease Greenspoint III 2895 Greenspoint Pky, Hoffman Estates 71,139 Omron Corporation New lease Woodfield Corporate Center 425 N Martingale Rd, Schaumburg 41,332 Advanced Technology Services Sublease Continental Towers - Tower II 171 Golf Rd, Rolling Meadows 23,682 Ceannate Corp Lease expansion Woodfield Corporate Centre 425 N Martingale Rd, Schaumburg 16,272 Rittal Corporation Lease renewal 1699 E Woodfield Rd, Schaumburg 9, Proactive New lease Entries highlighted in red denote NAI Hiffman transactions 13

14 Northbrook O Hare Area # OFFICE BUILDINGS 171 Chicago Executive Airport Arlington Heights 2 MARKET SIZE (SF) 15,25, TOTAL VACANCY 2,997,23 SF (19.63%) DIRECT VACANCY 2,934,649 SF (19.24%) SUBLEASE VACANCY 59,374 SF (.39%) AVAILABLE SPACE 3,559,18 SF (23.34%) Elk Grove Village Des Plaines Ohare Int'l Airport Park Ridge Rosemont 4Q13 NET ABSORPTION (SF) 165, TOTAL 213 NET ABSORPTION (SF) 87,124 UNDER CONSTRUCTION (SF) 165, Q13 NEW SUPPLY (SF) 5, Addison 29 Franklin Park 5 Vacancy Rate Net Absorption Asking Rents Lombard % 165,751 SF At approximately 15.3 million SF, the O Hare submarket is one of the smallest suburban markets. Due to its central location, proximity to O Hare International Airport and access to public transportation, the O Hare submarket has led the suburban offi ce recovery. Many companies have identifi ed the O Hare submarket as the ideal location for a new offi ce or a consolidation of multiple locations. Geographically, O Hare sits in the center of the major suburban submarkets providing the middle ground for employees coming from surrounding locations, not to mention immediate access to the airport for multi-market companies. Additionally, O Hare is the only submarket providing access to the CTA s elevated train lines from the city, allowing convenient public transportation for city-dwelling staff members. Vacancy Absorption Inventory by City 2, 12, 28% 26% Schiller Park, Franklin Park, Norridge, Harwood Heights (3%) Bensenville (4%) 4, 24% Park Ridge (9%) Rosemont (34%) -4, 22% -12, 2% -2, % Des Plaines (21%) Vacancy Rate (%) Net Absorption (SF) Chicago (O Hare Area) (29%) 14 NAI Hiffman The O Hare Area vacancy rate dropped to 19.63%, the fi rst time it has been below 2% since 27

15 O Hare Area Year in Review Following three quarters of negative net absorption and rising vacancy rates, conditions improved during the fourth quarter, as 165,751 SF of vacant space was removed from the market during the three month period, pushing absorption positive for 213 to 87,124 SF. This activity was due to continued leasing activity, tenants moving into their recently leased space, and the completion of the 5, SF headquarters build-to-suit facility for the Big Ten Conference at 544 Park Pl in Rosemont. By the end of the year, the O Hare vacancy rate had dropped to 19.63%, the fi rst time it has been below 2% since 27. Construction continues on the American Academy of Orthopaedic Surgeons 165, SF build-to-suit headquarters at the corner of River and Higgins Roads, less than two blocks from its current location. In the only signifi cant sale of the quarter in the O Hare Area, Physician Planning & Consulting purchased the 24, SF former Big Ten Conference headquarters located at 15 W Higgins Rd in Park Ridge for $112 PSF. The largest new lease signed during the fourth quarter involved Sullair, a compressed air solutions company, leasing 16,475 SF in the 49, SF class A offi ce building known as Presidents Plaza II, located at 87 W Bryn Mawr Ave in Chicago. Looking Forward The O Hare Area has experienced the strongest rebound of the suburban