Metropolitan Chicago Market Review. Office Market Review Second Quarter 2015

Transcription

1 Metropolitan Chicago Market Review Office Market Review Second Quarter 215

2 To our valued customers, partners and future clients Leaving an Open House last week, I was greeted with the blast-furnace sensation familiar to anyone who has opened their car door on a blistering July day in Chicago. That experience was followed closely thereafter by inadvertently touching my white-hot metal seatbelt, then wishing I had oven mitts to handle the steering wheel. Living in the midwest, you quickly learn that the stated temperature is only loosely related to the actual feeling outside. In the winter, the Chicago wind conspires with the temperature to give us the frigid subzero wind chill we actually feel. During the summer months, the heat index takes into account the sticky humidity to approximate what it really feels like to be outside. I ve heard meteorologists call these factors the TrueTemp or Real Feel. The charts, statistics and analysis on the following pages tell the story of continued improvement in the Chicagoland office and industrial real estate markets. The Real Feel, however, is evident when I look at my calendar and see the number of meetings, industry events, networking parties and groundbreakings filling up the days and nights. Which fuels our reality - the actual temperature (the statistics) or the heat index (the more abstract feel of the business climate)? There is broad consensus that the underlying fundamentals and optimistic outlook in Chicago are in sync right now. The return of optimism over the past few years is fostering boldness and excitement, and that attitude is reflected in the robust sales, leasing and construction activity seen in both in the suburban and downtown markets. In June, NAI Hiffman hosted the NAI Global Market Outlook featuring commentary by Sam Zell and economist Peter Linneman. In preparation for the event, several ownership groups agreed to speak on video about their successes and why they like to do business in Chicago. (You can see the result at our YouTube Channel - It is encouraging to hear these organizations reflect the forward momentum and optimism we ve all been feeling. It s an exciting time, and we look forward to working with you in the coming months to make your real estate strategies a reality. Regards, John R Picchiotti COO, Brokerage

3 Table of Contents NAI Hiffman Metropolitan Chicago Office Market Review Second Quarter Local Economy 7 Office Statistics 8 Suburban Office Summary 1 North Suburban 12 Northwest Suburban 14 O Hare Area 16 East-West Corridor 18 I-55 Corridor 2 Downtown Office Summary 22 West Loop 24 Central Loop 26 East Loop 28 North Michigan Avenue 3 River North 32 Methodology/NAI Global 34 NAI Hiffman

4 Overall Trend Local Economy Unemployment POPULATION (214 CENSUS) 9,537, % POPULATION CHANGE (2-214) +4.8% MEDIAN HOUSEHOLD INCOME (213) $51,25 GROSS METRO PRODUCT (214) $59.4 BILLION Case-Shiller Home Price Index EMPLOYMENT - NONFARM (Q2 215) JOBS GAINED (Q3 213-Q3 214) CHICAGO METRO UNEMPLOYMENT RATE ILLINOIS UNEMPLOYMENT RATE U.S. UNEMPLOYMENT RATE 5,92,2 43,2 5.8% 6.4% 5.3% Q1 215 US GDP Change.2% With a metropolitan population of nearly 1 million, Chicago is the third largest MSA in the U.S. after New York and Los Angeles and is the most influential 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 flow of goods and services through airports, rail, roads and ports. Situated at the geographical heart of the nation, Chicago s locational advantages have fostered its development into an international center for transportation, manufacturing, banking, securities, technology, services, wholesale and retail trade. In addition, Chicago is one of the principal trading centers for commodities, financial futures and derivative products with the Chicago Mercantile Exchange and Board of Trade. O Hare International still ranks as one of the busiest airports in the world with numerous non-stop flights to leading international business centers in Europe, Asia and the Middle East. Quarter in Review Real domestic product (GDP) decreased.2%, according to the third estimate released by the Bureau of Economic Analysis. In comparison, GDP increased 2.2 percent in the fourth quarter of 214. The first quarter decline is seen in declines in exports of goods, business investments and state and local government spending. Helping to offset the decline in GDP, consumer spending on services rose, particularly on healthcare and on housing and utilities. The nation s total GDP, in excess of $17 trillion, remains the world s largest, comprising 28% of the global total. With a population of 32 million, the U.S. is the world s third most populous country behind China and India. The U.S. has emerged as the world s largest energy producer, surpassing Saudi Arabia in oil and Russia in natural gas production, largely due to hydraulic fracturing technology. World oil prices have declined over 5% from $18 a barrel in January 214 to $6 in June 215, providing a $34 billion U.S. Dollar Index US GDP Change by Quarter 1 6% 9 4% 4.6% 5.% 8 2% % 1.5% -.2% 7-2% -2.1% % Q1 214 Q2 214 Q3 214 Q4 214 Q NAI Hiffman U.S. Dollar U.S. Recession Period Source: Federal Reserve Bank of St. Louis 215 IMF Projection GDP Growth (%) Source: Federal Reserve Bank of St. Louis

5 annual stimulus to the domestic economy. The U.S. Dollar strengthened against most major currencies gaining 19% on average since January 214. The relative strength of the Dollar raises concerns that domestic manufactures will be disadvantaged in global markets and pressured by currency advantaged imports. The increase in the Dollar has partially contributed to the 5% increase in the U.S. trade deficit in goods and services now exceeding $5 billion annually. Interest rates and inflation remain near historic lows at an average of 2.3% and 1.5 %, respectively. The S&P 5 stock index reached an all-time high surpassed the 21 level in March 214 and continues to perform in that range. The NASDAQ Composite reached the 5 level the first time since March 2. The housing market continues to recover albiet slow momentum. The West and Northeast region of the country have generally recovered at a stronger pace. The Midwest and South Region has lagged behind. The Case-Shiller 1 Cities Composite Home Price Index has increased 3% from April 212 lows and the Case-Shiller Index for Chicago has increased 2%. U.S. Housing starts continue to slowly recover but remain 5% below the 3 year annual average of 1.5 million units. Eventually U.S. housing starts will increase to higher levels which will enhance GDP growth. Crude Oil Prices Local Economy $16 $12 $8 $ Dollars per Barrel Source: Federal Reserve Bank of St. Louis S&P 5 Index 2,5 2, Employment continues to expand, with companies adding approximately over 2, per month, with over 28, jobs during the month of May. This represents the longest stretch of job creation the country has seen in 15 years. The unemployment rate declined to 5.3% in June 215 with the level of Americans filing for unemployment reaching the lowest level since 2. While the unemployment rate has significantly declined, so has the overall labor participation rate, indicating that many have dropped out of the labor market altogether. Federal, State and Local budget deficits, while improving, still remain dauntingly large. High corporate taxes continue to be a concern, causing some corporations to consider a move overseas. Governmental debt and tax reform will remain significant topics throughout the next election cycle which begins soon. 1,5 1, S&P/Case-Schiller Home Price Index Source: Federal Reserve Bank of St. Louis Looking Forward Positive indicators have outweighed the negative over the past 12 months with the U.S. economy achieving better results than generally predicted. The IMF is forecasting 3.6% U.S. GDP growth in 215, which if achieved, would be the highest annual increase since 24. Corporate profits have reached new records enabling U.S. businesses to invest in productivity enhancements and market share growth. Barring any significant negative geopolitical events in 215, the U.S. seems poised to continue to benefit from better than average economic performance relative to most other major world economies Chicago Home Price Index 1-City Composite Home Price Index Source: Federal Reserve Bank of St. Louis 5

6 Kenosha Regional Airport Chicago Office Markets Office Market Overviews North Suburban Waukegan Regional Airport Fox Lake Northwest Suburban O Hare Area Gurnee East-West Corridor Waukegan I-55 Corridor Grayslake McHenry West Loop Central Loop East Loop Libertyville North Lake Forest Suburban Crystal Lake North Michigan Avenue Vernon Hills River North Lake Zurich Highland Park Buffalo Grove Northwest Suburban Arlington Heights 9 Elgin Northbrook Chicago Executive Airport 2 Glenview Evanston Schaumburg Niles O Hare Area South Elgin Ohare Int'l Airport CBD (Central Business District) 171 Lombard Ohio 43 St 12 Grove I-55Darien Corridor Bolingbrook 83 Burr Ridge Oak Lawn Chicago Midway 5 Airport North 12 Michigan 2 Avenue Wacker Dr East Loop Randolph St Carpenter St Aurora Naperville River North 2 55 Kinzie St 9 41 Chicago Ave 29 East-West 2 Corridor Downers Westmont West Loop Central Loop Harvey Congress Pky 57 Michigan Ave Carol Stream 88 Chicago Midway Airport Chicago Oak St Michigan Ave Franklin Park State St Addison 29 Wacker Dr Dupage St CharlesAirport North Aurora Skokie Wells St Dundee Deerfield Halsted St Romeoville 55 6 NAI Hiffman Gary/Chicago Airport 8

