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

22 West Loop # OFFICE BUILDINGS Chicago Midway Airport Chicago Ave Chicago Oak St MARKET SIZE (SF) 45,399,37 TOTAL VACANCY 4,993,989 SF (11.%) DIRECT VACANCY 4,627,279 SF (1.19%) SUBLEASE VACANCY 366,71 SF (.81%) AVAILABLE SPACE 8,418,196 SF (18.54%) Ohio St Kinzie St 12 2 Oak Lawn 5 State St 57 Wacker Dr Q13 NET ABSORPTION (SF) 247,131 Randolph St TOTAL 213 NET ABSORPTION (SF) 717,666 UNDER CONSTRUCTION (SF) 1,55,67 4Q13 NEW SUPPLY (SF) Carpenter St Halsted St Wacker Dr Wells St Harvey Michigan Ave 6 29 Congress Pky 2 8 Vacancy Rate Net Absorption Asking Rents 11.% 247,131 SF The last decade s development cycle in Downtown Chicago transformed the West Loop into the premier offi ce 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 signifi cant offi ce developments. After several years of no construction cranes in the submarket, new development activity has begun again, with two buildings under construction at 444 W Lake St and 1 W Fulton St totaling 1,55,67 SF and a 4, SF building at 2 W Randolph St close to being approved. Several additional offi ce buildings have been proposed in the West Loop submarket, including a nearly 1.5 million SF offi ce tower at 4 W Randolph St. Vacancy Absorption 4, 2, 2% 18% Vacancy by Class Type 11.75% 11.1% 16% -2, 14% 4.97% -4, 12% -6, % Vacancy Rate (%) Net Absorption (SF) Class A Vacancy Rate Direct Vacancy Class B Vacancy Rate Sublease Vacancy Class C Vacancy Rate 22 NAI Hiffman The vacancy rate has dropped by more than 7%, the lowest rate the West Loop has experienced in more than fi ve years

23 West Loop Year in Review The West Loop witnessed positive demand for the fi fteenth consecutive quarter, as 247,131 SF of vacant space was absorbed through elevated leasing activity during the fourth quarter, bringing the total 213 net absorption to 717,666 SF. The area s vacancy rate continued to decline, dropping over half a percentage point this quarter to 11% by the end of December, 7.13% below the peak rate of 18.13% recorded during the fi rst quarter of 21, and the lowest rate in more than fi ve years. Newport Beach, California-based investment trust, KBS REIT III was responsible for closing the largest sale during the fourth quarter, acquiring the nearly 1.5 million SF class A offi ce tower located at 5 W Madison St. KBS paid $425 million for the 4-story Citigroup Center, or about $292 PSF. In-fl ight wireless provider Gogo Inc is making the jump from the suburbs to the city in one of the largest suburbs-to-city relocations in years, vacating its Itasca headquarters and leasing 232,484 SF within the 91, SF vintage offi ce building located 111 N Canal St. Gogo moving its headquarters to the city continues to raise Chicago s profi le as a technology hub as companies are attracted to the vast selection from a talented labor pool. Looking Forward The West Loop continues to feel the technology boom, evidenced by Google expanding by an additional 52, SF during the fourth quarter after leasing 2, SF earlier this year, and Gogo Inc s relocation from the suburbs. The area has transformed from what was once a meat packing district into a hub for technology and start-ups looking for unique space. Investors continue to witness the value offered in the West Loop by its location to various transportation options and available class A product. Currently, 1 contiguous blocks of space 1, SF or larger remain available, with 22 options for space 5, SF and larger, suggesting that the submarket could experience continued improvement over the coming year. Largest Blocks of Available Space Building Name Building Address Block Size (SF) River Point 444 W Lake St 7,2 311 W Monroe St 354,17 5 W Monroe St 311, W Monroe St 272,11 Bank of America Plaza 54 W Madison St 25,533 AT&T Building 225 W Randolph St 238, W Jackson Blvd 192,174 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 West Loop Sale Transactions 4th Quarter 213 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller Citigroup Center 5 W Madison St 1,455,688 $425,, $292 KBS Realty Advisors GE Asset Management/Estein & Associates Riverside Plaza 1 & 12 S Riverside Plz 1,369,872 $361,, $264 Ivanhoe Cambridge, Inc TIER REIT, Inc 2 S Wacker Dr 754,751 $214,5, $284 John Hancock Real Estate (Manulife) Pearlmark/Equity Group/TIER REIT, Inc One North Franklin 1 N Franklin St 617,592 $182,2,5 $295 MetLife, Inc Tishman Speyer Significant West Loop Lease Transactions 4th Quarter 213 Building Name Property Address Leased (SF) Tenant Lease Type 111 North Canal 111 N Canal St 234,484 Gogo Inc New lease Willis Tower 233 S Wacker Dr 125,553 Dentons US LLP Lease renewal Franklin Center 227 W Monroe St 57,518 ATK Foods New lease 1K Fulton 1 W Fulton St 52, Google Lease expansion 311 S Wacker Dr 39,414 Fargre Baker Daniels Lease renewal 1 South Riverside Plaza 1 S Riverside Plz 36,648 Belvedere Trading New lease (previously subleased) Riverside Plaza 3 S Riverside Plz 28,74 PCM Logistics New lease 23

24 Central Loop # OFFICE BUILDINGS Chicago Midway Airport Chicago Ave Chicago Oak St MARKET SIZE (SF) 39,6,748 TOTAL VACANCY 4,542,97 SF (11.64%) DIRECT VACANCY 4,174,842 SF (1.7%) SUBLEASE VACANCY 367,255 SF (.%) AVAILABLE SPACE 6,717,63 (17.22%) Ohio St Kinzie St 12 2 Oak Lawn 5 State St 57 Wacker Dr Q13 NET ABSORPTION (SF) 121,752 Randolph St TOTAL 213 NET ABSORPTION (SF) 241,86 UNDER CONSTRUCTION (SF) 4Q13 NEW SUPPLY (SF) Carpenter St Halsted St Wacker Dr Wells St Harvey Michigan Ave 6 29 Congress Pky 2 8 Vacancy Rate Net Absorption Asking Rents 11.64% 121,752 SF Historically, the Central Loop submarket had been Chicago s core fi nancial district. While this distinction has faded over the decades, several banks still remain and it has become a central hub for many local and national law fi rms. 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 fl oor plates and less in-building parking. Vacancy Absorption 1,, 7, 18% 16% Vacancy by Class Type 11.18% 12.93% 4, 14% 8.53% 1, 12% -2, 1% -5, % Vacancy Rate (%) Net Absorption (SF) Class A Vacancy Rate Class B Vacancy Rate Class C Vacancy Rate Direct Vacancy Sublease Vacancy 24 NAI Hiffman The Central Loop vacancy rate dropped by nearly a full percentage point in 213, as 241,86 SF was absorbed

25 Central Loop Year in Review 213 was an up-and-down year for the Central Loop submarket and it fi nished the year on a positive note, absorbing 121,752 SF of vacant space, bringing the tally for the year to 241,86 SF of vacant space absorbed. The vacancy rate decreased 32 basis points during the fourth quarter, ending the year at 11.64%. This rate is nearly a full percentage point below the rate recorded a year ago, and is more than 3% below the 15% rate recorded at its peak at the end of 21. CBRE Global Investors was the buyer in the two largest sale transactions in the Central Loop during the fourth quarter, acquiring nearly 2 million SF. The company purchased the 1,68,887 SF offi ce tower located at 161 N Clark St for $ million, or about $31 PSF and the 936,683 SF building at 181 W Madison St sold for just over $32 million, or about $322 PSF. Social media start-up Sprout Social Inc vacated its 14, SF space in a vintage three-story offi ce in the West Loop in favor of the 37-story offi ce tower at 131 S Dearborn St. Sprout Social Inc will now sublease the 64, SF space on the 17th fl oor within the 1.5 million SF Citadel Center, and now has the room to move forward with plans to double its staff size over the next year. Looking Forward There remain plenty of options for tenants looking for space in the Central Loop market. Over 3 blocks of space 2, SF or larger are currently available and 14 available options for tenants looking for at least 5, SF, with more than half of that space in the submarket s desirable class A buildings. Early in the fi rst quarter of 214, Boston-based Beacon Capital Partners is expected to purchase the 77,191 SF offi ce building at 18 N LaSalle St for $136 million. Demand for space in the Central Loop is expected to increase in 214 from the active West Loop market, putting additional downward pressure on the submarket s vacancy rate, which is the second lowest among the fi ve downtown submarkets. Largest Blocks of Available Space Building Name Building Address Block Size (SF) 222 North LaSalle 222 N LaSalle St 2,686 Chase Tower 1 S Dearborn St 193, S LaSalle St 146,313 One Financial Place 44 S LaSalle St 14,859 Bank of America Building 231 S LaSalle St 132, W Wacker Dr 13,968 Citadel Center 131 S Dearborn St 128,622 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 Central Loop Sale Transactions 4th Quarter 213 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller 161 N Clark St 1,56,48 $331,3, $314 CBRE Global Investors Tishman Speyer 181 West Madison 181 W Madison St 936,683 $32,,347 $322 CBRE Global Investors GE Asset Management 111 W Jackson Blvd 558,388 $135,, $242 Melohn Properties, Inc Berkley Properties, LLC 2 N Clark St 381,345 $63,75, $167 Beacon Investment/UBS Global Hamilton Partners/MEPT/Bentall Kennedy 1 N Dearborn St 8,228 $11,5, $143 REDICO Rosemont Realty, LLC Significant Central Loop Lease Transactions 4th Quarter 213 Building Name Property Address Leased (SF) Tenant Lease Type Citadel Center 131 S Dearborn St 64,125 Sprout Social Sublease Citadel Center 131 S Dearborn St 33,923 Citadel LLC Lease expansion One Financial Place 44 S LaSalle St 26,571 Chicago Board of Options Exchange New lease 3 N LaSalle St 25,84 Parsons Brinckerhoff Inc New lease Harris Bank Building 115 S LaSalle St 19,931 BMO Financial Group New lease 25

26 East Loop # OFFICE BUILDINGS Chicago Midway Airport Chicago Ave Chicago Oak St MARKET SIZE (SF) 23,768,36 TOTAL VACANCY 3,767,591 SF (15.85%) DIRECT VACANCY 3,598,727 SF (15.14%) SUBLEASE VACANCY 168,864 SF (.71%) AVAILABLE SPACE 5,441,157 SF (22.89%) Ohio St Kinzie St 12 2 Oak Lawn 5 State St 57 Wacker Dr Q13 NET ABSORPTION (SF) -197,84 Randolph St TOTAL 213 NET ABSORPTION (SF) -2,72 UNDER CONSTRUCTION (SF) 4Q13 NEW SUPPLY (SF) Carpenter St Halsted St Wacker Dr Wells St Harvey Michigan Ave 6 29 Congress Pky 2 8 Vacancy Rate Net Absorption Asking Rents 15.85% -197,84 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-profi ts, condominium conversions and a growing retail component. Over the past several years, the submarket has benefi ted 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 benefi t 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% 18% 17.22% 15.64% 13.35% 2, 16% 14% -2, 12% -4, % Vacancy Rate (%) Net Absorption (SF) Class A Vacancy Rate Class B Vacancy Rate Class C Vacancy Rate Direct Vacancy Sublease Vacancy 26 NAI Hiffman Few large contiguous blocks of space are available, suggesting that improvement will be slow over coming quarters