offi ce markets. The vacancy rate has dropped by more than 6% in just under four years, an average of a 15 basis point decrease per year. This has been especially evident among the market s premier class A assets, where few quality spaces remain available. Companies will continue to be drawn to the O Hare Area s central location, mass transit options, and excellent labor pool with easy access to Chicago. MB Financial recently agreed to buy Cole Taylor Bank, while US Foods, which leases about 5, SF in Rosemont, is currently being purchased by Sysco. The impact of these acquisition will begin to play out in the O Hare Area in 214. Largest Blocks of Available Space Building Name Building Address Block Size (SF) Cumberland Centre 545 N Cumberland Ave, Chicago 143,525 O Hare Lake Office Park E Devon Ave, Des Plaines 142,596 US Cellular Plaza 842 W Bryn Mawr Ave, Chicago 14, River Rd, Schiller Park 74, Touhy 135 E Touhy Ave, Des Plaines 71,367 O Hare International Center 1255 W Higgins Rd, Rosemont 69,695 O Hare Gateway Office Center 95 W Bryn Mawr Ave, Rosemont 6,68 Contiguous Block Analysis 2,+ SF Contig. Blocks 5,+ SF Contig. Blocks 1,+ SF Contig. Blocks Class A Blocks Class B Blocks Class C Blocks Significant O Hare Area Sale Transactions 4th Quarter 213 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller 15 W Higgins Rd, Park Ridge 24, $2,78,5 $112 Physician Planning & Consulting Big Ten Conference Significant O Hare Area Lease Transactions 4th Quarter 213 Building Name Property Address Leased (SF) Tenant Lease Type Triangle Plaza - West Tower 877 W Bryn Mawr Ave, Chicago 17,61 Telecom Brokerage, Inc Sublease Presidents Plaza II 87 W Bryn Mawr Ave, Chicago 16,475 Sullair New lease O Hare Gateway Office Center 95 W Bryn Mawr Ave, Rosemont 16, Cushman & Wakefield New lease One O Hare Centre 625 N River Rd, Rosemont 11,917 Prologis New lease Triangle Plaza - East Tower 875 W Bryn Mawr Ave, Chicago 8,287 Marcus & Millichap Lease renewal President s Plaza I 86 W Bryn Mawr Ave, Chicago 7,5 Axis Communications New lease 73 Birginal Dr, Bensenville 3,6 Liv Transportation, LLC New lease 97 W Bryn Mawr Ave, Rosemont 3,525 Ewald Consulting Group New lease Entries highlighted in red denote NAI Hiffman transactions 15

16 Chicago Executive Airport No East-West Corridor Elgin 9 Schaumburg Arlington Heights 2 # OFFICE BUILDINGS 666 Elk Grove Village Ohare Int'l Airport Rose MARKET SIZE (SF) 42,96,999 TOTAL VACANCY 8,774,463 SF (2.42%) DIRECT VACANCY 7,868,927 SF (18.32%) SUBLEASE VACANCY 95,536 SF (2.11%) AVAILABLE SPACE 1,81,49 SF (25.16%) 4Q13 NET ABSORPTION (SF) 26,18 TOTAL 213 NET ABSORPTION (SF) 39, St Charles North Aurora Aurora Dupage Airport Naperville Lombard 38 Oakbrook Terrace Oak Brook 2 Downers Grove Elmhurst Westmont Franklin UNDER CONSTRUCTION (SF) 72, Q13 NEW SUPPLY (SF) 13, Bolingbrook Romeoville Vacancy Rate Net Absorption Asking Rents 2.42% 26,18 SF Largest of the suburban offi ce markets, the East-West Corridor is diverse in many ways. Split into western and eastern sections by I-355, the western half of the market consists of relatively new product and the majority of the larger blocks of space. Historically home to large technological users including Alcatel-Lucent and Tellabs, Inc and other sizeable corporations such as Navistar and BP Amoco, the western half of the market is more prone to sudden changes in vacancy and absorption. The characteristically more stable eastern section is defi ned by more diverse multi-tenant buildings, smaller blocks of space, and older product. Vacancy Absorption Inventory by City 4, 25% Other Suburbs (19%) Oak Brook (16%) 2, 24% 23% Westchester (4%) -2, 22% Aurora (4%) Naperville (15%) -4, 21% Lombard (8%) -6, % Oakbrook Terrace (1%) Downers Grove (13%) Vacancy Rate (%) Net Absorption (SF) Lisle (11%) 16 NAI Hiffman Absorption increased as 213 moved along, pushing the vacancy rate down to 2.42%, the lowest since 28