7 Second Quarter 215 Office Market Statistics Market/ # Bldgs. Total RBA Direct Sublease Total Total Q2 215 Net Total 215 Q2 215 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 33,762,617 16,65,4 14,96,648 3,15,25 15,263,39 8,296,341 5,964, 1,2,64 43,32,999 21,192,182 16,844,42 4,996,775 4,19, ,578 2,685, ,73 126,399,495 64,156,315 49,676,12 12,567, % 13.18% 17.46% 13.24% 19.8% 14.92% 23.56% 21.15% 17.14% 13.8% 22.79% 17.21% 17.38% 14.15% 22.28% 14.52% 12.17% 5.1% 15.4% 6.37% 16.97% 13.85% 21.35% 15.62%.73% 1.12%.2%.22% 1.4% 1.68% 1.31%.32%.6%.91%.18%.43% 2.18% 2.21% 2.75%.15%.99%.% 1.48%.% 1.4% 1.59% 1.45%.22% 15.34% 14.3% 17.66% 13.47% 2.48% 16.59% 24.87% 21.47% 17.74% 13.99% 22.97% 17.64% 19.56% 16.36% 25.3% 14.67% 13.16% 5.1% 16.89% 6.37% 18.37% 15.43% 22.8% 15.84% 21.2% 22.98% 18.84% 16.93% 26.23% 25.51% 27.75% 23.7% 22.37% 19.36% 26.98% 2.16% 25.2% 25.61% 27.7% 17.12% 18.33% 15.36% 21.2% 1.22% 23.91% 23.95% 25.25% 18.4% -51,621-29,27-26,227 3,633-2,54-199,427 5,92-6,979 33,187 17,57-47,373-27,7 31,693 57,599-5,648-2,258-42,76-49,345 6,585-23,5-63, ,691-43, , ,82-2,83 1,585-69,146-66,818-3,444 1,116-19,3-31,261-62,653-15,89-14,463-1,776-6,252-6,435-65,965-75,654 9,689 13,7 298,7-168, ,3 753,3 131, , , ,628 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 Downtown Totals Class A Class B Class C Metro Chicago Totals Class A Class B Class C , , ,377,793 3,193,318 11,212,82 3,971,673 38,559,342 19,661,779 15,5,58 3,396,983 23,45,26 1,864,735 7,349,927 5,19,598 13,141,925 6,22,259 6,131,682 87,984 13,53,272 4,88,938 5,798,248 3,643,86 134,14,592 71,11,29 45,993,239 17,1,324 26,414,87 134,93,344 95,669,359 29,577, % 1.46% 5.78% 5.88% 9.59% 8.4% 9.25% 2.15% 15.4% 15.26% 17.79% 12.29% 14.62% 16.87% 12.59% 12.73% 9.76% 5.23% 13.46% 8.% 1.97% 1.78% 1.99% 11.67% 13.88% 12.24% 16.37% 13.34%.88%.7% 1.54%.41%.81%.%.81%.5%.83% 1.23%.22%.83%.91% 1.38%.54%.8% 1.16%.34% 2.2%.7%.88%.89% 1.1%.51% 1.13% 1.22% 1.24%.39% 1.4% 11.16% 8.33% 6.28% 1.41% 8.99% 1.6% 2.2% 16.22% 16.49% 18.2% 13.12% 15.52% 18.25% 13.12% 12.81% 1.91% 5.56% 15.48% 9.64% 11.85% 11.67% 12.% 12.18% 15.1% 13.46% 17.61% 13.73% 19.71% 2.92% 2.61% 7.96% 18.97% 19.71% 16.67% 25.12% 21.41% 21.91% 24.7% 16.7% 23.17% 25.12% 22.9% 15.49% 15.42% 1.19% 2.48% 13.25% 19.7% 2.49% 2.1% 15.55% 21.74% 22.13% 22.73% 16.76% 44,563-82, ,787-87, ,89 83, ,298 1,264 57,65-29,81 56,518 3,888-54,421-66,582 24,12-11,851-59,58 11,721 7,84-78, ,256-83, , ,55 84, , ,8-181,21-117, , ,855-14, ,4 213,97 213,354 38,76 26,488-13,261 61,767-22,18-44,73-9,869 49,782-3,643-25,56 9, ,16-87, ,577-79, ,598-18,12 58, ,28 432,59-143,276 2,564,446 2,564,446 2,564,446 2,564,446 3,449,74 3,449,74 7

8 Overall Trend Suburban Office Market # OFFICE BUILDINGS 2,32 MARKET SIZE (SF) 126,399, % TOTAL VACANCY 23,219,898 SF (18.37%) DIRECT VACANCY 21,455,97 SF (16.97%) SUBLEASE VACANCY 1,764,81 SF (1.4%) AVAILABLE SPACE 3,225,21 SF (23.91%) Net Absorption -23,5 SF Q2 215 NET ABSORPTION (SF) -23,5 YTD 215 NET ABSORPTION (SF) 13,7 UNDER CONSTRUCTION (SF) 884,628 Asking Rents Q2 215 NEW SUPPLY (SF) Pictured above: 5 Lake Cook Rd, one building of the 4-building Corporate 5 office complex acquired by Cornerstone RE Advisers during the second quarter Comprised of several dispersed pockets of office developments, corporate parks and high-rise office towers, the suburban office market has experienced historically higher vacancy rates, larger swings in absorption, and lower rents than Chicago s downtown office market. The 15 largest suburban office complexes each total at least 1.1 million SF, which is about the average size of an office tower in the Central Business District. Quarter in Review The Chicago suburban office market fundamentals showed improvement year-to-date, despite a flat performance during the second quarter. Year-to-date absorption remains positive at 13, SF despite quarterly negative net absorption of 23, SF. Contributing to the decrease in occupied space was large suburban tenant, Gogo, who vacated the suburbs, moving to the CBD. The Chicago suburban office vacancy rate increased just 18 basis points from the previous quarter to the second quarter rate of 18.37%. Class "A" space in the suburbs remains in strong demand with nearly 3, SF of positive net absorption year-to-date, shrinking the vacancy rate to 15.43% for this product. Sizable lease renewals and new lease commitments secured second quarter should have a positive impact on the suburban office market in future quarters. During the second quarter, increased suburban office sales activity transferred ownership on a number of assets. One of the largest transactions was Columbia Property Trust's disposition of its national 11-building portfolio, which resulted in Lone Star Fund's acquisition of six Chicago suburban assets. Lone Star also acquired two assets from Equity Commonwealth. Suburban Vacancy Absorption Suburban Direct & Overall Vacancy 9, 24% 3, -3, 22% 2% 15.34% 14.61% 2.48% 19.8% 17.74% 17.14% 19.56% 17.38% 13.16% 18.37% 16.97% 12.17% -9, 18% -15, % (%) 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 Looking Forward Investors are clearly setting their sights on the Chicago suburban office market with increasing investment sales activity. Shortly after the second quarter ended, Blackstone Group closed on the GE Capital national real estate portfolio which totaled 85 properties. Locally, Blackstone acquired assets, including several notable suburban assets: Oakbrook Terrace Tower, the tallest office building in the suburban market as well as Westbrook Corporate Center, a five-building office complex totaling nearly 1.1 million SF. Largest Blocks of Available Space Building Name Building Address Block Size (SF) Innovation Park Lake County 6 N US Highway 45, Libertyville 972,531 Zurich Towers I 14 American Ln, Schaumburg 441,531 1 Zurich Towers II 145 American Ln, Schaumburg 44,538 1 AON Office Building (SL) 1 Milwaukee Ave, Glenview 45,39 Shuman Boulevard Shuman Blvd, Naperville 354, Oakmont Centre 7 Oakmont Ln, Westmont 256, Winfield Rd, Warrenville 249,996 Lucent Technologies 26 Lucent Ln, Naperville 225, (SL) All or partially a sublease listing 1 available late 217 Suburban Office Significant Buildings On the Market 2nd Quarter 215 Market Building Address Size (SF) Target Price Price PSF Seller Status North Suburban Illinois Science & Technology Park, 491 Searle Pkwy, Skokie 75, $7,, $93 Forest City Marketing Northwest Suburban Atrium Corporate Center 38 Golf Rd, Rolling Meadows 483, $77,, $159 Spear Street Marketing O'Hare 625 N River Rd, Rosemont 38,36 $79,, $28 CBRE Global Investors Marketing East-West Corridor Highland Pointe I and II, 333 and 377 E Butterfield Rd, Lombard 367,18 $47,724, $13 LaSalle Investment Marketing Suburban Office Significant Sale Transactions 2nd Quarter 215 Market Building Address Size (SF) Sale Price Price PSF Buyer Seller North Suburban Corporate 5 (4 bldgs), Lake Cook Rd, Deerfield 697,673 $153,8, $22 Cornerstone RE Advisers GE Capital RE East-West Corridor 3333 Finley Rd & 151 Opus Pl, Downers Grove 1 321,852 $38,75,153 $12 1 Lone Star Funds Columbia Property Trust East-West Corridor 31 Highland Pky, Downers Grove 1 275,197 $33,,534 $12 1 Lone Star Funds Columbia Property Trust East-West Corridor 265 Warrenville Rd, Downers Grove 1 222, $26,697,19 $12 1 Lone Star Funds Columbia Property Trust East-West Corridor 215 W Diehl Rd, Naperville 1 161,865 $26,697,19 $12 1 Lone Star Funds Columbia Property Trust North Suburban 544 Lakeview Pky, Vernon Hills 1 145, $26,25,269 $179 1 Lone Star Funds Columbia Property Trust North Suburban 1717 Deerfield Rd, Deerfield 137, $11,91,2 $8 Lone Star Funds Equity Commonwealth North Suburban 2355 Waukegan Rd, Bannockburn 1 16,495 $19,114,214 $179 1 Lone Star Funds Columbia Property Trust Suburban Office Significant Lease Transactions 2nd Quarter 215 Market Property Address Leased (SF) Tenant Lease Type Northwest Suburban 171 W Golf Rd, Rolling Meadows 16, Verizon New lease Northwest Suburban 15 McConnor Pky, Schaumburg 72,513 Comcast Corporation Lease renewal East-West Corridor 814 Commerce Dr, Oak Brook 45,756 Inland Real Estate Corporation New lease East-West Corridor 6-68 Oakmont Ln, Westmont 34,7 Athletico New lease East-West Corridor 1 Parkview Plz, Oakbrook Terrace 3, Kellen Association Management New lease East-West Corridor 325 Highland Pky, Downers Grove 29, Microsoft Lease renewal I-55 Corridor 18 Harvester Dr, Burr Ridge 27,789 Univ of Chicago Physicians Group New lease East-West Corridor 7 E Butterfield Rd, Lombard 26,278 MOL (America), Inc Lease renewal 1 Columbia Property Trust sold 11 suburban office properties totaling 2.9 million SF nationally and a six-buillding portfolio in the Chicago suburban market, acquired by Lone Star Funds; $ PSF figure represents allocation per Real Capital Analytics Entries highlighted in red denote NAI Hiffman transactions 9