27 East Loop Year in Review Several new vacancies were introduced to the East Loop submarket during the fourth quarter, pushing net absorption negative. Between October and December, 197,84 SF of vacant space was re-introduced to the market, resulting in a 57 basis point increase in the area s vacancy rate to 15.85%. However, this rate is still slightly below the 16.1% rate recorded a year ago and well below the 19.58% peak vacancy rate witnessed at the end of 29. Net absorption over the course of 213 was totaled only negative 2,72 SF, as the fi rst two quarters of the year experienced positive absorption and the last two quarters turned negative. Transaction volume decreased during the fourth quarter in the East Loop as there were no signifi cant sale transactions recorded and leasing activity was limited to only a few larger deals. One of the largest leases that occurred during the quarter was Senior Lifestyle Corp moving into One Illinois Center. The company, that creates fulfi lling lifestyles that enrich seniors lives, will be occupying 26,5 SF within the 1,48,482 SF class A offi ce tower located at 111 E Wacker Dr. Looking Forward Following increased demand at the end of 212 and the fi rst half of 213, the East Loop has experienced negative net absorption over the past two quarters as 226,232 SF of vacant space was introduced back into the market since July. Only fi ve contiguous blocks of available space 1, SF or larger are currently available, suggesting tenants looking for large spaces will likely also have to consider options in neighboring submarkets. The recovery has been uneven in the East Loop due to periods of signifi cant vacancies being introduced, such as when Groupon left 22, SF at 33 E Wacker Dr. However, much of this vacated space has since been leased, resulting in periods of signifi cant absorption. 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 256,72 33 E Wacker Dr 188,9 Two Illinois Center 233 N Michigan Ave 133,639 One Congress Center 41 S State St 11,898 CNA Center 333 S Wabash Ave 92,473 One Illinois Center 111 E Wacker Dr 8,238 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 Loop Sale Transactions 4th Quarter 213 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller None to report Significant East Loop Lease Transactions 4th Quarter 213 Building Name Property Address Leased (SF) Tenant Lease Type 33 E Wacker Dr 3,919 Undisclosed New lease One Illinois Center 111 E Wacker Dr 26,5 Senior Lifestyle Corp New lease Michigan Plaza 25 N Michigan Ave 11,121 Undisclosed New lease Two Illinois Center 233 N Michigan Ave 6,515 Brightedge New lease 33 E Wacker Dr 4,15 S.T.P. Enterprises, Inc Lease renewal 27

28 North Michigan Avenue # OFFICE BUILDINGS 62 MARKET SIZE (SF) 13,141,925 TOTAL VACANCY 2,218,568 SF (16.88%) DIRECT VACANCY 2,74,51 SF (15.79%) SUBLEASE VACANCY 144,67 SF (1.1%) AVAILABLE SPACE 3,264,798 SF (24.84%) 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 4Q13 NET ABSORPTION (SF) 33,395 Randolph St TOTAL 213 NET ABSORPTION (SF) 31,454 UNDER CONSTRUCTION (SF) 4Q13 NEW SUPPLY (SF) Carpenter St Halsted St Wacker Dr Wells St Harvey Michigan Ave 6 29 Congress Pky 2 8 Vacancy Rate Net Absorption Asking Rents 16.88% 31,395 SF One of the smallest offi ce 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 offi ce 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 benefi t the submarket for years to come. Vacancy Absorption Vacancy by Class Type 4, 2% 18.68% 2, 17% 15.59% 14% 12.93% -2, 11% -4, 8% -6, % Vacancy Rate (%) Net Absorption (SF) Class A Vacancy Rate Class B Vacancy Rate Class C Vacancy Rate Direct Vacancy Sublease Vacancy 28 NAI Hiffman The North Michigan submarket experienced its largest decline in vacancy in two years during the fourth quarter

29 North Michigan Avenue Year in Review Following relatively fl at conditions, the North Michigan Avenue submarket experienced its largest decline in vacancy in the past two years, dropping 26 basis points during the fourth quarter to 16.88%. However, this rate is still well above the rates witnessed prior to the recession, and still has a long road to recovery ahead. Over the course of 213, a total of 31,454 SF of vacant space was absorbed. The only signifi cant sale that occurred during the fourth quarter involved KJF Properties LLC purchasing the 68,5 SF 5-story offi ce building located at 444 N Wabash Ave. The building was in bankruptcy at the time of sale and was previously owned by DDL Property Limited, an entity controlled by troubled developer Daniel Dvorkin. The buyer paid $8.15 million, or about $124 PSF for the property. Kraft Foods Group Inc leased the top two fl oors of the 35-story offi ce tower located at 41 N Michigan Ave. Kraft intends to use the 29,512 SF offi ce as a meeting space to meet with business partners in the city and to provide Kraft with a presence downtown. Looking Forward Currently, ten options for 5, SF or larger and fi ve options for 1, SF or larger are available in the North Michigan Avenue submarket. Until some of these larger blocks of space begin to lease, signifi cant improvement in the area is unlikely. While the small size of the submarket suggests that appreciable fl uctuations in the vacancy can occur when space is leased, transaction velocity is also typically slow in the area. The North Michigan Avenue vacancy rate remains just below its recession peak at 18.3%, but is expected to gradually improve over the coming year. Largest Blocks of Available Space Building Name Building Address Block Size (SF) The AMA Building 515 N State St 35,96 11 E Erie St 227,569 River East Arts Center E Illinois St 21, Wrigley Building-North Tower 41 N Michigan Ave 125, North Michigan Center 41 N Michigan Ave 14,99 36 E Grand Ave 91, N Rush St 76,51 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 Michigan Avenue Sale Transactions 4th Quarter 213 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller 444 N Wabash Ave 65,8 $8,15,* $124* KJF Properties LLC DDL Property Limited Significant North Michigan Avenue Lease Transactions 4th Quarter 213 Building Name Property Address Leased (SF) Tenant Lease Type 41 N Michigan Center 41 N Michigan Ave 29,512 Kraft Foods Group Inc New lease The Wrgiley Building 4 N Michigan Ave 29,95 Talent Partners LLC New lease 33 North Wabash 33 N Wabash Ave 25,258 Assisted Living Concepts New lease NBC Tower 455 N Cityfront Plaza Dr 18,422 Integrated Office Suites Sublease The Wrigley Building 4 N Michigan Ave 9,777 Grisko LLC New lease The Wrigley Building 4 N Michigan Ave 9,339 Bluebeam Software New lease *Bankruptcy sale 29

30 River North # OFFICE BUILDINGS Chicago Midway Airport Chicago Ave Chicago Oak St MARKET SIZE (SF) 13,53,272 TOTAL VACANCY 1,347,125 SF (9.96%) DIRECT VACANCY 992,244 SF (7.33%) SUBLEASE VACANCY 354,881 SF (2.62%) AVAILABLE SPACE 1,629,253 SF (12.4%) Ohio St Kinzie St 12 2 Oak Lawn 5 State St 57 Wacker Dr Q13 NET ABSORPTION (SF) 37,23 Randolph St TOTAL 213 NET ABSORPTION (SF) 133,822 UNDER CONSTRUCTION (SF) 4Q13 NEW SUPPLY (SF) Carpenter St Halsted St Wacker Dr Wells St Harvey Michigan Ave 6 29 Congress Pky 2 8 Vacancy Rate Net Absorption Asking Rents 9.96% 37,23 SF Comprised of predominantly class C timber-loft style offi ce buildings, the River North submarket is also home to several modern glass and steel class A offi ce 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 offi ce developments will be rare. The submarket is the least accessible to transportation of all the downtown offi ce submarkets, but offers sensational views along the Chicago River. Several highprofi le, quickly-growing companies have decided to call River North home, including tech giant Google, Inc and deal-of-theday website company Groupon. Vacancy Absorption Vacancy by Class Type 1,2, 2% 13.4% 8, 17% 4, 14% 11% 7.72% 6.98% -4, 8% -8, % Vacancy Rate (%) Net Absorption (SF) Class A Vacancy Rate Class B Vacancy Rate Class C Vacancy Rate Direct Vacancy Sublease Vacancy 3 NAI Hiffman The anticipated departure of Google from 2 W Kinzie St will introduce a rare large block of vacant space to the submarket

31 River North Year in Review The River North vacancy rate decreased nearly a full percentage point during 213 to 9.96% by year s end. Net absorption was positive during three of the four quarters of the year, resulting in an annual tally of 133,822 SF. During the fourth quarter alone, 37,23 SF of vacant space was absorbed through continued leasing activity. The current vacancy rate is more than 8% below the peak rate of 18.13% recorded during the second quarter of 21. MicroOffi ce Management LLC, a New York-based investor that caters to new technology fi rms and start-ups, acquired the 5,4 SF loft building located at 45 W Superior St from Quarasan in November for $5.4 million, or about $17 PSF. In addition to this being MicroOffi ce s second Chicago location, Quarasan, a full-service conceptual developer of content for publishers of educational materials and products, signed a two-year lease to remain in the building. Software company Networked Insights Inc, leased 26,385 SF at River North Point, formerly known as the Apparel Center. The company is moving 15 employees to the eighth fl oor of the building from offi ces at 2 W Adams St and 175 W Jackson Blvd. Looking Forward The River North submarket has continued to lead the recent surge of tech companies relocating to Chicago, as evidenced by the MicroOffi ce Management LLC purchase and the Networked Insights Inc lease during the fourth quarter. Few large contiguous blocks of space remain available, however with the anticipated departure of Google for its new offi ces at 1 W Fulton Market in 215, the tech giant will leave a rare large block of vacant space available. This new vacancy could negatively impact the area s vacancy rate, or it may quickly be leased. Largest Blocks of Available Space Building Name Building Address Block Size (SF) 6 West Chicago 6 W Chicago Ave 117,11 Dearborn Plaza 2 W Kinzie St 95,5 River North Point 35 W Mart Ctr 87, N Kingsbury St 83, The Merchandise Mart 222 Merchandise Mart Plz 81, W Erie St 63,876 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 River North Sale Transactions 4th Quarter 213 Building Name Building Address Size (SF) Sale Price Price PSF Buyer Seller 45 W Superior St 5,4 $5,4, $17 MicroOffice Management LLC Quarasan Significant River North Lease Transactions 4th Quarter 213 Building Name Property Address Leased (SF) Tenant Lease Type 321 North Clark at Riverfront Plaza 321 N Clark St 61,431 CBRE New lease 45 W Superior St 28,8 Quarasan Sale-leaseback Mesirow Financial Building 353 N Clark St 28,557 Undisclosed New lease River North Point 35 W Mart Ctr 26,385 Networked Insights Inc New lease 444 N Orleans St 5, Origami Risk Sublease 3 N LaSalle St 3,427 Gerchen Keller Capital New lease 31

32 Medical Office Review Year-End 213 Medical Office Review & 214 Forecast Pictured above: Oak Lawn Medical Center, located at 1837 S Cicero Ave, purchased by ARC Healthcare Trust for $1.3 million in August a Across an 18.3 million SF inventory, the Chicagoland medical offi ce market saw a slight increase in direct vacancy to 14.3% with a total annual net absorption of negative 13, SF in 213. Healthcare reform has moved from a talking point to a reality in 213; despite its disorganized roll-out over the past several months, forward-thinking healthcare systems across the region have been implementing new business and healthcare delivery strategies to allow them to effi ciently operate under the Affordable Care Act (ACA). Under the previous pay-for-service healthcare model, a hospital system s primary driver of income was from the higher acuity cases served at the main hospital campus. Under the Affordable Care Act s pay-for-performance model, healthcare systems are realizing that income will have to be driven from the front end of the care continuum (i.e. primary care, internal medicine, pediatrics, and women s health). Heightened demand for modern and more effi cient outpatient medical offi ce space has been generating an increase in ground-up development and retrofi tting of select existing medical offi ce buildings closer to patients and away from the main hospital campus. Additionally, the initiative of providing more convenient care to patients in a lower cost setting is driving some health systems to look at re-purposing retail real estate for outpatient or urgent care clinical uses. Local Mergers and Acquisitions Chicagoland saw its share of mergers and acquisitions of health systems in 213. Many of these transactions were driven by the push to increase market share, spread costs, gain effi ciencies, and negotiating power with vendors and insurance companies. In January of 213, Chicago s Holy Cross Hospital merged with Sinai Health System, creating a safety-net giant and becoming one of the largest hospital networks in the Chicago area. In June, Elgin-based Sherman Health merged with Advocate Health Care, adding to its network of 12 Illinois hospitals. In July, Elmhurst Memorial Healthcare merged with Naperville-based Edward Hospital, expanding its network to three hospitals in the affl uent Western Suburbs. Lastly, in November, Rockford Health System merged with Cadence Health, an organization created in the 211 merger of Central DuPage Hospital and Delnor Hospital. Physician Shortage Overblown? Several years ago, the Association of American Medical Colleges projected that due to the infl ux of patients seeking a primary care physician as a result of the Affordable Care Act (ACA), the U.S. Supply of primary care physicians would be 65,8 short of the number needed by the year 225; this projection was based on the assumption that healthcare practices would not change how they operate. It is now clear that the mandate for increased effi ciencies and cost control measures that health systems are implementing ahead of the ACA implementation will relieve physicians of some of their caseload and push more responsibilities onto nurse practitioners and physician assistants, all of which will be called upon to operate at the top of their license in order to drive more patients through the system, saving physicians time for more complex cases. According to a November study published in the journal Health Affairs, these new roles for nurse practitioners and physician assistants could cut the projected physician shortage by 2%. While some are concerned about a physician shortage, others are saying that they don t always need a doctor. The best example of this is the rapid growth of retail healthcare clinics that now total around 1,4 locations nationally. These clinics are generally staffed by nurse practitioners who operate without a physician on site but can diagnose common ailments and prescribe medication that can often be fi lled at a pharmacy in the clinic. Further driving this trend, the cost to treat patients in a retail clinic setting can cost 2% to 3% less than a visit to a doctor s offi ce, outpatient facility, or hospital emergency department. Investment Activity We have identifi ed 29 Metro Chicago medical offi ce building sale transactions in 213 representing $312.5 million in sales volume 32 NAI Hiffman