17 East-West Corridor Year in Review Net absorption in the East-West Corridor increased each quarter of 213, with the fourth quarter absorbing 26,18 SF of vacant space, bringing the tally for the year to 39,816 SF. Leasing activity picked up as the year moved along, pushing the vacancy rate 69 basis points below the rate recorded a year ago. During the fourth quarter alone, this rate decreased by 37 basis points to end the year with a vacancy rate of 2.42%, the lowest seen in the East-West Corridor since 28. Hub Group s new 13, SF offi ce building was completed during the fourth quarter at 2 Clearwater Dr in Oak Brook and construction is now underway on the 72, SF imed Medical Offi ce Campus at the corner of 75th St and Rt 59 in Naperville. The largest sale transaction of the fourth quarter involved The Blackstone Group purchasing the offi ce park known as Central Park of Lisle comprised of the 31,375 SF building located at 4225 Naperville Rd and the 311,912 SF building located at 3333 Warrenville Rd in Lisle. The portfolio sold for $ million and also included 7.47-acre parcel of vacant land. KeHe Distributors signed the largest new lease of the quarter at 1245 E Diehl Rd in Naperville, taking 54,857 SF in the building. Looking Forward Options continue to be tight for tenants looking for large contiguous blocks of space in the East-West Corridor, as only nine spaces 1, SF or larger are available. Few of these spaces can be found in the premier class A buildings in the market. As a result, area landlords have begun to increase asking rental rates and reduce concession packages in these properties. Offi cemax Inc announced they will be vacating their Naperville headquarters and relocating their operations to Boca Raton, Florida, due to the company s merger with Offi ce Depot Inc. While customer service centers, warehouses, and distribution centers are not affected by the headquarters decision, the withdrawal from the market will leave a sizable hole to fi ll. Largest Blocks of Available Space Building Name Building Address Block Size (SF) Oakmont Centre 7 Oakmont Ln, Westmont 256,767 Cantera 421 Winfield Rd, Warrenville 249, Cabot 24 Cabot Dr, Lisle 25,633 Corridors Two 2655 Warrenville Rd, Downers Grove 149,896 Westwood of Lisle II 2441 Warrenville Rd, Lisle 148,423 Esplanade II 35 Lacey Rd, Downers Grove 112,834 Contiguous Block Analysis 2,+ SF Contig. Blocks 5,+ SF Contig. Blocks 1,+ SF Contig. Blocks Class A Blocks Class B Blocks Class C Blocks Significant East-West Corridor Sale Transactions 4th Quarter 213 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller Central Park of Lisle 4225 Naperville Rd & 3333 Warrenville Rd, Lisle 622,287 $116,25, N/A 1 The Blackstone Group White Oak/Fulcrum/Angelo, Gordon & Co East West Corp Ctr 1751 & 1771 W Diehl Rd, Naperville 22,461 $22,95, $14 Stabilis Capital Mgmt Wells Fargo Bank Park Plaza 215 Shuman Blvd, Naperville 21,775 $24,, $114 Beacon Investment TA Associates Realty 24 Cabot Dr, Lisle 25,633 $1,76,17 $49 GlenStar/Walton Street HDG Mansur Investment Services, LLC Oak Brook Tech Ctr 8 & 81 Jorie Blvd, Oak Brook 193,689 $16,25, N/A 2 Server Farm Realty Inc LNR Property Corporation Significant East-West Corridor Lease Transactions 4th Quarter 213 Building Name Property Address Leased (SF) Tenant Lease Type Oak Brook Pointe 7 Commerce Dr, Oak Brook 68,748 Middough Inc Lease renewal Naperville Corporate Center 1245 E Diehl Rd, Naperville 54,857 KeHe Distributors New lease Corporetum Office Campus VI Warrenville Rd, Lisle 41,288 UnitedHealth Group Lease renewal 71 E 22nd St, Lombard 4,662 Emdeon New lease Midpoint Corporate Center 7155 Janes Ave, Woodridge 29,354 Westwood College Lease renewal Brush Hill Office Courte 75 Pasquinelli Dr, Westmont 15,237 MacNeal Health Providers, Inc Lease expansion 1 Sale included 7.47-acre land parcel 2 Sale included 1.76-acre land parcel Entries highlighted in red denote NAI Hiffman transactions 17

18 Oak Brook I-55 Corridor # OFFICE BUILDINGS Downers Grove Westmont 2 MARKET SIZE (SF) 4,19,255 TOTAL VACANCY 55,796 SF (13.7%) DIRECT VACANCY 57,133 SF (12.62%) SUBLEASE VACANCY 43,663 SF (1.9%) Naperville Darien 55 Burr Ridge 83 AVAILABLE SPACE 623,828 SF (15.52%) 4Q13 NET ABSORPTION (SF) 4,331 Bolingbrook TOTAL 213 NET ABSORPTION (SF) 91,976 UNDER CONSTRUCTION (SF) 4Q13 NEW SUPPLY (SF) Romeoville Vacancy Rate Net Absorption Asking Rents 13.7% 4,331 SF Although small in volume of space, the I-55 Corridor market benefi ts from convenient access to area expressways and tollways including I-55, I-2 and the recently completed I-355 extension. Drawing from an excellent labor pool, the area is an ideal choice for companies who don t want to move as far north as Oak Brook, providing a convenient location for their employees living in the southwest suburbs. Growth in the I-55 Corridor market is tied to the rapid growth of Will County. User types are mixed with a large presence of industrial services, catering to the large industrial base in the area and medical services, supporting the area hospitals in La Grange, Hinsdale, and the new Adventist Bolingbrook Hospital. Vacancy Absorption Inventory by City 15, 1, 5, 2% 18% 16% Countryside (4%) Darien (11%) Romeoville, Downers Grove (1%) Bolingbrook (26%) 14% Willowbrook (14%) -5, 12% -1, % Vacancy Rate (%) Net Absorption (SF) Woodridge (2%) Burr Ridge (24%) 18 NAI Hiffman The I-55 Corridor vacancy rate ended the year at 13.7%, nearly 2.3% below the rate recorded a year ago

19 I-55 Corridor Year in Review The I-55 Corridor fi nished the year with a vacancy rate of 13.7%, a rate nearly 2.3% below the rate recorded a year ago. Much of this improvement occurred during the second quarter of the year, when several signifi cant new leases combined to result in the absorption of 112,957 SF of vacant space, a signifi cant number for this small submarket. During the fourth quarter, net absorption totaled only 4,331 SF, bringing the tally for 213 to 91,976 SF. No signifi cant sale transactions took place this quarter in the I-55 Corridor, and leasing activity was limited to smaller transactions. Two new leases were signed in the fl ex building located at Remington Blvd in Bolingbrook, including Gaudian Industrial Sales, Inc leasing 5,621 SF and Apple Recyclers Inc taking 3,148 SF. Looking Forward Transaction velocity is often slow in the I-55 Corridor, but when a large new lease is signed or a signifi cant tenant moves out, it can have a jarring impact on the area s vacancy rate due to the small size of the offi ce market. This occurred during the second quarter of the year, when the absorption of more than 1, SF of vacant space dropped the vacancy rate by more than 2.8% in one quarter. The area remains an affordable alternative to parts of the East-West Corridor and will continue to attract tenants based on value and its transportational and locational advantages. Largest