10 173 North Suburban Waukegan Regional Airport # OFFICE BUILDINGS 524 Fox Lake 83 Gurnee Waukegan MARKET SIZE (SF) 3,321,585 Grayslake 12 TOTAL VACANCY 4,649,89 SF (15.34%) 21 DIRECT VACANCY 4,429,586 SF (14.61%) SUBLEASE VACANCY 22,34 SF (.73%) AVAILABLE SPACE 6,373,772 SF (21.2%) Vernon Hills Libertyville Lake Forest Q2 215 NET ABSORPTION (SF) -51,621 Lake Zurich TOTAL 215 NET ABSORPTION (SF) 388,584 Buffalo Grove Highland Park UNDER CONSTRUCTION (SF) 21 Deerfield 68 Q2 215 NEW SUPPLY (SF) Chicago Executive Airport Northbrook Net Absorption Asking Rents 9 Schaumburg Arlington Heights 2 Glenview 43 Niles Skokie Evanston 15.34% -51,621 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, qualified 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 had fallen victim to large reductions in size from companies such as Allstate and Hewitt Associates, but the market has bounced back in large part due to pharmaceutical-related staples including Walgreens, Baxter, Abbott Laboratories, and related spin-offs, among others. Vacancy Absorption Inventory by City 6, 25% Deerfield (14%) 4, 22% Other Suburbs (27%) 2, 19% Northbrook (12%) 16% Vernon Hills (5%) Skokie (1%) -2, 13% Glenview (5%) -4, 1% (%) Net Absorption (SF) Buffalo Grove (5%) Bannockburn (5%) Evanston (8%) Lincolnshire (9%) 1 NAI Hiffman The net result for year-to-date absorption is 389, SF, the highest year-to-date total of all the suburban office markets.

11 North Suburban Quarter in Review The second quarter was relatively flat in the North Suburban submarket, compared to the record breaking results posted first quarter. The net result for year-to-date absorption was nearly 389, SF, the highest year-to-date absorption total of all the Chicago suburban submarkets. Nominal second quarter absorption of negative 52, SF increased the vacancy rate slightly to 15.34%, up 17 basis points from the previous quarter, yet well below the 16.7% vacancy rate recorded one year ago. Investment sales totaled over 1 million SF during the quarter in this submarket. The largest property sold was Corporate 5, a four-building complex totaling 7, SF, acquired by Cornerstone. Additionally, Lone Star Funds closed on four office buildings, acquiring two properties from Columbia Property Trust and two buildings from Equity Commonwealth, now owning nearly 45, SF in the North Suburban office market. One large lease renewal was announced during the quarter by United Stationers at One Parkway North for 198, SF. The transaction reportedly included ownership's commitment to improving the overall building amenities package to secure the lease renewal. Looking Forward Shortly after the second quarter ended, Blackstone Group closed on the GE Capital national real estate portfolio which totaled 85 properties. This sale added two North Suburban office assets to Blackstone's growing portfolio. With the sustained improving market fundamentals, it's anticipated that more landlords will consider capital improvement projects to enhance building leasability. As available space continues to lease up, landlords will seek ways to improve competitiveness and successfully position themselves to maintain and increase occupancy. One such example of this is Edens Corporate Center in Northbrook. The landlord constructed a new contemporary cafe concept and enhanced with a new operator, as well as modernized the building's conference room and training amenities which helped boost occupancy up to 92%. Largest Blocks of Available Space Building Name Building Address Block Size (SF) Innovation Park Lake County 6 N US Highway 45, Libertyville 972,531 AON Office Building (SL) 1 Milwaukee Ave, Glenview 45,39 Woodland Falls Corporate Center N Riverwoods Blvd, Mettawa 159,821 Landmark of Lake Forest II (SL) 15 S Saunders Rd, Lake Forest 143,161 Bannockburn Corporate Center 3 Lakeside Dr, Bannockburn 111,141 One Overlook Point 1 Overlook Pt, Lincolnshire 17,984 Bannockburn Lake Office Plaza 2355 Waukegan Rd, Bannockburn 16,495 (SL) All or partially a sublease listing Contiguous Block Analysis 2,+ SF 5,+ SF 1,+ SF Class A Blocks Class B Blocks Class C Blocks Significant North Suburban Sale Transactions 2nd Quarter 215 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller Corporate 5 5, 51, 52, 54 Lake Cook Rd, Deerfield 697,673 $153,8, $22 Cornerstone RE Advisers GE Capital RE 544 Lakeview Pky, Vernon Hills 1 145, $26,25,269 $179 1 Lone Star Funds Columbia Property Trust 1717 Deerfield Rd, Deerfield 137, $11,91,2 $8 Lone Star Funds Equity Commonwealth Bannockburn Lake 2355 Waukegan Rd, Bannockburn 1 16,495 $19,114,214 $179 1 Lone Star Funds Columbia Property Trust 1955 W Field Ct, Lake Forest 59,1 $3,7, $63 Lone Star Funds Equity Commonwealth Significant North Suburban Lease Transactions 2nd Quarter 215 Building Name Property Address Leased (SF) Tenant Lease Type One Parkway North 1 Parkway Blvd N, Deerfield 198, United Stationers Lease renewal 11 W Lake Cook Rd, Buffalo Grove 28,673 Ceannate Corporation New lease Deerbrook Corporate Center 57 Lake Cook Rd, Deerfield 15,997 Vail Systems, Inc Lease renewal 1 Columbia Property Trust sold 11 suburban office properties totaling 2.9 million SF nationally and a six-buillding portfolio in the Chicago suburban market, acquired by Lone Star Funds; $ PSF figure represents allocation per Real Capital Analytics Entries highlighted in red denote NAI Hiffman transactions 11

12 173 Northwest Suburban # OFFICE BUILDINGS 585 MARKET SIZE (SF) 33,762,617 McHenry 14 Fox Lake Waukegan Regional Airport Waukegan TOTAL VACANCY 6,916,99 SF (2.48%) 176 Libertyville DIRECT VACANCY 6,442,13 SF (19.8%) SUBLEASE VACANCY 473,969 SF (1.4%) AVAILABLE SPACE 8,854,768 SF (26.23%) Q2 215 NET ABSORPTION (SF) -2,54 TOTAL 215 NET ABSORPTION (SF) -69,146 UNDER CONSTRUCTION (SF) 753,3 Q2 215 NEW SUPPLY (SF) Net Absorption Asking Rents 2.48% -2,54 SF Crystal Lake Dundee Elgin 72 2 South Elgin Dupage Airport St Charles 59 Hoffman Estates 62 Hanover Park Lake Zurich Palatine Schaumburg Bloomingdale Wood Dale 2 29 Addison 355 Chicago Executive Airport Arlington Heights Elk Grove Village Buffalo Grove Lake Fores 2 Highla Northbroo Ohare Rosemont Int'l Airport Franklin Park Lombard The Northwest Suburban market is highly influenced 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 Houghton Mifflin and Capital One have leased significant 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 7% due to more than 1.9 million SF of net absorption over the past three years. Vacancy Absorption Inventory by City 6, 4, 28% 26% Other Suburbs (22%) Schaumburg (29%) 2, 24% 22% Long Grove (4%) Elgin (7%) -2, 2% Arlington Heights (1%) -4, 18% (%) Net Absorption (SF) Hoffman Estates (8%) Rolling Meadows (1%) Itasca (1%) 12 NAI Hiffman The new interchange at Meacham Rd and I-9 enhances the long-term development potential in this area.