33 Medical Office Review and 1.46 million SF of space. The average price PSF was $213 PSF. Several of these were portfolio transactions. There are a number of owners who tend to be generous in their classifi cation of offi ce buildings as medical offi ce. For purposes of this analysis, we have defi ned medical offi ce as buildings with 1% medical use, no mixed-use properties were included. Multiple property acquisitions by Ventas, Griffi n American Healthcare REIT, and ARC Healthcare Trust represented 79% of the 213 sales volume. Ventas acquired portfolios from LaSalle Investment Management and Great Lakes REIT totaling $163.5 million; Griffi n American Healthcare REIT acquired two properties totaling $45.5 million, and ARC Healthcare Trust acquired three properties totaling $38.3 million. Notable Medical Office Transactions 213 Address Price Price PSF Buyer Seller 1837 S Cicero Ave, Oak Lawn $1,3, $391 ARC Healthcare Trust Stage Equity Partners 7-property portfolio $81,7, $2 Ventas Inc LaSalle Investment Management N Elm St, Hinsdale $35,5, $21 Griffin American Healthcare REIT Bentall Kennedy LP 36 Station Dr, Crystal Lake $19,, $34 ARC Healthcare Trust Crystal Lake Medical Arts LLC 525 E Congrss Pky, Crystal Lake $9,, 1 $134 ARC Healthcare Trust Inland American S Route 59, Plainfield $8,3, $375 Broadstone Real Estate Irgins Partners 1 Part of a multi-state, three building portolio - Illinois property shown Major Local Healthcare Development Projects in the Pipeline Advocate Health Care is moving ahead with a pair of hospital projects in Chicago s Lakeview neighborhood and South Suburban Oak Lawn. In Oak Lawn, Advocate Christ Medical Center is nearing completion of a $3 million, 7-story patient tower and $191 million, 9-story outpatient building which will add beds and modernize other areas of the campus. In Lakeview, Advocate Illinois Masonic Medical Center is under construction of a $19 million, 15, SF outpatient facility, which will treat patients with digestive diseases, oncology, and other illnesses. Presence St. Joseph Hospital in Chicago s Lincoln Park neighborhood is planning a $147 million, 25, SF medical offi ce building that will house outpatient surgery, medical imaging, physical therapy, cancer care, digestive disease care, and a parking garage with 35 spaces. St. Joseph s plan aims to provide a more convenient and cost-effective setting for outpatient services and doctor s offi ces. Northwestern Medicine s new 24-story, 975, SF Outpatient Care Pavilion in Chicago s Streeterville neighborhood is projected to be completed by the end of 214. The facility will feature medical offi ce space, an ambulatory surgery center, and a comprehensive array of advanced diagnostic and therapeutic services along with a parking garage with 575 spaces. Also in Streeterville, the Rehabilitation Institute of Chicago (RIC) broke ground on its new 9, SF, $5 million replacement hospital. The RIC is the nation s #1 ranked provider of comprehensive physical medicine and rehabilitation care for patients from around the word. The state-of-the-art facility will feature a cutting-edge AbilityLab, 242 patient beds, conference space, and a 68- car parking garage. Looking Forward Several main drivers will continue to shift healthcare systems focus from inpatient to outpatient care and drive development of outpatient facilities. Patient experience and satisfaction will play a major role in where patients will choose to receive care, often factoring into this choice are healthcare facilities that are geographically close to where they live and work. The demand for the delivery of healthcare in lower-cost settings like urgent care and retail clinics is the more cost effective way to treat the population. Ultimately, healthcare providers are attempting to manage the population s health that they geographically serve and strategically located ambulatory care sites allow the provider to more pro-actively manage chronic illness, preventative care, and post-acute care follow up. Managing a patient s continuum of care through an organized outpatient healthcare model is the best way to keep patients healthy and out of the hospital. 33

34 Office Investment Market Year-End 213 Investment Market Trends Pictured above: 163 Orrington Ave in Evanston, purchased by a joint venture of Investcorp Internationa and Golub & Company for $63 million in October a Downtown Offi ce Market At million SF, the downtown offi ce market represents approximately 52% of the metropolitan Chicago offi ce space. There is a dramatic difference between the downtown and suburban investment climate. Driven by strong net absorption fi gures, with the direct vacancy rate approaching 11% and total vacancy rate approaching 12.5%, along with overall market optimism, downtown pricing levels (PSF and cap rate) are approaching those seen in the 25 through 27 market peak. Under these improving conditions, the 213 dollar sales volume was 4% above the 212 level. A clear sign of investor confi dence in the market are the institutional acquisitions of non-core assets. s. Institutions are looking for additional yield from the value-add component of the rent roll vacancy which they are confi dent they can achieve with conservative underwriting. New construction, built at 8% returns on costs of $4 PSF, will require gross rents of $47 to $5 PSF gross. Developer optimism is refl ected in the announcements of several development projects and the clustering of technology tenants that has drawn tenants from suburban campuses to downtown. Additionally, employers requiring closer proximity to tech-savvy Millennials are focused on downtown space options, e.g. Groupon, Google, CDW, AT&T, etc. Suburban Offi ce Market The million SF suburban offi ce market ended 213 with a direct vacancy rate of 18.4% and a total vacancy rate of 19.9%. While net absorption has been positive for 11 of the past 13 quarters, relative to the downtown market s 14 consecutive quarters of positive net absorption, the direct and total suburban ba vacancy rates are 67% and 6% higher than the downtown rates, respectively. Notwithstanding this differential, investors have shown renewed interest in the suburban markets as the 213 dollar sales volume increased over that of 212 by 25%. Institutional investors are very selective in their direct investments ts focusing on core assets with strong credit and minimal near-term rollover; leasing risk is not yet a part of their suburban ban investment strategy. Foreign investors have entered the market, including China-based Wanxiang and Vancouver-based Adventus Realty Services. Non-core PSF pricing still offers attractive discounts to replacement costs. A market adjusted basis should allow investors to effectively compete for tenants against investors who entered the market in the peak years of 25 through 27. Aside from a build-to-suit opportunity, no speculative construction has been announced thereby eb presenting no near term risk. Capital Markets What keeps investors awake at night? The most critical question on investors minds is What impact will the Federal Reserve s (Fed) tapering of the stimulus bond-buying program have on cap rates? The Fed s balancing act requires a reduction of the monthly $85 billion in bond acquisitions without stalling the fragile economic recovery. Cap rates are frequently described in terms of spreads (basis points) over U.S. Treasury rates. The spread refl ects projected current and future returns. To the extent an improving economy increases investor returns (increasing rental rates, diminishing concessions, etc.), an increase in interest rates will be offset somewhat by a reduction in spreads. The signifi cant amount of equity that has been raised should also temper a dramatic increase in cap rates. 34 NAI Hiffman

35 Office Investment Investment Activity Downtown Offi ce Market The charts below show the annual class A and B dollar sales volume at the property level versus the entity level, from 1998 through 213, and the corresponding year-over-year percent changes. Market sales volume peaked in 26 at $6.6 billion and bottomed out in 29 at $23 million, a reduction in volume of 96.5%. 21 experienced a 763% increase in volume to $1.9 billion. Three core assets (3 North LaSalle, 71 South Wacker Drive, and 353 North Clark Street) represented 83% of the 21 dollar sales volume. These low risk assets made re-entry to the market attractive. Downtown Sales Volume $7 Billion Year-Over-Year Change - Downtown Sales Volume 1% 763% $6 Billion $5 Billion 5% $4 Billion $3 Billion % $2 Billion -5% $1 Billion $ -1% As the market recovery continued in 211 and beyond, the improving investor confi dence was demonstrated by the sale of buildings with vacancy rates between 25% and 35% and cap rates equating to less than 6% on income in place, i.e., investors were confi dent in buying returns further into the future. 213 volume totaled $3.3 billion, a 4% increase over 212. After more than a decade on the sidelines, life insurance companies returned to investing in equity real estate with MetLife and Manulife Financial leading the way. Owners took advantage of favorable interest rates by refi nancing more than $1 billion in debt in 213. Suburban Offi ce Market The charts below show the same data as above for non-medical suburban transactions. Market sales volume peaked in 27 at $2.2 billion and bottomed out in 29 at $38 million - a reduction in volume of 86%. 21 experienced an 87% increase in volume. The suburban recovery has lagged that of the downtown market - the suburban year-end vacancy rate stood at 19.88% versus the downtown rate of 12.51%. The Canadian fi rm, Adventus Realty Services, was active with four acquisitions representing a $114.2 million investment in 936, SF of space. Walgreens completed a sale leaseback of a six-building, 573, SF portfolio in Deerfi eld to Realty Income Corporation, a California-based REIT. Owners took advantage of favorable interest rates refi nancing approximately $1 million in debt in 213, a modest amount relative to CBD volume. Suburban Sales Volume $3 Billion Year-Over-Year Change - Suburban Sales Volume 1% 221% $2 Billion 5% % $1 Billion -5% $ -1%

36 Chicago Industrial Submarkets Lake Geneva Industrial Market Overviews 43 1 Southeast Beloit Kenosha Regional Airport 1 Wisconsin Lake County McHenry County Pleasant Prairie Westosha Airport Wisconsin Illinois Kenosha Wisconsin Illinois 4 I-39 Corridor/Rockford Area Zion 9 Waukegan Regional Airport 5 DeKalb County 39 Fox Lake 6 I-9 Northwest Waukegan 7 Northwest Cook Rockford McHenry 2 3 North Cook Libertyville 9 Fox Valley.....Belvidere Crystal Lake Cherry 1 Central DuPage Lake Forest Vernon Hills Valley Lake Zurich 9 13 Chicago North East Dundee 6 15 I-88 Corridor Arlington Heights Elgin 16 Southwest Cook 17 I-55 Corridor South Elgin DeKalb St Charles Airport Geneva West Chicago 2 Northwest Indiana I-57/Will Corridor Lincolnwood 9 Franklin Park 355 Elmhurst Naperville Evanston Skokie Melrose Park 88 North Aurora Sugar Grove Niles Wood Dale Batavia 5 8 Elk Grove 1 Dupage 9 Grove 29 Village Int'lOhare Airport Bloomingdale 19 I-8/Joliet Corridor Morton Des Plaines Schaumburg Streamwood 18 South Cook helle Chicago Executive Airport Palatine Hampshire 14 Chicago South Highland Park Buffalo Grove Downers Grove Chicago 29 Cicero La Grange 14 Chicago Midway Airport Burr Ridge Aurora 13 Bedford Park Montgomery Bridgeview Bolingbrook 17 Plainfield 2 Alsip 55 Palos Heights Romeoville Blue Island 18 Gary/Chicago Airport South Holland Tinley Park Joliet Shorewood NAI Hiffman M Park Forest Monee 21 Hammond 2 Chicago Heights Elwood Ottawa 8 Mokena Minooka La Salle 9 Illinois 12 West Cook Indiana 11 O Hare