Blocks of Available Space Building Name Building Address Block Size (SF) 22 Remington Blvd, Bolingbrook 79,832 Waterfall Glen - Phase III 84 S Frontage Rd, Woodridge 77, Tallgrass Corporate center 1 Remington Blvd, Bolingbrook 67,58 MidPoint II 7135 Janes Ave, Woodridge 46,624 Creekside Corporate Center 27 Remington Blvd, Bolingbrook 38,115 Waterfall Glen 9 S Frontage Rd, Woodridge 27, W Boughton Rd, Bolingbrook 22, Contiguous Block Analysis 2,+ SF Contig. Blocks 5,+ SF Contig. Blocks 1,+ SF Contig. Blocks Class A Blocks Class B Blocks Class C Blocks Significant I-55 Corridor Sale Transactions 4th Quarter 213 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller None to report Significant I-55 Corridor Lease Transactions 4th Quarter 213 Building Name Property Address Leased (SF) Tenant Lease Type Burr Ridge Business Center 745 McClintock Dr, Burr Ridge 7,446 Cotter Consulting New lease Remington Blvd, Bolingbrook 5,621 Gaudian Industrial Sales, Inc New lease Remington Blvd, Bolingbrook 3,148 Apple Recyclers Inc New lease Entries highlighted in red denote NAI Hiffman transactions 19

20 Overall Trend Downtown Office Market Vacancy Rate # OFFICE BUILDINGS 452 MARKET SIZE (SF) 134,846, % TOTAL VACANCY 16,869,37 SF (12.51%) DIRECT VACANCY 15,467,593 SF (11.47%) SUBLEASE VACANCY 1,41,777 SF (1.4%) AVAILABLE SPACE 25,471,34 SF (18.89%) Net Absorption 241,668 SF 4Q13 NET ABSORPTION (SF) 241,668 TOTAL 213 NET ABSORPTION (SF) 1,122,79 UNDER CONSTRUCTION (SF) 1,55,67 4Q13 NEW SUPPLY (SF) Asking Rents $28.64 Pictured above: Riverside Plaza, where Zurich American leased 17,852 SF during the third quarter The Chicago Loop, Wacker Drive, North Michigan Avenue and the South Michigan Avenue Streetwall are all iconic landmarks that give Chicago worldwide recognition. Historic buildings and modern high-rises defi ne Chicago s famous skyline, home to several of the tallest buildings in the country. These landmarks, combined with O Hare International Airport and public transportation including the El, commuter train lines and dozens of bus lines, all make Chicago s 24-hour downtown a world-class business center and tourist destination. Wacker Drive in the West Loop is the most active corridor in the downtown offi ce market, but when it comes to rents companies pay for offi ce space, it isn t as expensive as one would think, ranking 2th most expensive for offi ce tenants, behind cities like San Francisco, New York, Austin and Portland, Oregon. Year in Review The downtown offi ce market absorbed more than 1.1 million SF of vacant space during 213, as demand for space in the market remained elevated and several sizable leases were signed. The downtown offi ce vacancy rate decreased by 96 basis points over the course of the year to 12.51%, the lowest rate the downtown market has seen in more than fi ve years. During the fourth quarter alone, 241,668 SF of vacant space was absorbed due to several new leases being signed, the largest involving in-fl ight wireless provider Gogo, Inc leasing 234,484 SF at 111 N Canal St. The West Loop submarket witnessed the greatest demand for the year, absorbing 717,666 SF, while the Central Loop followed behind, absorbing 241,86 SF. The only downtown submarket to witness negative absorption during the fourth quarter was the East Loop, introducing 197,84 SF Downtown Vacancy Absorption Downtown Direct & Overall Vacancy 1 MM 18% -1 MM 16% 14% 12% 11.% 1.19% 11.64% 1.7% 15.85% 15.14% 16.88% 15.79% 7.33% 12.51% 9.96% 11.47% -2 MM % 2 NAI Hiffman Vacancy Rate (%) Net Absorption (SF) West Loop Central Loop East Loop North Michigan Avenue Direct Vacancy River North Overall Downtown Sublease Vacancy