13 Northwest Suburban Quarter in Review The Northwest Suburban submarket's second quarter market fundamentals were largely impacted by a sizable tenant leaving the submarket. Gogo, an in-flight wireless service provider, vacated over 1, SF in Itasca and more than doubled its space requirement upon its relocation to the West Loop submarket in the CBD. This departure contributed to second quarter negative absorption of 2, SF, pushing the vacancy rate up 5 basis points from the previous quarter to 2.48%. Despite the quarterly uptick in vacancy, the current vacancy is still well below the peak rate of 27.1% recorded third quarter 21. While no investment sales were recorded in this submarket during the quarter, one user sale was completed. Weber-Stephen Products purchased Schneider Electric's 155,-SF headquarters in Palatine. The grill maker's plans for the building have not yet been announced for this property but the company maintains a significant footprint in the Northwest Suburban submarket: the company owns a 28,-SF industrial building in Palatine, leases a 48,-SF office building in Rolling Meadows and recently completed construction on a 75,-SF distribution center in Huntley, next to its existing manufacturing facility. Two large lease commitments were announced in the second quarter by telecommunications providers. Verizon signed a new lease for 16, SF at Continental Towers in Rolling Meadows, expanding from 127, SF in Elgin. In addition, Comcast renewed its lease for 73, SF at Windy Point I in Schaumburg. Looking Forward The village of Schaumburg announced second quarter that it is considering a land use plan for the 2-acre Motorola campus as the tech company sheds unused land. Motorola previously sold 39 acres to Zurich North America for its 753, SF headquarters, currently under construction. Another 8.2 acres of Motorola's campus was sold to the Illinois Tollway for construction of a new interchange at Meacham Road and I-9. This infrastructure project will provide improved access to the area, thus enhancing the long-term development potential in the area. Largest Blocks of Available Space Building Name Building Address Block Size (SF) Zurich Tower I 14 American Ln, Schaumburg 441,531 1 Zurich Tower II 145 American Ln, Schaumburg 44,538 1 Northwest Crossings 1421 W Shure Dr, Arlington Heights 218,662 Meadows Corporate Center 255 W Golf Rd, Rolling Meadows 216,592 Fischer Corporate Center 177 N Randall Rd, Elgin 22, Algonquin Rd, Schaumburg 195,393 Contiguous Block Analysis 2,+ SF 5,+ SF 1,+ SF Class A Blocks Class B Blocks Class C Blocks 1 available late 217 Significant Northwest Suburban Sale Transactions 2nd Quarter 215 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller 1415 S Roselle Rd, Palatine 154,76 $11,867,65 $77 Weber-Stephen Products Schneider Electric USA Significant Northwest Suburban Lease Transactions 2nd Quarter 215 Building Name Property Address Leased (SF) Tenant Lease Type Continental Towers 171 W Golf Rd, Rolling Meadows 16, Verizon New lease WindyPoint 15 McConnor Pky, Schaumburg 72,513 Comcast Corporation Lease renewal 13

14 9% 4% 4% 29% 34% Northbrook O Hare Area # OFFICE BUILDINGS 17 Chicago Executive Airport Arlington Heights 2 MARKET SIZE (SF) 15,263, TOTAL VACANCY 2,77,825 SF (17.74%) DIRECT VACANCY 2,616,737 SF (17.14%) SUBLEASE VACANCY 91,88 SF (.6%) AVAILABLE SPACE 3,417,545 SF (22.37%) Elk Grove Village 72 Des Plaines Ohare Int'l Airport Park Ridge Rosemont Skokie Q2 215 NET ABSORPTION (SF) 33, TOTAL 215 NET ABSORPTION (SF) -19,3 UNDER CONSTRUCTION (SF) Q2 215 NEW SUPPLY (SF) Addison 29 Franklin Park 355 Net Absorption Asking Rents Lombard % 33,187 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 amenities and public transportation, the O Hare submarket led the suburban office recovery starting in 21. Many companies have identified the O Hare submarket as an ideal location for a new office 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 and the Metra North Central line, allowing convenient public transportation for city-dwelling staff members. Vacancy Absorption Inventory by City 24, 16, 26% 24% Schiller Park, Franklin Park, Norridge, Harwood Heights (4%) Bensenville (4%) 8, 22% Park Ridge (9%) Rosemont (34%) 2% -8, 18% -16, % Des Plaines (21%) (%) Net Absorption (SF) Chicago (O Hare Area) (29%) 14 NAI Hiffman With tight class "A" supply, it's anticipated rents will soon push the $2 net PSF level.

15 O Hare Area Quarter in Review Second quarter activity in the O'Hare submarket was relatively quiet, marked by smaller sized transactions compared to large lease commitments. As a result, market fundamentals posted modest improvements. Quarterly absorption totaled 33, SF, decreasing the vacancy rate to 17.74%, down 27 basis points from the previous quarter. Class "A" space in the O'Hare submarket is the tightest in all the suburban office markets at 13.99%. During the quarter, Sysco abandoned plans to acquire US Foods, thus eliminating the potential downsize of 4, SF coming back on the market. One notable sale transaction occurred during the second quarter: Phoenix International Publications purchased a 166, SF office building at 851 W Higgins Rd. One O'Hare Centre, a 38, SF class "A" office building in Rosemont, is currently on the market for sale, featuring an occupancy level in excess of 95% with a targeted price PSF north of $2. Smaller sized lease transactions, both new and renewals, were recorded during the quarter. The largest of such transactions included: First Midwest Bank renewed 18, SF at 851 W Higgins Rd, Reyes Holdings expanded into 14, SF at One O'Hare Centre and Sterling Infosystems, provider of employment screening and background checks, subleased 12, SF at US Cellular Plaza. Looking Forward Shortly after the second quarter ended, Blackstone Group closed on the GE Capital national real estate portfolio which totaled 85 properties. This sale added one O'Hare Area office asset, Pointe O'Hare, a 27, SF class "A" asset, to Blackstone's growing portfolio. This submarket's central location, expanded retail amenities and multiple transportation access points will continue to draw new office users and retain the existing tenant base. As institutional investors look for opportunities in the suburban office market, this submarket will capture their attention as a highly desirable suburban office location with strong market performance. With limited class "A" availabilities, its anticipated rents will push the $2 net PSF level. Largest Blocks of Available Space Building Name Building Address Block Size (SF) O'Hare Gateway Office Center 96 W Bryn Mawr Ave, Rosemont 156,832 Cumberland Centre 545 N Cumberland Ave, Chicago 143, Touhy Plaza 135 E Touhy Ave, Des Plaines 123,176 US Cellular Plaza 842 W Bryn Mawr Ave, Chicago 119,228 Triangle Plaza 875 W Bryn Mawr Ave, Rosemont 92,166 O'Hare International Center II 1255 W Higgins Rd, Rosemont 88,227 Pointe O'Hare I (SL) 955 W Higgins Rd, Rosemont 78,937 (SL) All or partially a sublease listing Contiguous Block Analysis 2,+ SF 5,+ SF 1,+ SF Class A Blocks Class B Blocks Class C Blocks Significant O Hare Area Sale Transactions 2nd Quarter 215 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller 851 W Higgins Rd, Chicago 166,23 $23,25, $14 Phoenix Intl Publications Lowe Enterprises Investment Management Significant O Hare Area Lease Transactions 2nd Quarter 215 Building Name Property Address Leased (SF) Tenant Lease Type 851 W Higgins Rd, Chicago 18,367 First Midwest Bank Lease renewal One O'Hare Centre 625 N River Rd, Rosemont 14,23 Reyes Holdings Lease expansion US Cellular Plaza 843 W Bryn Mawr Ave, Chicago 12,148 Sterling Infosystems Sublease 15

16 Chicago Executive Airport Northbrook East-West Corridor Elgin 9 Schaumburg Arlington Heights 2 # OFFICE BUILDINGS 667 Elk Grove Village Ohare Int'l Airport Rosemont MARKET SIZE (SF) 43,32,999 TOTAL VACANCY 8,417,88 SF (19.56%) DIRECT VACANCY 7,477,53 SF (17.38%) SUBLEASE VACANCY 939,585 SF (2.18%) AVAILABLE SPACE 1,842,467 SF (25.2%) Q2 215 NET ABSORPTION (SF) 31,693 TOTAL 215 NET ABSORPTION (SF) -14, St Charles North Aurora Aurora Dupage Airport Naperville Lombard 38 Oakbrook Terrace Downers Grove 29 Elmhurst 83 Oak Brook Westmont 2 Franklin Park UNDER CONSTRUCTION (SF) 131, Q2 215 NEW SUPPLY (SF) Bolingbrook Romeoville Net Absorption Asking Rents 19.56% 31,693 SF Largest of the suburban office 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. The characteristically more stable eastern section is defined by more diverse multi-tenant buildings, smaller blocks of space, and older product. 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. Vacancy Absorption Inventory by City 4, 24% Other Suburbs (19%) Oak Brook (16%) 2, 23% 22% Westchester (4%) 21% Aurora (4%) Naperville (15%) -2, 2% Lombard (8%) -4, % Oakbrook Terrace (1%) Downers Grove (13%) (%) Net Absorption (SF) Lisle (11%) 16 NAI Hiffman New development potential is one step closer to reality with the acquisition of the 16-acre site at 22nd and York Rd.