37 Industrial Market Statistics Year-End 213 Submarket # Bldgs Total RBA Vacancy Available 4Q13 NET Total 213 Net 4Q13 New 4Q13 Under (SF) Rate (%) Rate (%) Absorption (SF) Absorption(SF) Supply (SF) Constr. (SF) Chicago North 1,12 63,661,848 7.% 8.9% 261, ,263 35, Chicago South 1, ,498, % 11.% 336, ,25 North Cook 79 45,842, % 7.7% 256, 422,837 West Cook ,486, % 1.5% 13, ,2 Southwest Cook 49 39,829, % 6.6% 66, , ,29 South Cook 1,125 85,311,64 8.5% 11.4% 214, ,824 36, I-57/Will Corridor 82 13,772, % 19.2% -181,756-43,52 Lake County ,257, % 1.1% 224,977 1,46,813 24,5 Northwest Cook ,431,27 6.7% 8.2% -44,47 166,61 32, O Hare 1,72 1,2, % 11.1% 826,342 2,75,88 296, ,36 Central DuPage 1,97 67,371, % 7.9% 636,666 1,66, ,781 64,192 I-55 Corridor ,119, % 12.2% 41,77 1,488,276 41,928 2,52,86 McHenry County ,395, % 12.8% 93,3-17,92 I-9/Northwest ,756, % 9.8% 19,8 541, ,854 3, Fox Valley ,378,25 8.5% 8.8% -24,52 424,175 I-88 Corridor ,92, % 8.% -24, , ,565 I-8/Joliet Corridor ,66, % 13.% 32,516 3,181,131 1,18,911 57, DeKalb County 57 6,97, % 7.5% -5, -51,13 I-39 Corridor ,753, % 18.2% 248, ,153 14, 527,36 Southeast Wisconsin ,21, % 9.3% 61,281 1,21, ,543 2,97,112 Northwest Indiana ,957,57 6.8% 9.9% 347,776 62,288 25, 548,228 Flex Space Summary Total Flex Space 1,531 72,591,8 15.1% 15.9% 86, ,2 Total Market Totals 16,44 1,22,362, % 1.8% 4,414,596 15,852,353 3,45,2 8,655,26 The data compiled in the Chicago Industrial and Offi ce Market Reviews is the legal property of NAI Hiffman. Reproduction or dissemination of the information contained herein is strictly prohibited without the expressed written consent of NAI Hiffman. This review contains information, including information available to the public, which has been relied upon by NAI Hiffman on the assumption that it is accurate and complete without independent verifi cation by NAI Hiffman. NAI Hiffman accepts no responsibility if this should prove to be inaccurate or incomplete. No warranty or representation, express or implied, is made by NAI Hiffman as to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, and changes in market conditions. 37

38 Overall Trend Industrial Market Vacancy Rate # INDUSTRIAL BUILDINGS 16,44 MARKET SIZE (SF) 1,22,362, % TOTAL VACANCY 1,891,19 SF (8.39%) DIRECT VACANCY 97,273,389 SF (8.9%) SUBLEASE VACANCY 3,617,81 SF (.3%) AVAILABLE SPACE 129,466,296 SF (1.77%) Net Absorption 4,414,596 SF 4Q13 NET ABSORPTION (SF) 4,414,596 TOTAL 213 NET ABSORPTION (SF) 15,852,353 UNDER CONSTRUCTION (SF) 8,655,26 Asking Rents 4Q13 NEW SUPPLY (SF) 3,45,2 Pictured above: Corporate Dr in Elgin, part of the more than 1 million SF Fox River Business Center, purchased in October Chicago is the second largest industrial market in the U.S. with nearly 1.2 billion SF of inventory, second only to the Greater Los Angeles industrial market. The Chicago industrial market remains the most infl uential in the Midwest, due to its growing prominence as an inland port and its diverse, comparatively low-cost labor force. It has the second largest workforce in the country and is the largest manufacturing market. Chicago s strategic location and transportation infrastructure make it the most important transportation center in the country. Located in the path of three of the nation s busiest transcontinental expressways (I-8, I-9 and I-), Chicago also claims 7 percent of the nation s rail and intermodal activity. The metropolitan area sits at the convergence of all six class-one railways and within a day s drive of one-third of the country s population. Year in Review Chicago's industrial market experienced its fourteenth consecutive quarter of positive net absorption during the fourth quarter, as 4,414,596 SF of vacant space was removed from the market through leasing activity and user sales. Net absorption averaged more than 3.9 million SF per quarter during 213, bringing the tally for the year to 15,852,353 SF, the highest total since 27 and a fi gure 8.3% greater than the total for 212 and 13.8% higher than the total for 211. This activity dropped the vacancy rate 81 basis points over the course of the year to 8.39% by the end of December. This is more than 3.7% below the vacancy rate recorded in mid-21, when the rate was at its peak, and is the lowest rate since 27. Industrial Vacancy Absorption 6 MM 14% Quarterly Net Absorption by Submarket 4 MM 2 MM -2MM 12% 1% 3 MM 2 MM Net Absorption (SF) 213 Total Net Absorption: 15,852,353 SF 1 MM -6 MM 8% -1 MM 8 38 NAI Hiffman % Vacancy Rate (%) Net Absorption (SF) -1 MM I-8/Joliet Corridor O Hare Central DuPage I-55 Corridor SE Wisconsin Lake County South Cook Chicago South Northwest Indiana I-9 Northwest Fox Valley North Cook I-88 Corridor West Cook Southwest Cook Chicago North Northwest Cook I-39 Corridor DeKalb County McHenry County I-57/Will Corridor

39 The O'Hare submarket witnessed the greatest net absorption during 213, as more than 2.7 million SF was absorbed over the course of year due to several large new leases being signed and vacant buildings being purchased by users. Only three of the 21 industrial submarkets experienced negative net absorption for the year, indicating that demand remains strong throughout the industrial market. The four most signifi cant new leases signed during the fourth quarter were build-to-suit projects for either new tenants to the Chicago area or tenants expanding within the area. The largest involved online retailer Amazon.com leasing two new adjacent construction projects in Southeast Wisconsin for a total of 1.7 million SF. Investment sales activity accelerated during the fourth quarter, and included several multi-property portfolio purchases, the largest involving Liberty Property Trust acquiring a 177-property national portfolio for $1.475 billion that included 25 Chicagoarea properties. While the number of sale transactions $1 million or greater has continued to increase each year since it bottomed at 199 building sales in 29, this year's tally of 365 sales is still well below the 825 sales recorded in 27. Industrial Market Largest Blocks of Available Space Submarket Building Address City Block Size (SF) Chicago 4 W Diversey Ave Chicago 1,449, I-8/Joliet Corridor 3851 Youngs Rd Joliet 1,1,184 I-8/Joliet Corridor 51 International Pky Minooka 849,691 North Cook 5959 W Howard St Niles 756,56 I-55 Corridor 91 Carlow Dr Bolingbrook 747,152 I-55 Corridor 17 Windham Pky Romeoville 723,291 I-57/Will Corridor 58 W Industrial Dr Monee 7,2 I-55 Corridor 145 Remington Blvd Bolingbrook 65,4 I-57/Will Corridor 211 Dralle Rd University Park 65, Total Sale Transactions and Price PSF 8 MM 6 MM 4 MM 2 MM $6 $5 $4 $3 $2 Total SF Sold (Annualized) # Total # Sold Average Price PSF Investment and user industrial sales $1 million or greater Source: NAI Hiffman & CoStar Industrial Market Significant Sale Transactions 4th Quarter 213 Submarket Building Address Size (SF) Sale Price Price PSF Buyer Seller I-9 Northwest Fox River Business Center, Elgin (6 buildings) 1,39,846 $43,165, $42 DCT Industrial Trust Hamilton Partners South Cook 217 Mark Collins Dr, Sauk Village 776,515 Undisclosed 2 Und 2 IndCor Properties Pacific Life Insurance Co Central DuPage Kehoe Blvd & E Elk Trl, Carol Stream 72,62 $39,75, $55 Liberty Property Trust James Campbell Company O'Hare 1 buildings, Bensenville, Itasca, & Elk Grove Village 644,45 Undisclosed 3 Und 3 Liberty Property Trust Cabot Properties, Inc Southeast Wisconsin 11 58th Pl, Kenosha 626,784 $28,3, $45 First Industrial Realty Trust, Inc LaSalle Investment Mgmt I-55 Corridor 553 S Joliet Rd, Bolingbrook 417,9 Undisclosed 3 Und 3 Liberty Property Trust Cabot Properties, Inc Northwest Cook 251 N Barrington Rd, Hoffman Estates 382,2 $36,267, 1 $95 1 Broadstone Real Estate Siemens Healthcare North Cook W Howard St, Niles 366,931 $23,997,5 $65 Woodward, Inc Duke Realty Corporation Industrial Market Significant Lease Transactions 4th Quarter 213 Submarket Property Address Leased (SF) Tenant Lease Type Southeast Wisconsin Kenosha Enterprise Park, Kenosha 1,1, Amazon.com Build-to-suit lease I-55 Corridor Pinnacle Business Center, Romeoville 898,56 Pactiv Corp Build-to-suit lease Southeast Wisconsin Kenosha Enterprise Park, Kenosha 6, Amazon.com Build-to-suit lease I-8/Joliet Corridor CenterPoint Intermodal Center 45,6 Undisclosed 3PL provider Build-to-suit lease Northwest Cook 251 N Barrington Rd, Hoffman Estates 382,2* Siemens Healthcare Sale-leaseback Lake County 3818 Grandville Ave, Gurnee 183,415 Metropolitan Graphic Arts (MGA) New lease South Cook 5623 W 115th St, Alsip 17,563 Resource Plastics New lease Lake County 6 Rose Rd, Lake Zurich 162,921 FETCO Sale-leaseback Central DuPage Center Ave, Carol Stream 152, CoreCentric Solutions New lease 1 Flex building sale-leaseback 2 Part of a national 28-property portfolio sold for a published price of $32 million 3 Part of a 177-property national portfolio sold for $1.475 billion, or about $64 PSF Entries highlighted in red denote NAI Hiffman transactions 39

40 Industrial Land Prices by Submarket Nearly 9.2 million SF of new industrial product was completed during 213, with 47% of that new construction being build-to-suit projects, 41% being speculative development projects, and 12% being building additions. In the I-8/Joliet Corridor alone, more than 4 million SF of new development was completed in 213, with 37% of that space being speculative projects. A total of 14 additional projects broke ground during the fourth quarter, amounting to more than 5.1 million SF of new construction projects. Through the market, 3 projects are underway for a total of 8,655,26 SF. The most activity is in the I-55 Corridor, where 4 projects are under construction totaling 2,52,64 SF. $2 $15 $12-$15 New Development $1 Southeast Wisconsin Northwest Indiana $2$4 Southwest Cook $1.$3.5 $2.5$5. I-8/Joliet Corridor Lake County $3$5 $3.5$5.5 1,1, SF Beloit Wisconsin Illinois I-55 Corridor Industrial Under Construction Map $4$6 Lake Geneva 43 I-88 Corridor I-9 Northwest Central DuPage O Hare $ $4$6 $4-$8 $6-$9 $5 Westosha Airport 76,32 SF 245,792 SF 425, SF 25, SF 9 39 McHenry County 2, SF Rockford 218,5 SF Fox Lake Rockford Area McHenry Lake County Belvidere Crystal Lake Libertyville Lake Forest Vernon Hills Cherry Valley Lake Zurich 9 Highland Park Buffalo Grove 3, SF Hampshire I-9 Northwest 39 22, SF East Dundee Palatine 9 Chicago Executive Airport Northwest 32, SF Elgin 2 Morton North Evanston Grove Des Plaines Cook 123,84 SF 15,52 SF Lincolnwood 35, Chicago SF 64,192 SF Wood Dale Bloomingdale North 9 Central Franklin Park Dupage St Charles Airport West DuPageElmhurst Melrose Cook Park West Ch Chicago Chicago 88 64,656 SF 365,359 SF 35, SF Chicago 152,67 SF Chicago Midway South 36, SF 62,82 SF 347,4 SF Bridgeview South Elgin DeKalb County I-39 Corridor 2 Alsip 898,56 SF Blue Island South Holland 672,8 SF 217, SF 35, SF 25, SF Mokena 39 Speculative Construction Project Build-to-Suit Construction Project Building Addition Construction Project La Salle 4 NAI Hiffman Ottawa ,228 SF South Cook 123, SF Palos Heights Chicago Heights I-8/Joliet 29, SF Corridor Minooka Monee Elwood M Park Forest 57 I-57/Will Corridor Illinois 327,36 SF Indiana DeKalb helle lle le e North India