21 Downtown Office Market of vacant space to the market between October and December. The outlook for 214 continues to look positive for the most active downtown submarkets, as remaining desirable space is leased. New Development Google leased an additional 52, SF at 1K Fulton, bringing its footprint in the 689,67 building currently under construction at 1 W Fulton St to over 275, SF. Construction continues on an 861, SF offi ce tower at 444 W Lake St, known as River Point, which landed anchor tenant McDermott Will & Emery during in 213. Several additional buildings have been proposed, including a 1.5 million SF offi ce tower at 4 W Randolph St. Largest Blocks of Available Space Submarket Building Name Building Address Block Size (SF) West Loop River Point 444 W Lake St 7,2 West Loop 311 W Monroe St 354,17 North Michigan Avenue The AMA Building 515 N State St 35,96 East Loop AON Center 2 E Randolph St 339,761 West Loop 5 W Monroe St 311,49 West Loop 227 W Monroe St 272,11 East Loop One Prudential Plaza 13 E Randolph St 256,72 West Loop Bank of America Plaza 54 W Madison St 25,533 West Loop AT&T Building 225 W Randolph St 238,788 North Michigan Avenue 11 E Erie St 227,569 Downtown Office Buildings On the Market 4th Quarter 213 Submarket Building Name Building Address Size (SF) Asking Price Price PSF Seller Status Central Loop Citadel Center 131 S Dearborn St 1,54,364 S.T.O. S.T.O. Dearborn Capital Group On market West Loop 311 S Wacker Dr 1,276,85 $29,, $227 Shorenstein Realty & Fremont Group Under contract Central Loop 3 N LaSalle St 982,576 S.T.O. S.T.O. Tishman Speyer On market West Loop AT&T Building 225 W Randolph St 853,25 $275,, $322 Kushner Companies On market Central Loop 18 N LaSalle St 77,191 S.T.O. S.T.O. Berkley Properties LLC Under contract West Loop 2 W Jackson Blvd 476,711 $85,, $178 AREA Partners On market Downtown Office Significant Sale Transactions 4th Quarter 213 Submarket Building Address Size (SF) Sale Price Price PSF Buyer Seller West Loop 5 W Madison St 1,455,688 $425,, $292 KBS Realty Advisors GE Asset Management/Estein & Associates West Loop 1 & 12 S Riverside Plz 1,369,872 $361,, $264 Ivanhoe Cambridge, Inc TIER REIT, Inc Central Loop 161 N Clark St 1,56,48 $331,3, $314 CBRE Global Investors Tishman Speyer Central Loop 181 W Madison St 936,683 $32,,347 $322 CBRE Global Investors GE Asset Management West Loop 2 S Wacker Dr 754,751 $214,5, $284 John Hancock Real Estate (Manulife) Pearlmark/Equity Group/TIER REIT, Inc West Loop 1 N Franklin St 617,592 $182,2,5 $295 MetLife, Inc Tishman Speyer Downtown Office Significant Lease Transactions 4th Quarter 213 Submarket Building Name Property Address Leased (SF) Tenant Lease Type West Loop 111 North Canal 111 N Canal St 234,484 Gogo Inc New lease West Loop Willis Tower 233 S Wacker Dr 125,553 Dentons US LLP Lease renewal Central Loop Citadel Center 131 S Dearborn St 64,125 Sprout Social Sublease River North 321 North Clark at Riverfront Plaza 321 N Clark St 61,431 CBRE New lease West Loop Franklin Center 227 W Monroe St 57,518 ATK Foods New lease West Loop 1K Fulton 1 W Fulton St 52, Google Lease expansion West Loop 311 S Wacker Dr 39,414 Fargre Baker Daniels Lease renewal West Loop 1 South Riverside Plaza 1 S Riverside Plz 36,648 Belvedere Trading New lease (previously subleased) Central Loop Citadel Center 131 S Dearborn St 33,923 Citadel LLC Lease expansion East Loop 33 E Wacker Dr 3,919 Undisclosed New lease North Michigan Avenue 41 N Michigan Center 41 N Michigan Ave 29,512 Kraft Foods Group Inc New lease 21