17 East-West Corridor Quarter in Review The East-West Corridor market fundamentals experienced modest improvement during the second quarter with positive absorption of 32, SF, pushing the vacancy rate down to 19.56%, the lowest level in the past seven years. Although performance metrics improved nominally during the quarter, a number of sizable leases announced will positively impact market fundamentals in future quarters. Two significant sales were completed in the second quarter, resulting in five assets changing ownership. Lone Star Funds acquired Columbia Property Trust's portfolio, which included four office buildings totaling close to 1 million SF. Lincoln Property Company and Foxford Communities acquired an office and retail property on a 16-acre site in Oak Brook; the buyer was drawn to the property due to its location and the mixed-use zoning currently in place and is considering a variety of alternative uses for the property. Multiple lease transactions in the 25, to 45, SF range were announced during the quarter. The largest commitment was Inland Real Estate Corporation's new lease of 46, SF at 814 Commerce Drive in Oak Brook. The company looks forward to gaining greater efficiencies, relocating from a three-story building to single-story space. Looking Forward After the end of the second quarter, Blackstone Group closed on the GE Capital national real estate portfolio which totaled 85 properties. This sale added five East-West Corridor office assets to Blackstone's growing portfolio. New development potential in this submarket is one step closer to reality with the completed sale of the portfolio of assets located at 22nd Street and York Rd in Oak Brook. Largest Blocks of Available Space Building Name Building Address Block Size (SF) Shuman Boulevard Shuman Blvd, Naperville 354, Oakmont Centre 7 Oakmont Ln, Westmont 256, Winfield Rd, Warrenville 249,996 Lucent Technologies 26 Lucent Ln, Naperville 225, 24 Cabot 24 Cabot Dr, Lisle Contiguous Block Analysis 2,+ SF 5,+ SF 1,+ SF Class A Blocks Class B Blocks Class C Blocks Significant East-West Corridor Sale Transactions 2nd Quarter 215 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller Axciom Buildings 3333 Finley Rd & 151 Opus Pl, DG 321,852 $38,75,153 $12 1 Lone Star Funds Columbia Property Trust Highland Landmark III 31 Highland Pky, Downers Grove 275,197 $33,,534 $12 1 Lone Star Funds Columbia Property Trust Corridors III 265 Warrenville Rd, Downers Grove 222, $26,697,19 $12 1 Lone Star Funds Columbia Property Trust ConAgra Foods 215 W Diehl Rd, Naperville 161,865 $26,697,19 $12 1 Lone Star Funds Columbia Property Trust 2122 York Rd, Oak Brook 2 121,866 $4,, 2 Portfolio sale 2 Lincoln Property Co JV 2 John Buck Co JV 2 Significant East-West Corridor Lease Transactions 2nd Quarter 215 Building Name Property Address Leased (SF) Tenant Lease Type 814 Commerce Dr, Oak Brook 45,756 Inland Real Estate Corporation New lease Oakmont Tech Center 6-68 Oakmont Ln, Westmont 34,7 Athletico New lease Parkview Plaza 1 Parkview Plz, Oakbrook Terrace 3, Kellen Association Management New lease Highland Landmark III 325 Highland Pky, Downers Grove 29, Microsoft Lease renewal Butterfield Centre 7 E Butterfield Rd, Lombard 26,278 MOL (America), Inc Lease renewal Executive Towers West II 1411 Opus Pl, Downers Grove 25,28 Gallagher Bassett New lease 1 Columbia Property Trust sold 11 suburban office properties totaling 2.9 million SF nationally and a six-building portfolio in the Chicago suburban market, acquired by Lone Star Funds; $ PSF figure represents allocation per Real Capital Analytics 2 Buyer is Lincoln Property Co JV with Foxford Communities and Seller is John Buck Co JV with DRI Development Services and included retail and office properties with additional land for development 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 528,996 SF (13.16%) DIRECT VACANCY 489,141 SF (12.17%) SUBLEASE VACANCY 39,855 SF (.99%) Naperville Darien 55 Burr Ridge 83 AVAILABLE SPACE 736,658 SF (18.33%) Q2 215 NET ABSORPTION (SF) -42,76 Bolingbrook TOTAL 215 NET ABSORPTION (SF) -65,965 UNDER CONSTRUCTION (SF) Q2 215 NEW SUPPLY (SF) Romeoville Net Absorption Asking Rents 13.16% -42,76 SF Although small in volume of space, the I-55 Corridor market benefits 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 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, % (%) Net Absorption (SF) Woodridge (2%) Burr Ridge (24%) 18 NAI Hiffman The vacancy rate fluctuates quarterly yet remains in a consistent range between 12% and 16% over the past seven years.

19 I-55 Corridor Quarter in Review Market fundamentals were impacted by one sizable tenant that vacated during the quarter. Chicago Bridge & Iron Company moved out of approximately 6, SF of space at Tallgrass Corporate Center in Bolingbrook. This departure contributed to the second quarter net absorption total of negative 43, SF, and drove the second quarter vacancy rate up 1 basis points to 13.16%. Given the smaller size of this 4 million SF office market, the vacancy rate fluctuates from quarter-to-quarter but remains in a consistent range from about 12.% to 16.5% over the past seven years. Two notable lease transactions were announced during the second quarter. The University of Chicago Physicians Group committed to nearly 28, SF at the Estancia Corporate Centre in Burr Ridge, expanding from the building next door. Muscular Dystrophy of America (MDA) leased 6,2 SF in Bolingbrook. An office condominium measuring 6,4 SF was purchased by Custom Education Solutions for $15 PSF. Looking Forward Given the smaller size of the submarket relative to the other suburban markets, market fundamentals in the I-55 Corridor tend to fluctuate more as demand is more sporadic in terms of volume and timing. The departure of Chicago Bridge & Iron leaves Tallgrass Corporate Center with a large block of available space which may take time to be absorbed as this office market is primarily comprised of smaller sized office buildings, with the median building size measuring 3, SF. Largest Blocks of Available Space Building Name Building Address Block Size (SF) Tallgrass Corporate Center 1 Remington Blvd, Bolingbrook 124, Remington Blvd, Bolingbrook 79, Burr Ridge Pky, Burr Ridge 71,19 Midpoint II 7135 Janes Ave, Woodridge 46, High Ridge Park Bldg I & II 688 N Frontage Rd, Burr Ridge 34,383 Madison Ridge 832 S Madison St, Burr Ridge 25,13 Contiguous Block Analysis 2,+ SF 5,+ SF 1,+ SF Class A Blocks Class B Blocks Class C Blocks Significant I-55 Corridor Sale Transactions 2nd Quarter 215 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller 235 Remington Blvd, Bolingbrook 6,371 $955,65 $15 Custom Education Solutions Remquad Office LLC Significant I-55 Corridor Lease Transactions 2nd Quarter 215 Building Name Property Address Leased (SF) Tenant Lease Type Estancia Corporate Centre 18 Harvester Dr, Burr Ridge 27,789 University of Chicago Physicians Group New lease 5 Professional Building 55 E Boughton Rd, Bolingbrook 6,2 Muscular Dystrophy of America New lease Entries highlighted in red denote NAI Hiffman transactions 19

20 Overall Trend Downtown Office Market # OFFICE BUILDINGS 447 MARKET SIZE (SF) 134,14, % TOTAL VACANCY 15,88,153 SF (11.85%) DIRECT VACANCY 14,696,844 SF (1.97%) SUBLEASE VACANCY 1,183,39 SF (.88%) AVAILABLE SPACE 26,399,311 SF (19.7%) Q2 215 NET ABSORPTION (SF) 314,256 YTD 215 NET ABSORPTION (SF) 124,577 UNDER CONSTRUCTION (SF) 2,564,446 Net Absorption 314,256 SF Asking Rents Q2 215 NEW SUPPLY (SF) Pictured above: Willis Tower, acquired by The Blackstone Group for $1,3,, during the second quarter. The Chicago Loop, Wacker Drive, and North Michigan Avenue are all iconic landmarks that give Chicago worldwide recognition. Historic buildings and modern high-rises define 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 office market, but when it comes to rents companies pay for office space, it isn t as expensive as one would think, ranking 2th most expensive for office tenants, behind cities like San Francisco, New York, Austin and Portland, Oregon. Quarter in Review The downtown office market resumed its trend of improving market fundamentals in the second quarter. Positive net absorption totaled 314, SF, driving the year-to-date total to 124,577 SF. The vacancy rate improved 58 basis points over the previous quarter decreasing to 11.5%. The Central Loop submarket experienced the greatest quarterly improvement in the quarter, largely due to Wintrust Wealth Management taking occupancy of 18, SF. Increasing leasing velocity occurred in the second quarter with a two leases announced in excess of 1, SF. Other noteworthy activity includes The Blackstone Group's purchase of Willis Tower, the nation's second tallest building, for $1.3 billion. This represents a record high total purchase price for an office tower outside of New York. Downtown Vacancy Absorption Downtown Direct & Overall Vacancy 1 MM 18% 16% % 15.4% 15.52% 14.62% -1 MM 14% 12% 1.4% 9.15% 1.41% 9.59% 1.91% 9.76% 11.85% 1.97% -2 MM % 2 NAI Hiffman (%) Net Absorption (SF) West Loop Central Loop East Loop North Michigan Avenue Direct Vacancy River North Overall Downtown Sublease Vacancy