41 Industrial Market Construction Deliveries 25 MM 2 MM Industrial Construction by Type Building Additions (11%) 956,472 SF 15 MM 14 million SF Speculative (29%) 2,486,745 SF 1 MM 5 MM Total Under Construction 8,655,26 SF Total Deliveries (SF) 2-Year Average (SF) Build-to-Suit (6%) 5,211,989 SF Ongoing Speculative Construction Projects 4th Quarter 213 Submarket Building Address Size (SF) User Developer Central DuPage 158 Hecht Dr, Bartlett 64,192 N/A Private partnership I-55 Corridor 7 S Weber Rd, Bolingbrook 62,82 N/A IDI I-55 Corridor Pinnacle Business Center, Romeoville 672,8 N/A Pizzuti Co I-88 Corridor I-88 Gateway Logistics Center, North Aurora 64,565 N/A The Opus Group/USAA Real Estate Company Lake County 2431 N Delany Rd, Waukegan 218,5 N/A HSA Commercial Real Estate Northwest Indiana Ameriplex at the Port, Portage, IN 5,228 N/A Holladay Properties O'Hare 221 W Lunt Ave, Elk Grove Village 15,52 N/A Bridge Development Partners O'Hare 2475 Touhy Ave, Elk Grove Village 123,84 N/A Bridge Development Partners Ongoing Build-to-Suit Construction Projects 4th Quarter 213 Submarket Building Address Size (SF) User Developer I-39 Corridor Loves Park 2, Woodward Inc. Woodward Inc I-55 Corridor Pinnacle Business Center, Romeoville 898,56 Pactiv Corp Pizzuti Co I-55 Corridor Union Pointe Business Park, Woodridge 347,4 Orbus Exhibit and Display Group Conor Commercial Real Estate I-8/Joliet Corridor New Lenox Rd at Cherry Hill Rd, Joliet 217, Supreme Lobster/Joliet Cold Storage I-8/Joliet Corridor Rock Run Business Park, Joliet 29, Falken Tire IDI I-88 Corridor 543 Frontenac Ct, Naperville 35, Ozark Automotive Distributors, Inc Ozark Automotive Distributors, Inc I-9 Northwest 2661 Galvin Ct, Elgin 3, Newhaven Display International Inc Newhaven Display International Inc Northwest Cook I-9 at Roselle Rd, Schaumburg 32, Sunstar Americas Inc Northwest Indiana Coffee Creek Center, Chesterton, IN 35, Urschel Laboratories Inc Urschel Laboratories Inc Northwest Indiana West Point Industrial Park, Hammond, IN 123, Munster Steel Northwest Indiana Merrillville, IN 25, Aunt Millie's Bakeries South Cook W 73rd St, Bedford Park 36, Intermodal Maintenance Group LLC Intermodal Maintenance Group LLC Southeast Wisconsin Kenosha Enterprise Park, Kenosha, WI 1,1, Amazon.com Inc KTR Capital Partners Southeast Wisconsin Sturtevant, WI 425, United Natural Foods Inc United Natural Foods Inc Southwest Cook 821 W 47th St, McCook 365,359 The Freeman Co Bridge Development Partners Southwest Cook 891 W 47th St, McCook 152,67 Golden State Foods Golden State Foods 41

42 Southeast Wisconsin 43 Muskego Franklin South Milwaukee Oak Creek # INDUSTRIAL BUILDINGS 528 MARKET SIZE (SF) 45,21,637 TOTAL VACANCY 3,448,619 SF (7.66%) DIRECT VACANCY 3,448,619 SF (7.66%) SUBLEASE VACANCY SF (.%) AVAILABLE SPACE 4,164,845 SF (9.25%) 4Q13 NET ABSORPTION (SF) 61,281 TOTAL 213 NET ABSORPTION (SF) 1,21,582 UNDER CONSTRUCTION (SF) 2,97,112 4Q13 NEW SUPPLY (SF) 589,543 Burlington Westosha Airport Union Grove 45 5 Wisconsin Illinois 41 Mt. Pleasant Sturtevant Kenosha Regional Airport Pleasant Prairie Kenosha Racine Vacancy Rate 7.66% Net Absorption 61,281 SF Asking Rents Fox Lake Gurnee Zion Waukegan Regional Airport Waukegan McHenry Grayslake Demand in Southeast Wisconsin continues to be driven by users in Illinois seeking lower operating costs, economic development incentives and perceived tax advantages. While the inventory of developable land in Lake County is limited, Southeast Wisconsin offers users more alternatives and aggressive fi nancial incentives more diffi cult to secure south of the border. The Lakeview Corporate Park in Pleasant Prairie and the Kenosha Enterprise Park are two of the submarket s premier industrial parks. The area is home to an international roster of companies including Ta Chen, S.C. Johnson, IRIS, Yamaha and Jelly Belly. Other signifi cant users in the area include Jockey International, Uline Inc, Abbott Laboratories, and the new 1.1 million SF build-to-suit for Amazon.com. 213 has been a busy year for current land owners and developers attempting to secure sites to accommodate multiple highly-publicized build-to-suit projects in Southeast Wisconsin. Groundbreaking occurred this on a number of developments in Southeast Wisconsin, further emphasizing the attractiveness of this submarket to corporate users and developers alike. Vacancy Absorption Inventory by City 1,2, 15% Burlington (5%) 8, 13% Kenosha (17%) 4, 11% Racine (33%) 9% -4, 7% -8, % Sturtevant (18%) Vacancy Rate (%) Net Absorption (SF) Pleasant Prairie (27%) 42 NAI Hiffman Conditions continue to tighten, as vacancy dropped 1.34% during 213 and 1.2 million SF of vacant space was absorbed

43 Year in Review The Southeast Wisconsin submarket has now witnessed improving conditions for the past four-and-a-half years. Vacancy dropped 15 basis point during the fourth quarter to 7.66%, an improvement of 1.34% over the course of 213. Net absorption fi nished the year strong with 61,281 SF of space absorbed during the fourth quarter. This brought the year-to-date tally to just over 1.2 million SF of positive net absorption for 213. Construction Deliveries 2,5, 2,, 1,5, Southeast Wisconsin A 471,43 SF build-to-suit facility for Ta Chen International Inc 1,, and a 118,5 SF addition to McLane Foodservice's existing facility were completed, and a 1.1 million SF build-to-suit for 5, Amazon.com broke ground during the fourth quarter. Amazon has also announced plans for an additional 6, SF building to be built just to the east of this building, set to break ground this spring. Construction continues on a 425, SF buildto-suit for United Natural Foods Inc and a total of 572,112 SF of building additions for Rust-Oleum, Meijer Inc, and Kerry Ingredients & Flavours, all expected to be completed this spring. Blocks of Available Space 2,-49,999 5,-99,999 The only signifi cant sale during the quarter involved First Industrial Realty Trust purchasing the 626,784 SF industrial facility at 11 58th Pl in Kenosha for $28.3 million. The building is fully-leased to supply-chain supplier IMS Fastpak. The two largest leases signed during the fourth quarter were for retail giant Amazon.com s new 1.1 million SF and 6, SF buildto-suit facilities in Kenosha. Looking Forward Conditions continue to tighten in the Southeast Wisconsin submarket, as vacancy has dropped below 8% and only 1 options for more than 1, SF of contiguous space are currently available. Development activity will continue to increase over the coming year due to these favorable market conditions. 1,-199,999 2, Largest Blocks of Available Space Building Address City Block Size (SF) 921 Wilmot Rd Pleasant Prairie 363, th St Pleasant Prairie 256,24 33 S Sylvania Ave Sturtevant 235, Mound Ave Racine 2, th Ave Kenosha 16, th Ave Pleasant Prairie 15,128 Significant Southeast Wisconsin Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller 11 58th Pl, Kenosha 626,784 $28,3, $45 First Industrial Realty Trust, Inc LaSalle Investment Management Significant Southeast Wisconsin Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type Kenosha Enterprise Park, Kenosha 1,1, Amazon.com Build-to-suit lease Kenosha Enterprise Park, Kenosha 6, Amazon.com Build-to-suit lease 855 1th St, Pleasant Prairie 256,24 Uline Inc New lease 43

44 p Kenosha Lake County Westosha Airport 173 Wisconsin Illinois Pleasant Prairie 173 # INDUSTRIAL BUILDINGS 934 MARKET SIZE (SF) 67,257,186 TOTAL VACANCY 4,572,416 SF (6.8%) DIRECT VACANCY 4,543,436 SF (6.76%) SUBLEASE VACANCY 28,98 SF (.4%) AVAILABLE SPACE 6,784,61 SF (1.9%) 4Q13 NET ABSORPTION (SF) 224,977 TOTAL 213 NET ABSORPTION (SF) 1,46,813 Fox Lake Gurnee Grayslake 21 Libertyville Mundelein 6 Vernon Hills Waukegan 137 Regional Airport Zion Waukegan North Chicago Lake Forest UNDER CONSTRUCTION (SF) 24,5 4Q13 NEW SUPPLY (SF) Lake Zurich 22 Buffalo Grove Highland Park Glencoe Vacancy Rate Net Absorption Asking Rents Palatine Chicago Executive Airport 6.8% 268,5 SF Hoffman Estates 9 Arlington Heights l 2 Morton Grove The Lake County industrial submarket is notable for its roster of corporate headquarters and heavy concentration of owner-occupied real estate, all located within close proximity to the I- Tri-State Tollway. Entrepreneurial owners and corporate managers residing along the lakefront and northwest Lake County make this area attractive for investment. Large corporations including Abbott Laboratories, Baxter, Caremark, Takeda, Walgreens and WMS join privately-held companies such as CDW, Medline and ULINE to form a vibrant base of employment. Lake County s relatively low property tax rates attract companies from Cook County, although infrastructure demands have begun to slightly even the playing fi eld. Vacancy Absorption Inventory by City 9, 6, 15% 13% Other Suburbs (23%) Waukegan (23%) 3, 11% 9% Vernon Hills (5%) Libertyville (11%) -3, 7% Mundelein (6%) -6, % Vacancy Rate (%) Net Absorption (SF) North Chicago (6%) Lake Zurich (7%) Buffalo Grove (9%) Gurnee (1%) 44 NAI Hiffman Vacancy dropped by a full percentage point during the course of 213 to 6.8%, a healthy vacancy rate for Lake County