21 Downtown Office Market New Development Three new development projects are currently underway in the downtown office market totaling 2.5 million SF, all located in the West Loop. These include a 1.2 million SF office tower at 15 N Riverside Dr, River Point, a 1 million SF office located at 444 W Lake St and a 287, SF asset located at 133 W Fulton on the periphery of the West Loop. The two larger projects have secured sizable commitments during construction: River Point is 56% preleased while15 S Riverside is 51% preleased. Both buildings are expected to be completed by year-end 216. Largest Blocks of Available Space Submarket Building Name Building Address Block Size (SF) West Loop Riverside Plaza 3 S Riverside Plz 497,7 West Loop 311 W Monroe St 387,75 North Michigan Ave The AMA Building 515 N State St 377,421 East Loop AON Center 2 E Randolph St 339,761 West Loop The Franklin 227 W Monroe St 313,462 West Loop River Point 444 W Lake St 31, 1 West Loop The Franklin 222 W Adams St 36,576 Central Loop 23 N LaSalle St 292,777 West Loop 133 W Fulton St 287, 1 West Loop 15 N Riverside Dr 275, under construction Downtown Office Significant Buildings On the Market 2nd Quarter 215 Submarket Building Name Building Address Size (SF) Target Price Price PSF Seller Status East Loop Aon Center 2 E Randolph St 2,7, $712,, $26 Piedmont Office Realty Trust Under contract East Loop Illinois Center 1 Two buildings 1 2,72,34 Undislcosed Undisclosed Equity Commonwealth Marketing River North River North Point 35 N Orleans St 1,243, Undisclosed Undisclosed Shorenstein Properties Under contract Central Loop 18 N LaSalle St 767,65 Undisclosed Undisclosed Beacon Capital Partners Under contract Downtown Office Significant Sale Transactions 2nd Quarter 215 Submarket Building Address Size (SF) Sale Price Price PSF Buyer Seller West Loop 233 S Wacker Dr 3,787,238 $1,3,, $343 The Blackstone Group The Chetrit Group, etc 2 West Loop 1 S Wacker Dr 1,195,17 $344,, $288 John Hancock Real Estate Harbor Grp Mgmt, Clal US Inc West Loop 111 N Canal St 83, $34,, $366 JP Morgan Asset Management Sterling Bay Companies Downtown Office Significant Lease Transactions 2nd Quarter 215 Submarket Building Name Property Address Leased (SF) Tenant Lease Type River North 6 W Chicago Av 38, Groupon Lease renewal/expansion River North 2 W Kinzie St 15, WeWork New lease North Michigan Avenue 41 N Michigan Ave 88, ACGME New lease Central Loop 222 N LaSalle St 78,7 Avant Credit Corporation New lease West Loop River Point 444 W Lake St 52,6 Morton Salt New lease 1 The sale includes two buiidlings at Illinois Center: One Illinois Center, 111 E Wacker Dr, 1,5,34 SF and Two Illinois Center, 233 N Michigan Ave, 1,67, SF. 2 Seller is The Chetrit Group, The Moinian Group, and American Landmark Properties, Ltd 3 Represents office SF; buyer also acquired 1,243 SF of ground floor retail space 21

22 West Loop # OFFICE BUILDINGS Chicago Midway Airport Chicago Ave Chicago Oak St MARKET SIZE (SF) 45,377,793 TOTAL VACANCY 4,553,744 SF (1.4%) DIRECT VACANCY 4,152,63 SF (9.15%) SUBLEASE VACANCY 41,141 SF (.88%) AVAILABLE SPACE 8,4,287 SF (19.71%) Ohio St Kinzie St 12 2 Oak Lawn 5 State St 57 Wacker Dr 12 2 Q2 215 NET ABSORPTION (SF) 44,563 Randolph St TOTAL 215 NET ABSORPTION (SF) -117,525 UNDER CONSTRUCTION (SF) 2,564,446 Q2 215 NEW SUPPLY (SF) Carpenter St Halsted St Wacker Dr Wells St Harvey Michigan Ave 6 29 Congress Pky 2 8 Net Absorption Asking Rents 1.4% 44,563 SF The last decade s development cycle in Downtown Chicago transformed the West Loop into the premier office submarket due to its proximity to multiple transportation options. Wacker Drive lies at the heart of the submarket and has been the corridor of the most significant office developments. After several years of no construction cranes in the submarket, new development activity has begun again, with three buildings under construction at 444 W Lake St, 133 W Fulton St, and 15 N Riverside Dr totaling 2.5 million SF. Vacancy Absorption Vacancy by Class Type 4, 2% 11.16% 2, 18% 16% 14% 8.33% 6.28% -2, 12% -4, 1% -6, 8% (%) Net Absorption (SF) Class A Class B Class C Direct Vacancy Sublease Vacancy 22 NAI Hiffman New office development is currently underway that will add 3 office projects to the skyline, totaling 2.5 million SF.

23 West Loop Quarter in Review Market fundamentals improved albeit nominally in the West Loop second quarter with positive net absorption totaling 45, SF. This drove the vacancy rate down to 1.4%. Due to consistent demand, the West Loop submarket remains relatively tight as it continues to maintain one of the lowest vacancy rates of all the submarkets in the CBD. The traditionally low vacancy rate has benefited new construction projects, as developers have been able to secure sizable tenants during the construction phase and historically developers have delivered new projects with significant occupancy. In addition to several sizable lease renewals during the second quarter, Morton Salt signed a new lease for 52,6 SF at River Point, an office tower currently under construction. The producer of salt will relocate its headquarters, moving 3 employees from its current West Loop headquarters at 123 N Wacker Dr. The company also plans to move 5 customer service employees in Oak Brook upon completion in 217. The largest sale transaction closed second quarter with Blackstone's acquisition of the Willis Tower. The 4.5 million SF asset is comprised of 3.8 million SF with the balance of space dedicated to retail and entertainment. The new owner plans include a strategic repositioning of the mixed-use tower. Looking Forward Construction continues on three buildings, totaling 2.5 million SF. The 1 million SF River Point project at 444 W Lake St upped its preleasing commitment to 56% and 15 N Riverside, a 1.2 million SF building underway, secured leases from tenants for 51% of the building as of the second quarter. Despite the availability of larger contiguous blocks of space in existing class "A" buildings, projects currently under construction will continue to an increase in preleasing commitments. Morton Salt's lease announcement identified the new building's modern, open and high-tech features will provide an innovative and collaborative environment. Other tenants seeking new space opportunities will also factor into their decision the intangible aesthetic features new construction offers and the enhanced environment it can provide. Largest Blocks of Available Space Building Name Building Address Block Size (SF) Riverside Plaza 3 S Riverside Plz 497,7 311 W Monroe St 387,75 The Franklin 227 W Monroe St 313,462 River Point 444 W Lake St 31, 1 The Franklin 222 W Adams St 36, W Fulton St 287, 1 15 N Riverside Dr 275, under construction Contiguous Block Analysis 2,+ SF 5,+ SF 1,+ SF Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller Class A Blocks Class B Blocks Class C Blocks Significant West Loop Sale Transactions 2nd Quarter 215 Willis Tower 233 S Wacker Dr 3,787,238 $1,3,, $343 The Blackstone Group The Chetrit Group, The Moinian Group, etc 1 One South Wacker 1 S Wacker Dr 1,195,17 $344,, $288 John Hancock Real Estate Harbor Group Management, Clal US Inc River Center 111 N Canal St 83, $34,, $366 JP Morgan Asset Management Sterling Bay Companies Significant West Loop Lease Transactions 2nd Quarter 215 Building Name Property Address Leased (SF) Tenant Lease Type 54 W Madison 83,228 SAC Wireless Lease renewal 2 W Monroe St 56,238 Hyatt Hotels Corporation Lease renewal River Point 444 W Lake St 52,6 Morton Salt New lease 1 South Riverside Plaza 1 S Riverside Plz 36,812 American Institutes for Research New lease 222 S Riverside Plz 35, Land of Lincoln Sublease 1 Seller is The Chetrit Group, The Moinian Group, and American Landmark Properties, Ltd 23

24 Central Loop # OFFICE BUILDINGS Chicago Midway Airport Chicago Ave Chicago Oak St MARKET SIZE (SF) 38,559,342 TOTAL VACANCY 4,12,7 SF (1.41%) DIRECT VACANCY 3,699,468 SF (9.59%) SUBLEASE VACANCY 313,326 SF (.82%) AVAILABLE SPACE 7,312,87 (18.97%) Ohio St Kinzie St 12 2 Oak Lawn 5 State St 57 Wacker Dr 12 2 Q2 215 NET ABSORPTION (SF) 326,89 Randolph St YTD 215 NET ABSORPTION (SF) 465,4 UNDER CONSTRUCTION (SF) Q2 215 NEW SUPPLY (SF) Carpenter St Halsted St Wacker Dr Wells St Harvey Michigan Ave 6 29 Congress Pky 2 8 Net Absorption Asking Rents 1.41% 326,89 SF Historically, the Central Loop submarket had been Chicago s core financial district. While this area has evolved over the decades, several banks still remain and it has become a central hub for many local and national law firms. Chicago s El train serves the submarket well, as the area is surrounded by the trains loop. Unlike many of the West Loop s more modern and well-equipped structures, buildings in the Central Loop tend to be older with smaller floor plates and less in-building parking. Vacancy Absorption 4, 18% Vacancy by Class Type 2, 16% 6.41% 14% 12% 8.99% 1.6% -2, 1% -4, 8% (%) Net Absorption (SF) Class A Class B Class C Direct Vacancy Sublease Vacancy 24 NAI Hiffman Second quarter's posted positive net absorption total boosted the year-to-date figure to 465, SF, the highest level of absorption recorded in the CBD to date.

25 Central Loop Quarter in Review Market fundamentals continue to improve in the Central Loop during the second quarter. Positive net absorption totaled 326, SF and boosted the year-to-date figure to 465, SF, the highest level of absorption recorded in all of the CBD submarkets this quarter. Wintrust Wealth Management moved into 18, SF at 231 S LaSalle St during the second quarter which significantly contributed to the positive absorption. The Central Loop vacancy rate fell to 1.41% which is the lowest vacancy rate recorded in this submarket in recent years. During the second quarter, one office building traded in this submarket. Windy City Real Estate acquired a 23-story building for $86 PSF. The seller retained the retail space on the ground floor and a portion of the second floor. The buyer, who owns 1,2 apartment units and 32, SF of commercial space, plans to keep the building use for offices. Several sizable new leases were signed during the second quarter and totaled over 115, SF. Avant Credit Corporation signed a deal for 79, SF at 222 N LaSalle St and Grant Thornton committed to 38, SF at 161 N Clark St. Looking Forward The outlook for the Central Loop submarket remains positive with the continued trend of improving market fundamentals during the first half of 215. Recent sizable lease transactions underscore tenant demand for this centrally located submarket within the CBD. The central location among the CBD submarkets allows tenants easy access to the locational benefits of the neighboring submarkets such as restaurants, museums, commuter train stations, entertainment venues, etc. Some owners within this submarket with older and functionally obsolete properties may consider redevelopment plans or capital improvement projects to remain competitive in the market. Largest Blocks of Available Space Building Name Building Address Block Size (SF) 23 N LaSalle St 292,777 Insurance Exchange Building 175 W Jackson Blvd 271,2 Citadel Center 131 S Dearborn St 22,972 Chase Tower 1 S Dearborn St 193, N LaSalle St 165,866 Chicago Board of Trade - South Bldg 141 W Jackson Blvd 162,31 Chicago Board of Trade - North Bldg 141 W Jackson Blvd 135,45 Contiguous Block Analysis 2,+ SF 5,+ SF 1,+ SF Class A Blocks Class B Blocks Class C Blocks Significant Central Loop Sale Transactions 2nd Quarter 215 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller 15 W Madison St 125,729 $1,8, $86 Windy City Real Estate Baker Development Corporation Significant Central Loop Lease Transactions 2nd Quarter 215 Building Name Property Address Leased (SF) Tenant Lease Type 222 N LaSalle St 78,7 Avant Credit Corporation New lease 161 N Clark St 38,236 Grant Thornton New lease 25

26 East Loop # OFFICE BUILDINGS Chicago Midway Airport Chicago Ave Chicago Oak St MARKET SIZE (SF) 23,45,26 TOTAL VACANCY 3,797,34 SF (16.22%) DIRECT VACANCY 3,63,872 SF (15.4%) SUBLEASE VACANCY 193,432 SF (.83%) AVAILABLE SPACE 5,17,248 SF (21.41%) Ohio St Kinzie St 12 2 Oak Lawn 5 State St 57 Wacker Dr 12 2 Q2 215 NET ABSORPTION (SF) 57,65 Randolph St TOTAL 215 NET ABSORPTION (SF) 26,488 UNDER CONSTRUCTION (SF) Q2 215 NEW SUPPLY (SF) Carpenter St Halsted St Wacker Dr Wells St Harvey Michigan Ave 6 29 Congress Pky 2 8 Net Absorption Asking Rents 16.22% 57,65 SF Unlike neighboring submarkets such as the West Loop or Central Loop, the East Loop submarket is far more diverse due to the presence of several universities, not-for-profits, condominium conversions and a growing retail component. Over the past several years, the submarket has benefited from a plethora of condo conversion projects that have rejuvenated the area and its aging buildings. However, since the economic downturn, the market for condo conversions has been greatly diminished. The area does not benefit from the easy access to highways or commuter lines that neighboring submarkets enjoy, but it is still within walking distance of the El trains, Millennium Park and close to Lake Shore Drive. Vacancy Absorption Vacancy by Class Type 6, 4, 2, -2, 2% 18% 16% 14% 16.49% 18.2% 13.12% -4, 12% -6, 1% (%) Net Absorption (SF) Class A Class B Class C Direct Vacancy Sublease Vacancy 26 NAI Hiffman Market fundamentals improved slightly second quarter with nominal positive absorption reducing the vacancy rate to 16.22%.

27 East Loop Quarter in Review Market fundamentals slowly began to improve in this submarket second quarter. Nominal positive absorption during the quarter moved the year-to-date figure out of the red and into the black. The vacancy rate posted a modest improvement of 25 basis points from the first quarter rate of 16.47% to the current rate of 16.22%. Despite the second quarter improvement, this submarket continues to post the highest vacancy rate of all submarkets in the CBD. While the East Loop submarket recorded no significant building sales during the second quarter, there are several sizable assets currently on the market. Aon Center, a 2.7 million SF office tower owned by Piedmont Office Realty Office Trust, is on the market however a deal has reportedly been agreed to with a venture of 61W Cos, led by a New York real estate investor. Also, Equity Commonwealth is marketing two buildings for sale at Illinois Center, totaling nearly 1.1 million SF. No large new leases were announced during the quarter, yet one sizable tenant committed to a lease renewal. Baker Tilly renewed its lease for 47, SF at 25 N Michigan Ave. Looking Forward Market fundamentals will improve in this submarket in the near future as a large tenant announced plans to lease 17, SF at Aon Center. After the close of the second quarter, Kraft Heinz, the newly merged packaged food company, signed a transaction for space at the third tallest building in Chicago, and will be relocating its headquarters from the northern suburbs. Kraft Heinz plans to take occupancy in the first quarter of 216. Largest Blocks of Available Space Building Name Building Address Block Size (SF) AON Center 2 E Randolph St 339,761 One Prudential Plaza 13 E Randolph St 188,4 One North State 1 N State St 162,227 One Illinois Center 111 E Wacker Dr 16,476 Two Illinois Center 233 N Michigan Ave 133, E Wacker Dr 129,993 One Congress Center 41 S State St 11,898 Contiguous Block Analysis 2,+ SF 5,+ SF 1,+ SF Class A Blocks Class B Blocks Class C Blocks Significant East Loop Sale Transactions 2nd Quarter 215 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller None to report Significant East Loop Lease Transactions 2nd Quarter 215 Building Name Property Address Leased (SF) Tenant Lease Type 25 N Michigan Ave 46,816 Baker Tilly Lease renewal 27

28 North Michigan Avenue # OFFICE BUILDINGS 62 MARKET SIZE (SF) 13,141,925 TOTAL VACANCY 2,39,993 SF (15.52%) DIRECT VACANCY 1,92,954 SF (14.62%) SUBLEASE VACANCY 119,39 SF (.91%) AVAILABLE SPACE 3,38,126 SF (23.17%) Chicago Midway Airport 43 Ohio St Kinzie St 12 2 Oak Lawn Chicago Ave 5 Chicago Oak St State St 57 9 Michigan Ave Wacker Dr 41 Q2 215 NET ABSORPTION (SF) -54,421 Randolph St TOTAL 215 NET ABSORPTION (SF) -44,73 UNDER CONSTRUCTION (SF) Q2 215 NEW SUPPLY (SF) Carpenter St Halsted St Wacker Dr Wells St Harvey Michigan Ave 6 29 Congress Pky 2 8 Net Absorption Asking Rents 15.52% -54,421 SF One of the smallest office submarkets in Chicago s Central Business District, the North Michigan Avenue submarket is diverse, similar to the East Loop submarket which borders it to the south. A distinguished retail corridor interspersed with posh residential towers, North Michigan Avenue is a Chicago icon renowned throughout the world. The office submarket consists of primarily smaller-sized spaces. The submarket is home to Northwestern Memorial Hospital and the new home of the Lurie Children s Hospital of Chicago. The presence of these large healthcare institutions should benefit the submarket for years to come. Vacancy Absorption Vacancy by Class Type 4, 2% 18.25% 2, 17% 14% 13.12% 12.81% -2, 11% -4, 8% -6, 5% (%) Net Absorption (SF) Class A Class B Class C Direct Vacancy Sublease Vacancy 28 NAI Hiffman The submarket remained relatively unchanged in the first quarter with modest positve net absorption pushing down the vacancy rate marginally.

29 North Michigan Avenue Quarter in Review The North Michigan Avenue submarket posted negative net absorption in the second quarter, totaling 54, SF, and bringing the year-to-date total to negative 45, SF. The vacancy rate increased 41 basis points from the previous quarter to the current rate of 15.52%. Class "A" space in this submarket measures 18.25% vacant and represents the highest vacancy rate within class "A" space of all the submarkets in the CBD. Two noteworthy lease transactions were signed during the second quarter. ACGME (The Accreditation Council for Graduate Medical Education) committed to 88, SF at 41 N Michigan Ave. Perkins & Will signed a lease for 6, SF at the Wrigley Building. The architecture firm will relocate from the IBM at 33 N Wabash Ave to 41 N Michigan in the first quarter 216. The owners of this historic building spent $7 million on renovations which has helped boost occupancy from 2% in 212 to nearly 85% with this new lease. No significant sale transactions were reported second quarter. Looking Forward As healthcare institutions and renowned universities continue to expand in the area, the office submarket may benefit from related service businesses seeking the need to occupy space nearby. The ACGME lease announcement this quarter will positively impact market fundamentals in this submarket upon lease commencement. North Michigan Avenue, the smallest submarket in the CBD in terms of number of buildings and total SF inventory, will continue to lag behind the other CBD submarkets largely due to the unique composition of the tenant base. Largest Blocks of Available Space Building Name Building Address Block Size (SF) The AMA Building 515 N State St 377, E Erie St 161,49 Tribune Tower N Michigan Ave 69,3 AMA Plaza 33 N Wabash Ave 66,546 NBC Tower 455 N Cityfront Plaza Dr 63,167 One Magnificent Mile 98 N Michigan Ave 42,187 American Dental Association Bldg 211 E Chicago Ave 37,265 Contiguous Block Analysis 2,+ SF 5,+ SF 1,+ SF Class A Blocks Class B Blocks Class C Blocks Significant North Michigan Avenue Sale Transactions 2nd Quarter 215 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller None to report Significant North Michigan Avenue Lease Transactions 2nd Quarter 215 Building Name Property Address Leased (SF) Tenant Lease Type 41 N Michigan Ave 88, ACGME New lease The Wrigley Building 41 N Michigan Ave 6,44 Perkins & Will New lease 29