45 Year in Review Demand remained positive for the tenth consecutive quarter as 268,5 SF of space was absorbed through leasing activity and user sales during the fourth quarter. In turn, the vacancy rate decreased 33 basis points from the previous quarter, ending the year at a 6.8% vacancy rate, an improvement of a full percentage point during the course of 213 and a rate 5.1% lower than its peak in 21. Construction Deliveries 1,2, 1,, 8, 6, Lake County Construction continues on HSA Commercial Real Estate's 218,5 SF speculative building in the Delany Commerce Center in Waukegan. Visual Pak started construction during the fourth 4, 2, quarter on a 22, SF building addition at 1731 S Lakeside Dr in the Amhurst Lake Business Park, also in Waukegan FETCO completed the sale/leaseback of its current building with KTR Capital Partners in October, who purchased the 162,921 SF industrial facility located at 6 Rose Rd in Lake Zurich for $1.4 million, or about $64 PSF. The largest new lease signed during the fourth quarter involved custom printing, packaging, and mailing service company Metropolitan Graphic Arts taking 183,415 SF at 3818 Grandville Ave in Gurnee. Looking Forward The Lake County vacancy rate has dropped to historically low levels below 7%. There remains room for this rate to further improve, as nearly 2 options for 1, SF or larger contiguous blocks of space remain available throughout the submarket. However, over the past year Lake County has lost a sizeable amount of jobs to Southeast Wisconsin, largely due to Kenall Manufacturing Co decision to relocate to Kenosha. Blocks of Available Space 2,-49,999 5,-99,999 1,-199,999 2, Largest Blocks of Available Space Building Address City Block Size (SF) 7-75 Corporate Grove Dr Buffalo Grove 33, N Skokie Hwy North Chicago 326, Albrecht Dr Lake Bluff 256, Old Deerfield Rd Highland Park 245, Centerpoint Ct Gurnee 213, Central Ave Waukegan 1,365 Significant Lake County Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller 6 Rose Rd, Lake Zurich 162,921 $1,4, $64 KTR Capital Partners FETCO 65 Heathrow Dr, Lincolnshire 65,1 $6,787, $14 WaterSaver Faucet Co Nicolson Porter & List, Inc 6 Barclay Blvd, Lincolnshire 57,235 $2,55, $45 Exeter 6 Barclay LLC LaSalle Income & Growth Fund IV 6 E Bunker Ct, Vernon Hills 44,315 $2,275, $51 Forefront Properties, LLC Pactiv Corporation Significant Lake County Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type 3818 Grandville Ave, Gurnee 183,415 Metropolitan Graphic Arts (MGA) New lease 6 Rose Rd, Lake Zurich 162,921 FETCO Sale-leaseback 2816 N Keith Dr, Lake Forest 77,924 The Popcorn Factory Lease renewal 1397 W Laurel Dr, Lake Forest 75,775 The Popcorn Factory Lease renewal 61 N Skokie Hwy, Lake Bluff 75,11 Design Phase Inc New lease 99 Asbury Dr, Buffalo Grove 61,231 Zoro Tools (division of W.W. Grainger) New lease 917 N Shore Dr, Lake Bluff 52,278 Lake Forest Sports Cars Lease renewal 1215 Henri Dr, Wauconda 31,325 OCM Lease renewal Entries highlighted in red denote NAI Hiffman transactions 45

46 I-9 Northwest Crystal Lake L # INDUSTRIAL BUILDINGS 437 MARKET SIZE (SF) 26,756,462 TOTAL VACANCY 2,446,281 SF (9.14%) 9 Hampshire Carpentersville B DIRECT VACANCY 2,374,636 SF (8.87%) SUBLEASE VACANCY 71,645 SF (.27%) AVAILABLE SPACE 2,622,37 SF (9.8%) 4Q13 NET ABSORPTION (SF) 19, East Dundee Elgin 31 Hoffman Estates Sc TOTAL 213 NET ABSORPTION (SF) 541,791 South Elgin Bartlett UNDER CONSTRUCTION (SF) 442,854 Bl 4Q13 NEW SUPPLY (SF) 3, St Charles Dupage Airport Vacancy Rate Net Absorption Asking Rents Geneva Batavia West Chicago 9.14% 19,8 SF North Aurora 88 Napervill The I-9 Northwest industrial submarket is attractive to companies looking for excellent interstate access, relatively low taxes, potential incentives and a strong labor pool. Most of the industrial inventory base in the submarket is located within minutes of one of several 4-way intersections with I-9. This serves to make the I-9 Northwest submarket a good distribution point for companies that are serving the I-9/upper-midwest supply chain. The availability of developed land and continued easy access in to the Chicago market have always been a key asset of the area. Additionally, the Elgin area provides an abundant, educated labor pool. Population along and near the Fox River has increased dramatically over the past decade. More than 73% of the total submarket inventory is located in Elgin. Vacancy Absorption 45, 3, 15, -15, 15% 13% 11% 9% 7% Inventory by City Carpentersville (7%) East Dundee, Genoa, Hampshire, etc. (1%) South Elgin (5%) Marengo (5%) -3, % Vacancy Rate (%) Net Absorption (SF) Elgin (73%) 46 NAI Hiffman Vacancy increased during the fourth quarter, but net absorption for 213 totaled positive 541,791 SF

47 Year in Review Despite positive absorption totaling 19,8 SF during the fourth quarter, the I-9 Northwest vacancy rate increased by 111 basis points to 9.14% as two vacant speculative buildings were completed during the quarter, increasing the vacant space in the submarket. Over the course of 213, 541,791 SF of vacant space was absorbed through user sales and leasing activity. Two speculative construction projects were completed during the fourth quarter. A 342,62 SF facility was delivered at 251 Galvin Dr in Elgin's Northwest Corporate Park and a 1,234 SF facility was completed at Prairie Pky in Gilberts. Construction continues on Newhaven Display International Inc's 3, SF build-to-suit in Elgin's Northwest Corporate Park and is on pace to be completed during the fi rst quarter of 214. In October, Denver-based DCT Industrial Trust purchased the six-building industrial portfolio known as the Fox River Business Center. Comprised of just over 1 million SF and buildings ranging in size from 73, to 449, SF, the assets sold for $43.17 million. Charcoal and gas grill manufacturer Weber- Stephen Products Co expanded its lease by 72,48 SF within the 319,43 SF building located at 27 Alft Ln in Elgin. The largest new lease signed during the quarter belonged to Hubbell Lighting, leasing the entire 48,187 SF industrial building located at Bowes Rd in Elgin. Looking Forward Despite an increase in the I-9 Northwest vacancy rate at the end of the year due to new vacant space being introduced through the completion of new vacant buildings, the rate remains well below peak levels recorded in 21. The outlook for submarket continues to look positive throughout 214. Construction Deliveries 1,5, 1,2, 9, 6, 3, 2 2,-49,999 5,-99,999 1,-199,999 2, I-9 Northwest Blocks of Available Space Largest Blocks of Available Space Building Address City Block Size (SF) 251 Galvin Dr Elgin 342, Galvin Dr Elgin 3, Corporate Dr Elgin 15,55 3 N West St Marengo 145, Corporate Dr Elgin 125, N Prospect St Marengo 121, Spectrum Dr Elgin 12,91 Significant I-9 Northwest Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller Fox River Business Center, Elgin (6 buildings) 1,39,846 $43,165, $42 DCT Industrial Trust Hamilton Partners 27 Alft Ln, Elgin 319,43 Undisclosed Undisclosed TA Associates Realty WB 27 Alft LLC 51 Davis Rd, Elgin 88,84 $4,45, $5 Chicago Logistic Services Great Lakes Technologies LLC Alft Ln, Elgin 66, $3,15, $48 Waveland Financial C-III Asset Management Significant I-9 Northwest Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type 27 Alft Ln, Elgin 72,48 Weber-Stephen Products Co Lease expansion Bowes Rd, Elgin 48,187 Hubbell Lighting New lease Galvin Dr, Elgin 33,263 PSAV Lease renewal Wesemann Dr, Elgin 27,746 General Technologies Lease renewal 1355 Bowes Rd, Elgin 12, Belden Inc New lease Entries highlighted in red denote NAI Hiffman transactions 47

48 y y North Chicago Northwest Cook al Lake Mundelein Libertyville Vernon Hills Lake Fore # INDUSTRIAL BUILDINGS 524 MARKET SIZE (SF) 28,431,27 Lake Zurich Buffalo Grove High TOTAL VACANCY 1,89,293 SF (6.65%) DIRECT VACANCY 1,845,113 SF (6.49%) SUBLEASE VACANCY 45,18 SF (.16%) AVAILABLE SPACE 2,318,398 SF (8.15%) 4Q13 NET ABSORPTION (SF) -44,47 TOTAL 213 NET ABSORPTION (SF) 166,61 UNDER CONSTRUCTION (SF) 32, uth Elgin East Dundee Elgin 2 Bartlett Streamwood Hoffman Estates Barrington 9 14 Palatine 72 Schaumburg Arlington Heights Elk Grove Village Chicago Executive Airport Mt. Prospect Ohare Int'l Airport 2 Des Plaines Mo Gr 4Q13 NEW SUPPLY (SF) Bloomingdale Wood Dale Vacancy Rate Net Absorption Asking Rents t Charles Geneva Dupage Airport West Chicago 355 Elmhurst 2 Franklin Park Melrose Park 6.65% -44,47 SF atavia 88 The Northwest Cook submarket is a desirable business location for entrepreneurial owners and corporate managers who reside in the area s suburban communities. The submarket is conveniently located close to Chicago s O Hare International Airport and has excellent access to Chicago and the western suburbs using I-9, I-29 and Route 53. The user base generally consists of specialized manufacturing and service companies. Many international companies, particularly Asian and European, have located their North American headquarters here due to the proximity to the airport. Few modern distribution facilities exist relative to neighboring submarkets. This submarket is dominated by fl ex, technology and research and development space. Predominantly an infi ll market there are still a few large land sites and business parks available for new construction. Many users come from the comparatively cramped O Hare submarket looking for newer construction or a location closer to their residences. However, Cook County taxes remain a concern to some users. Vacancy Absorption 5, 15% Inventory by City Streamwood, Hoffman Estates, etc. (9%) 25, 13% 11% Rolling Meadows (8%) Schaumburg (35%) -25, 9% Bartlett (8%) -5, 7% Barrington (9%) -75, % Vacancy Rate (%) Net Absorption (SF) Palatine (12%) Mt. Prospect (19%) 48 NAI Hiffman Vacancy has reached a healthy level below 7%, one of the lowest rates recorded in the past decade

49 Year in Review Net absorption turned slightly negative in the Northwest Cook submarket during the fourth quarter, totaling negative 44,47 SF for the three month period. Despite this minor setback, demand was positive for 213, totaling 166,61 SF for the year. The vacancy rate increased by 16 basis points during the fourth quarter, but remains 45 basis points below the rate recorded a year ago, and more than 7% below the peak rate reached in 29, an impressive rebound for this small submarket. Construction Deliveries 1,, 8, 6, 4, Northwest Cook The fi rst new construction project in four years broke ground during the fourth quarter, a 32, SF build-to-suit facility for 2, Sunstar Americas Inc behind the Medieval Times building near the intersection of I-9 and Roselle Rd in Schaumburg. The building will have direct exposure to the tollway and is anticipated to be completed by the end of 214. Blocks of Available Space In early October, Broadstone Real Estate purchased the 382,2 SF fl ex building located at 251 N Barrington Rd from Siemens Healthcare, who signed a long-term lease to stay in the facility. The building sold for nearly $36.3 million, or about $95 PSF. Looking Forward The Northwest Cook vacancy rate has reached a healthy level below 7%, one of the lowest rates recorded in the past decade. However, there are currently only three options for 1, SF of contiguous space or larger available in the submarket, suggesting that the pace of improvement will slow down over coming quarters as few large chunks of space can be absorbed. Tenants looking for large spaces will likely have more luck in other neighboring submarkets such as O'Hare or Central DuPage. 2,-49,999 5,-99,999 1,-199,999 2, Largest Blocks of Available Space Building Address City Block Size (SF) 2222 N Hammond Dr Schaumburg 119, 1 E Business Center Dr Mt. Prospect 11, 166 Wall St Mt. Prospect 18,732 8 Biermann Ct Mt. Prospect 89,37 82 E Devon Ave Bartlett 88,737 Significant Northwest Cook Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller 251 N Barrington Rd, Hoffman Estates 382,2 $36,267,* $95* Broadstone Real Estate Siemens Healthcare Significant Northwest Cook Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type 251 N Barrington Rd, Hoffman Estates 382,2* Siemens Healthcare Sale-leaseback *Flex building sale-leaseback Entries highlighted in red denote NAI Hiffman transactions 49