30 River North # OFFICE BUILDINGS Chicago Midway Airport Chicago Ave Chicago Oak St MARKET SIZE (SF) 13,53,272 TOTAL VACANCY 1,476,318 SF (1.91%) DIRECT VACANCY 1,319,7 SF (9.76%) SUBLEASE VACANCY 156,371 SF (1.16%) AVAILABLE SPACE 2,86,843 SF (15.42%) Ohio St Kinzie St 12 2 Oak Lawn 5 State St 57 Wacker Dr 12 2 Q2 215 NET ABSORPTION (SF) -59,58 Randolph St TOTAL 215 NET ABSORPTION (SF) -25,56 UNDER CONSTRUCTION (SF) Q2 215 NEW SUPPLY (SF) Carpenter St Halsted St Wacker Dr Wells St Harvey Michigan Ave 6 29 Congress Pky 2 8 Net Absorption Asking Rents 1.92% -25,56 SF Comprised of predominantly class C timber-loft style office buildings, the River North submarket is also home to several modern glass and steel class A office towers. The recent construction in the neighborhood of high-end residential developments, retail and up-scale restaurants has also been of note, but only one available development site remains at Wolf Point where the Chicago river splits, so major new office developments will be rare. The submarket is the least accessible to transportation of all the downtown office submarkets, but offers sensational views along the Chicago River. Several highprofile, quickly-growing companies call River North home, including deal-of-the-day website company Groupon and Yelp. Vacancy Absorption 1,2, 8, 2% 17% Vacancy by Class Type 15.48% 4, 14% 11% 9.46% -4, 8% 5.56% -8, % (%) Net Absorption (SF) Class A Class B Class C Direct Vacancy Sublease Vacancy 3 NAI Hiffman Two large lease commitments plus smaller new leases will translate to improved market fundamental in future quarters.

31 River North Quarter in Review While market fundamentals weakened during the second quarter, the River North submarket was active with lease announcements which will translate to positive absorption in subsequent quarters. Net absorption totaled negative 6, SF, bringing the year-to-date figure to negative 25, SF. As a result, the vacancy rate increased nominally from the previous quarter's rate of 1.47% to 1.91%. Two noteworthy leases were announced during the second quarter. Groupon entered into a lease renewal and expansion at 6 W Chicago Ave. The online deal company will grow from 315, SF to 38, SF to house its 2,1 employees. As part of the transaction, owner Equity Commonwealth agreed to building improvements which include a rooftop deck, upgrades to the lobby and elevator and providing more food options to the retail area. Another sizable transaction announced in the second quarter was WeWork's new lease for 15, SF at 2 W Kinzie St. The growing co-working firm will move into space Google will be vacating from later this year, relocating to a new development in the Fulton market area on the periphery of the West Loop. One significant sale occurred in the second quarter as GLL Real Estate Partners acquired One11 W Illinois St. Looking Forward The two large lease commitments coupled with smaller sized transactions will translate to improved market fundamentals in future quarters. The capital improvements the landlord agreed to make as part of the Groupon deal will likely bode well for future leasing success at that building. Other landlords in this submarket may follow suit and commit to enhanced building amenities to remain competitive in retaining existing tenants and securing new tenants. Largest Blocks of Available Space Building Name Building Address Block Size (SF) 6 West Chicago 6 W Chicago Ave 231,2 The Merchandise Mart 222 Merchandise Mart Plz 21,34 Dearborn Plaza 2 W Kinzie St 18,495 River North Point 35 W Mart Ctr 87, N Franklin St 3,6 Mesirow Financial Building 353 N Clark St 27,685 Contiguous Block Analysis 2,+ SF 5,+ SF 1,+ SF Class A Blocks Class B Blocks Class C Blocks Significant River North Sale Transactions 2nd Quarter 215 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller One11 W Illinois St 111 W Illinois St 141,957 1 Undisclosed Undisclosed GLL Real Estate Partners, Inc The Alter Group Significant River North Lease Transactions 2nd Quarter 215 Building Name Property Address Leased (SF) Tenant Lease Type 6 W Chicago Ave 38, Groupon Lease renewal/expansion Reid Murdoch Center 2 W Kinzie St 15, WeWork New lease Reid Murdoch Center 325 N LaSalle St 19,538 Walton Isaacson New lease 314 W Superior St 16, Softchoice Lease renewal 1 represents office SF; buyer also acquired 1,243 SF of ground floor retail space 31

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33 Methodology & Definitions Methodology The information included in this review is the result of a compilation and analysis of data from various sources on class "A", class "B", and class "C" industrial properties located in the metropolitan Chicago area defined by the submarket map on the previous page. 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 each of these individuals, companies and resources, without whose help this report would not have been possible. All of the information detailed throughout this report is saved and organized in our own in-house database and is regularly updated. Utilizing this database, we can analyze, calculate and report demographic information, inventory, vacancy, availability, net absorption, and transactional information. 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 defined as total square footage and/or number of buildings that has completed construction and received a certificate 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 Definitions abandoned or discontinued) but for which a certificate The NAI Hiffman Market Reviews track several measures of market undergoing conversion to office from another use or conditions. This information is collected for individual properties c) properties undergoing a major renovation where then consolidated, organized and analyzed for submarket and 75 percent or more of the building is not available for market totals. These terms, used throughout the reports, are lease and building generally requires a certificate of defined below according to NAIOP Terms & Definitions. occupancy to be made available for lease. Total Inventory (Market Size) The total square footage of gross Available Space The total amount of space that is rentable area in a specific market. It includes the gross rentable currently being marketed as available for lease in a area in buildings that have received a certificate of occupancy. given time period. It includes space that is available, Total inventory increases when a new building is delivered and regardless of whether the space is vacant, occupied, decreases when an existing building is destroyed, demolished or available for sublease, or available at a future date. its use changes. Available space excludes shadow space. A measurement expressed as a percentage of Shadow Space That portion of leased space which the total amount of vacant space divided by the total amount of is vacant but not available space. Shadow space is inventory. Vacant space is inventory that is not currently occupied. difficult to measure. (Synonym: phantom space) of occupancy has not yet been issued; or b) properties 33

34 Executive Leadership Dennis Hiffman Chairman David Petersen, RPA CEO John Picchiotti COO - Brokerage [email protected] Bob Assoian Managing Director [email protected] Office Services Michael Flynn, CCIM, SIOR Executive Vice President [email protected] Linda Garske Senior Vice President [email protected] Matt Novak Associate [email protected] Aubrey Van Reken Vice President [email protected] James Adler Executive Vice President [email protected] Perry Higa Vice President [email protected] Daniel O Neill Executive Vice President [email protected] Michael Van Zandt Senior Vice President [email protected] Kailey Boyd Associate [email protected] Adam Johnson Vice President [email protected] Jack Reardon Senior Vice President [email protected] Jason Wurtz Vice President [email protected] Brian Edgerton Vice President [email protected] Patrick Kiefer Executive Vice President [email protected] Jason Streepy Senior Vice President [email protected] Investment Services Arthur Burrows Senior Vice President [email protected] Shawn Frick Financial Analyst [email protected] Patrick Sullivan HFF, L.P. Managing Director [email protected] Mark Katz HFF, L.P. Managing Director [email protected] Retail Services Mike Meksto Senior Vice President [email protected] Jim Tsevis Vice President [email protected] Dan Hiffman Senior Sales Associate [email protected] Jana Foreman Senior Retail Leasing Representative [email protected] 34

35 Industrial Services NAI Hiffman John Cash, SIOR Executive Vice President Steve Connolly, SIOR Executive Vice President David Haigh Vice President Adam Roth, CCIM, SIOR Executive Vice President Sam Badger Senior Vice President Benjamin Cremer Senior Vice President Whit Heitman Senior Vice President Stephen Sullivan Vice President Casey Baird Associate Kelly Disser Senior Vice President Daniel Leahy, SIOR Executive Vice President Alex Sutterer Associate Joe Bennett Associate [email protected] Packy Doyle Associate [email protected] Jay Maher Vice President [email protected] Brett Tomfohrde Associate [email protected] Howard Bergdoll Associate [email protected] Jeff Fischer Executive Vice President [email protected] Mark Moran Executive Vice President [email protected] Eric Tresslar Executive Vice President [email protected] Duke Botthof Executive Vice President [email protected] Michael Freitag Associate [email protected] Lawrence Much, SIOR Executive Vice President [email protected] Brad Weiner Vice President [email protected] Joe Bronson, SIOR Senior Vice President [email protected] Chris Gary Vice President [email protected] Adam Naparsteck Vice President [email protected] John Whitehead Vice President [email protected] Brian Colson Executive Vice President [email protected] Bruce Granger Senior Vice President [email protected] Michael Robbins Vice President [email protected] Marketing Whitney Kannaka Director of Marketing [email protected] Matt Hronick Senior Designer [email protected] Lauren Fishbune Marketing Manager [email protected] Colin Borows Associate Designer [email protected] Elsa Gaztambide Kassandre Janson Karen Kirian Melody Lawrence Judy Loch Cindy Nickell Alison O Connell Janice Ridderhoff Tammi Sowinski Lynn Zbierski Research For further information regarding the content of this market review, or for specialty reports, please contact your local broker or: Kelly Brown DeBouver Senior Research Manager [email protected] Brian Chandler Research Associate [email protected]

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