50 non Hills Lake Forest North Cook Buffalo Grove Highland Park # INDUSTRIAL BUILDINGS 79 MARKET SIZE (SF) 45,842,324 TOTAL VACANCY 2,489,762 SF (5.43%) Wheeling 21 Chicago Executive Airport 68 Northbrook 43 Glencoe DIRECT VACANCY 2,489,762 SF (5.43%) SUBLEASE VACANCY SF (.%) AVAILABLE SPACE 3,515,331 SF (7.67%) 4Q13 NET ABSORPTION (SF) 256, TOTAL 213 NET ABSORPTION (SF) 422,837 UNDER CONSTRUCTION (SF) ngton eights lk Grove Village Mt. Prospect Des Plaines Ohare Int'l Airport Park Ridge Morton Grove Niles Evanston 41 Skokie Lincolnwood 4Q13 NEW SUPPLY (SF) d Dale Franklin Park 9 Vacancy Rate 5.43% Net Absorption 256, SF Asking Rents Elmhurst Melrose Park Oak Park 29 Desirable for users seeking quick access to Chicago, major area expressways, and the northern suburbs, the North Cook submarket is also attractive to long-term Chicago-based users looking to stay close to the city while escaping Chicago congestion. The area has the advantage of an inventory of buildings with better specifi cations than many of the antiquated buildings found in the city of Chicago. It tends to be a primarily owner/user market, with limited leasing opportunities. The user base generally consists of service providers and light manufacturers who tend to remain in their locations for extended periods of time, resulting in limited transaction velocity in the submarket. The inventory base is mostly comprised of 196s 197s-era buildings with lower ceilings and low parking ratios. Higher taxes may be a deterrent for some users, while others are willing to pay the price for the location. Vacancy Absorption Inventory by City 5, 9% Glenview, Lincolnwood, Evanston, etc. (15%) 3, Wheeling (28%) 1, 7% Morton Grove (8%) -1, 5% -3, Northbrook (12%) -5, % Vacancy Rate (%) Net Absorption (SF) Skokie (17%) Niles (2%) 5 NAI Hiffman Vacancy dropped by nearly a full percentage point during 213, and is one of the lowest rates in the entire market

51 Year in Review The market improvement trend witnessed over the past threeand-a-half years in the North Cook submarket resumed during the fourth quarter, following a brief setback last quarter. Leasing activity and user sales pushed net absorption positive, totaling 256, SF for the quarter and bringing the tally for 213 to 422,837 SF. This activity pushed the vacancy rate down 56 basis points during the fourth quarter to 5.43%, a rate nearly a full percentage point below the 6.4% rate recorded a year ago. Construction Deliveries 6, 5, 4, 3, North Cook The largest sale transaction of the fourth quarter involved Fort Collins, Colorado-based energy control company Woodward, 2, 1, Inc's purchase of the 366,931 SF building located at W Howard St in Niles for about $24 million, or around $65 PSF Leasing activity during the fourth quarter was limited to transactions under 2, SF. The largest new lease was signed by Prinz, a wholesale provider of frames, albums, and home decor accessories, taking 16,14 SF at 515 Huehl Rd in Northbrook's Sky Harbor Industrial Park. Looking Forward Returning to levels witnessed in 28, the North Cook vacancy rate continues to be one of the lowest in the entire industrial market at 5.43%. Only seven blocks of contiguous space 1, SF or larger are available in the submarket, suggesting that large swings in absorption are unlikely and mid-sized to smaller transactions will be more common over the coming quarters. This spring, Panattoni is expected to break ground on a 15, SF speculative facility in Skokie, which will represent the fi rst signifi cant construction activity in the North Cook submarket in several years. Blocks of Available Space 2,-49,999 5,-99,999 1,-199,999 2, Largest Blocks of Available Space Building Address City Block Size (SF) 5959 W Howard St Niles 756, W Touhy Ave Niles 153, Peterson Dr Wheeling 147, 742 N Lehigh Ave Niles 138, Woodhead Dr Northbrook 117, 311 Gilman Ave Wheeling 1, Messner Dr Wheeling 95,664 Significant North Cook Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller W Howard St, Niles 366,931 $23,997,5 $65 Woodward, Inc Duke Realty Corporation 45 W Hintz Rd, Wheeling 31,156 Undisclosed* Undisclosed* Liberty Property Trust Cabot Properties, Inc 161 Overlook Dr, Glenview 31,324 $1,1, & $34 & Regency Centers Corporation Avon Products, Inc 69 Austin Ave 18, $4,1, $23 Georgia Nut Company Schwarz Paper Company 29 Shermer Rd, Northbrook 57,554 $4,56, $79 Tasty Breads International CenterPoint Properties Significant North Cook Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type E Marquardt Dr, Wheeling 17, Shure Incorporated Lease renewal 515 Huehl Rd, Northbrook 16,14 Prinz New lease 751 N Caldwell Ave, Niles 12,981 Camel Grinding Lease expansion 6633 W Howard St, Niles 11,2 CrossFit Illumine LLC New lease *Part of a 177-property national portfolio sold for $1.475 billion, or about $64 PSF & Property sold for land value and plans to be converted into retail development Entries highlighted in red denote NAI Hiffman transactions 51

52 9 Barring Fox Valley # INDUSTRIAL BUILDINGS 496 MARKET SIZE (SF) 32,378,25 Hampshire East Dundee Elgin South Elgin Bartlett Hoffman Estates Streamwood 9 Schaum TOTAL VACANCY 2,747,24 SF (8.48%) 25 Bloomin DIRECT VACANCY 2,79,3 SF (8.37%) SUBLEASE VACANCY 38,21 SF (.12%) St Charles Dupage Airport AVAILABLE SPACE 2,859,597 SF (8.83%) Geneva West Chicago 4Q13 NET ABSORPTION (SF) -24,52 Batavia 38 TOTAL 213 NET ABSORPTION (SF) 424,175 UNDER CONSTRUCTION (SF) 4Q13 NEW SUPPLY (SF) Sugar Grove North Aurora Aurora 88 Naperville Montgomery Vacancy Rate Net Absorption Asking Rents Bolingb 8.48% -24,52 SF Plainfield 55 Romeoville The Fox Valley submarket lies between the I-9/Northwest submarket to the north and the I-88 Corridor submarket to the south and has non-direct access to major expressways. It is primarily an owner/user market with leasing opportunities in the small to mid-size range. The user base generally consists of manufacturing companies that serve the area within close proximity to users homes. Much of the inventory is composed of mid-198s buildings in contrast to the modern big-box distribution warehouses of neighboring submarkets. However, there is land available for new state-of-the-art construction. Many users choose to be in the Fox Valley submarket due to the need to remain in the submarket long-term because of the proximity their labor pool and homes, resulting in limited transaction velocity. Vacancy Absorption 4, 15% Inventory by City Geneva (12%) 24, 8, 1% West Chicago (35%) -8, -24, 5% Batavia (25%) -4, % Vacancy Rate (%) Net Absorption (SF) St. Charles (28%) 52 NAI Hiffman The Fox Valley vacancy rate decreased by 82 basis points during 213, as 424,175 SF of vacant space was absorbed

53 Year in Review Absorption turned negative in the Fox Valley submarket for the fi rst time in over a year during the fourth quarter, totaling negative 24,52 SF. However, demand remained positive for the year, with 424,175 SF of vacant space being removed from the market over the past 12 months. The vacancy rate increased slightly during the fourth quarter to 8.48%, but remains 82 basis points below the rate recorded a year ago, and 3.72% below the peak rate of 12.2% witnessed during the third quarter of 21. No new construction projects are underway and activity has been limited to building expansions over the past few years. Construction Deliveries 1,5, 1,2, 9, 6, 3, Fox Valley Pennsylvania-based Liberty Property Trust purchased fi ve buildings in the submarket in October, part of a 177-property national portfolio acquired from Cabot Properties, Inc for $1.475 billion. The buildings in the Fox Valley submarket totaled 38,245 SF, with the largest being a 81,11 SF building located at Swenson Ave in St. Charles. Chicago Mold Engineering Co, Inc, an engineer and manufacturer of plastic injection and compression molds, purchased the 44,457 SF building located at 362 Swenson Ave in St. Charles for $1.58 million, or about $36 PSF. The new owners plan to renovate and expand the building by an additional 15, SF. Looking Forward Only fi ve contiguous blocks of space 1, SF or larger are currently available in the Fox Valley submarket, suggesting that large transactions will be few and far between over the coming quarters. Transaction velocity is typically low in the submarket because new tenants are rarely drawn to the area due to its land-locked location. 2 2,-49,999 5,-99,999 1,-199,999 2, Blocks of Available Space Largest Blocks of Available Space Building Address City Block Size (SF) 1717 W Harvester Rd West Chicago 465, Stern Ave St. Charles 146, W Hawthorne Ln West Chicago 132, W Hawthorne Ln West Chicago 12, 151 Indiana Ave St. Charles 93, Kingsland Dr Batavia 92,39 Significant Fox Valley Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller Swenson Ave, St. Charles 81,11 Undisclosed* Undisclosed* Liberty Property Trust Cabot Properties, Inc 14 Powis Rd, West Chicago 57, Undisclosed* Undisclosed* Liberty Property Trust Cabot Properties, Inc Kingsland Dr, Batavia 54,522 Undisclosed* Undisclosed* Liberty Property Trust Cabot Properties, Inc 362 Swenson Ave, St. Charles 44,457 $1,58, $36 Chicago Mold Engineering Co, Inc Bayview Loan Servicing LLC Swenson Ave, St. Charles 39,965 Undisclosed* Undisclosed* Liberty Property Trust Cabot Properties, Inc 371 Illinois Ave, St. Charles 31,191 Undisclosed* Undisclosed* Liberty Property Trust Cabot Properties, Inc Significant Fox Valley Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type 16 Downs Dr, West Chicago 12,28 Undisclosed New lease W Hawthorne Ln, West Chicago 3,8 Indo US Sales New lease *Part of a 177-property national portfolio sold for $1.475 billion, or about $64 PSF 53

54 Central DuPage e Hoffman Estates 9 Schaumburg 29 Arlington Heights Mt. Prospect Des Plaines 2 # INDUSTRIAL BUILDINGS 1,97 Bartlett Streamwood 53 Elk Grove Village Ohare Int'l Airport MARKET SIZE (SF) 67,371,831 TOTAL VACANCY 3,299,787 SF (4.9%) 2 19 Bloomingdale Wood Dale DIRECT VACANCY 3,159,578 SF (4.69%) SUBLEASE VACANCY 14,29 SF (.21%) AVAILABLE SPACE 5,327,777 SF (7.91%) 4Q13 NET ABSORPTION (SF) 636,666 TOTAL 213 NET ABSORPTION (SF) 1,66,399 UNDER CONSTRUCTION (SF) 64,192 ge rt West Chicago Carol Stream Glendale Heights 64 Glen Ellyn 355 Addison Lombard Elmhurst Frankli Melr Par 4Q13 NEW SUPPLY (SF) 139, Downers Grove La Gran Naperville Vacancy Rate Net Absorption Asking Rents Burr Ridge 4.9% 636,666 SF Woodridge The well-positioned Central DuPage submarket benefi ts from advantages including relatively low DuPage County taxes, newer building inventory and an educated workforce. The completion of the I-355 extension, Chicago s newest expressway, has improved access to the area and spurred interest in the mature market. Users in the Central DuPage submarket vary by type and are not limited to primarily distribution like other nearby submarkets, yet this market is centrally located and ideally serves the Chicago Metropolitan Area. For all of these reasons, the area is favored by institutional ownership. Vacancy Absorption Inventory by City 1,5, 1,, 12% 1% Roselle, Bloomingdale, Lombard, etc. (18%) Carol Stream (28%) 5, 8% Hanover Park (8%) 6% -5, 4% Elmhurst (9%) -1,, % Vacancy Rate (%) Net Absorption (SF) Glendale Heights (1%) Addison (27%) 54 NAI Hiffman The 4.9% Central DuPage vacancy rate is the lowest among all of the industrial submarkets

55 Year in Review Over the past two years, the Central DuPage submarket has absorbed more than 3.6 million SF and the area's vacancy rate has dropped by nearly 3% to 4.9%, one of the lowest rates the submarket has witnessed. During the fourth quarter alone, 636,666 SF of vacant space was absorbed, bringing the net absorption tally for 213 to just over 1.6 million SF. Construction was completed during the fourth quarter on a 139,82 SF speculative building at 21 Gary Ave in Roselle's Turnberry Lakes Business Park in Roselle, while a 64,192 SF speculative facility broke ground at 158 Hecht Dr in Bartlett's Brewster Creek Business Park. Construction Deliveries 2.5 MM 2. MM 1.5 MM 1. MM.5 MM Central DuPage Liberty Property Trust was the buyer for all of the Central DuPage buildings that sold during the fourth quarter. This included a portfolio sale of two fully-leased buildings in Carol Stream totaling 72,62 SF purchased from James Campbell Company LLC for $39.75 million and fi ve buildings purchased as part of the 177-property national portfolio Liberty Property Trust acquired from Cabot Properties, Inc for $1.475 billion. The largest lease signed during the fourth quarter involved CoreCentric Solutions leasing 152, SF at Center Ave in Carol Stream ,-49,999 5,-99,999 1,-199,999 2, Blocks of Available Space Looking Forward Among all of the industrial submarkets, the Central DuPage vacancy rate is the lowest, at 4.9%. Although this is a very healthy rate, 7.91% of the space in the market is being listed as available, suggesting that if tenants move out over the coming months, the vacancy rate would increase. Only seven options for contiguous spaces 1, SF or larger remain available. Largest Blocks of Available Space Building Address City Block Size (SF) 9-91 Kimberly Dr Carol Stream 275, Internationale Blvd Glendale Heights 259, Exchange Blvd Glendale Heights 177,615 5 Regency Dr Glendale Heights 16,66 2 Regency Dr Glendale Heights 15,461 Significant Central DuPage Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller Kehoe Blvd & E Elk Trl, Carol Stream 72,62 $39,75, $55 Liberty Property Trust James Campbell Company LLC 1575 Hunter Rd, Hanover Park 288,366 Undisclosed* Undisclosed* Liberty Property Trust Cabot Properties, Inc Central Ave, Roselle 229,74 Undisclosed* Undisclosed* Liberty Property Trust Cabot Properties, Inc 156 Hunter Ct, Hanover Park 21,696 Undisclosed* Undisclosed* Liberty Property Trust Cabot Properties, Inc 91 S Route 53, Addison 133,892 Undisclosed* Undisclosed* Liberty Property Trust Cabot Properties, Inc 869 S Route 53, Addison 13,2 Undisclosed* Undisclosed* Liberty Property Trust Cabot Properties, Inc Significant Central DuPage Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type Center Ave, Carol Stream 152, CoreCentric Solutions New lease 1688 Glen Ellyn Rd, Glendale Heights 84,84 KKSP (K&K Screw) New lease 635 Church Rd, Hanover Park 83,666 Richelieu Hardware New lease 22 W Pinehurst Blvd, Addison 81,761 Herregan Distributors Lease renewal 2 S Mitchell Ct, Addison 66,612 The Howard Elliott Collection New lease 31 Windy Point Dr, Glendale Heights 63,457 Elite Casino Products Lease renewal *Part of a 177-property national portfolio sold for $1.475 billion, or about $64 PSF Entries highlighted in red denote NAI Hiffman transactions 55

56 Palatine Chicago Executive Airport O Hare 9 Arlington Heights Mt. Prospect 2 Morton Grove # INDUSTRIAL BUILDINGS 1,72 MARKET SIZE (SF) 1,2,966 TOTAL VACANCY 6,566,171 SF (6.55%) DIRECT VACANCY 6,245,447 SF (6.23%) SUBLEASE VACANCY 325,724 SF (.32%) AVAILABLE SPACE 11,77,14 SF (11.5%) 4Q13 NET ABSORPTION (SF) 826,342 Schaumburg loomingdale Itasca Elk Grove Village Wood Dale 83 Des Plaines Ohare Int'l Airport N TOTAL 213 NET ABSORPTION (SF) 2,75,88 UNDER CONSTRUCTION (SF) 274,36 Bensenville Franklin Park 4Q13 NEW SUPPLY (SF) 296, Elmhurst Melrose Park Vacancy Rate Net Absorption Asking Rents 6.55% 826,342 SF 88 2 The O Hare submarket is unique due to its close proximity to O Hare International Airport and its central location at the crossroads of Chicago s expressway system. The O Hare submarket holds the most industrial inventory of all of the Chicagoland submarkets. Elk Grove Village alone is the nation s largest industrial park, boasting more than 4 million SF of industrial and fl ex space. New, state-of-the-art facilities are being built as older, obsolete structures are being torn down in the O Hare submarket, as construction activity starts to pick up again. The demand for state of the art facilities is driven by the massive modernization program that serves to increase airport capacity by 6% and decrease delays by 7%. This program is slated for completion in 22 at a cost of $15 billion. Currently O Hare International Airport is ranked 6th in the country and 17th in the world with respect to total tonnage of air cargo which passes through each year. The city is forecasting that the airport modernization will boost Chicago s ranking with respect to air cargo tonnage. Developers are aggressively seeking large land sites in advance for this increase in cargo capacity. Vacancy Absorption 9, 14% Inventory by City Rosemont (1%) Wood Dale (9%) 3, 12% Itasca (11%) -3, 1% Elk Grove Village (43%) -9, 8% Bensenville (18%) -1,5, % Vacancy Rate (%) Net Absorption (SF) Des Plaines (18%) 56 NAI Hiffman 213 witnessed the absorption of 2.8 million SF of vacant space and a 2.6% decrease in the vacancy rate

57 Year in Review The O'Hare submarket vacancy rate continued to decline for the fi fth consecutive quarter to 6.55%, down 55 basis points from the previous quarter. Net absorption remained strongly positive, as 826,342 SF of vacant space was removed from the market during the fourth quarter, bringing the year-to-date tally to nearly 2.8 million SF absorbed. Construction Deliveries 1,2, 1,, 8, O Hare Development activity returned in 213, as 526,118 SF of new 6, construction was completed in the O'Hare submarket this year, the fi rst signifi cant development the area has seen since 28. During the fourth quarter, two speculative projects were 4, 2, completed, including a 28,32 SF building at 1925 Busse and a 87,975 SF building at 161 Estes, both in Elk Grove Village. Construction continues on two additional speculative developments in Elk Grove Village, a 15,52 SF building at 221 W Lunt Ave and a 123,84 SF building at 2475 Touhy Ave. Blocks of Available Space 2,-49,999 In early October, Liberty Property Trust acquired ten O'Hare buildings as part of a 177-property national portfolio purchased from Cabot Properties, Inc for $1.475 billion. Dynamex, a transportation service company, signed the largest new lease of the fourth quarter, leasing the entire 111,2 SF warehouse at Kirk St in Elk Grove Village. Looking Forward The past fi ve quarters have witnessed the absorption of nearly 3.6 million SF of vacant space and precipitously falling vacancy rates. While this rate of improvement will be diffi cult to sustain, 31 contiguous blocks of space 1, SF or larger remain available, suggesting signifi cant absorption is still a possibility. 5,-99,999 1,-199,999 2, Largest Blocks of Available Space Building Address City Block Size (SF) W Thorndale Ave Itasca 31, Foster Ave Bensenville 36, Mark St Wood Dale 234, 855 N Wood Dale Rd Wood Dale 231, Supreme Dr Bensenville 21,11 Significant O Hare Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller 1 buildings, Bensenville, Itasca, & Elk Grove Village 644,45 Undisclosed* Undisclosed* Liberty Property Trust Cabot Properties, Inc N Central Ave, Wood Dale 169,534 $6,25, $37 MC Appliance, Co HSA Commercial Real Estate Morse Ave, Elk Grove Village 19, $3,5, $32 DCT Industrial Trust Elston Property Management 22 Estes Ave, Elk Grove Village 53,67 $1,4, $26 Arkman Logistics UNBEL LLC 8 Morse Ave, Elk Grove Village 39,52 $2,829, $72 Private trust Installation Specialist Inc Significant O Hare Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type Kirk St, Elk Grove Village 111,2 Dynamex New lease Mark St, Elk Grove Village 52,42 JDS Industries New lease 9- Lively Blvd, Elk Grove Village 32,4 Smith Medical Partners New lease Ellis Ave, Bensenville 2,74 MMA Warehouse New lease Edgewood Ave, Wood Dale 5, Moscoso Trucking New lease Edgewood Ave, Wood Dale 5, Earthwise Environmental New lease *Part of a 177-property national portfolio sold for $1.475 billion, or about $64 PSF Entries highlighted in red denote NAI Hiffman transactions 57

58 ights Mt. Prospect Morton Grove West Cook # INDUSTRIAL BUILDINGS 732 lk Grove Village Des Plaines Ohare Int'l Airport Niles Skokie Lincolnwo MARKET SIZE (SF) 59,486,743 TOTAL VACANCY 4,615,37 SF (7.76%) DIRECT VACANCY 4,615,37 SF (7.76%) SUBLEASE VACANCY SF (.%) Dale Schiller Park 19 Franklin Park 9 AVAILABLE SPACE 6,532,6 SF (1.98%) 4Q13 NET ABSORPTION (SF) 13,217 TOTAL 213 NET ABSORPTION (SF) 326,2 UNDER CONSTRUCTION (SF) Elmhurst 2 45 Melrose Park Oak Park 29 4Q13 NEW SUPPLY (SF) 88 Cicero 2 Vacancy Rate Net Absorption Asking Rents La Grange % 13,217 SF Chicago Midway Airport Burr The West Cook submarket draws companies from the City of Chicago looking for a more functional building and additional amenities compared to the aging, often obsolete inventory of properties in Chicago. Additionally, companies migrate to the area from the nearby O Hare submarket where interstate and airport access is similar, but rental rates tend to be higher. The West Cook submarket benefi ts from good access to the City of Chicago, close proximity to area interstates and rail providers and relatively low rental rates. It is primarily an owner/user market, but leasing opportunities have increased as institutional and private owners have entered the submarket. Vacancy Absorption Inventory by City 1,, 15% Hillside, River Grove, Maywood, etc. (12%) 6, 2, 13% 11% Berkeley (5%) Schiller Park (8%) Franklin Park (35%) -2, 9% -6, 7% Bellwood (9%) -1,, % Vacancy Rate (%) Net Absorption (SF) Melrose Park (31%) 58 NAI Hiffman Market vacancy remained relatively stable for the third consecutive quarter, but is still more than 4.5% under its peak

59 Year in Review Conditions in the West Cook submarket were relatively fl at for the second consecutive quarter as continued transaction velocity was offset by the impact of new vacancies being introduced into the market, resulting in net absorption totaling 13,217 SF for the fourth quarter. However, over the course of 213, 326,2 SF of vacant space was removed from the market and the vacancy rate decreased by 1.24%. At the end of the year, the West Cook vacancy rate stood at 7.76%, more than 4.5% below the peak vacancy rate recorded in mid-21. Construction Deliveries 1,5, 1,2, 9, 6, West Cook Construction remains at a stand-still as there are few 3, opportunities for new construction in the area. The former Central Grocers site, a 24.8 acre parcel, is still awaiting a build to-suit opportunity and can accommodate a building up to 7, SF in size. Blocks of Available Space The largest sale transaction of the fourth quarter involved shelving, racking, and storage system manufacturer Edsal Manufacturing purchasing the 218,749 SF building located at 56 Proviso Dr in Berkeley for $6 million. The company plans to occupy part of the building, and leased a 74, SF unit in the building to third-party logistics provider Diversifi ed Entities, that leases additional space down the street at 5 Proviso Dr. Looking Forward The West Cook vacancy rate has remained relatively stable over the past three quarters, following a two-and-a-half year decline. There are currently 19 available options in the submarket for tenants looking for 1, SF of contiguous space or more, suggesting that signifi cant absorption and a continued drop in vacancy is still a possibility over the coming quarters. 2,-49,999 5,-99,999 1,-199,999 2, Largest Blocks of Available Space Building Address City Block Size (SF) 4 N Wolf Rd Northlake 559, Edgington St Franklin Park 487,7 53 Saint Charles Rd Berkeley 468, West St River Grove 48, Mount Prospect Rd Franklin Park 362,8 21 N 15th Ave Melrose Park 3, 271 Washington Blvd Bellwood 3, Significant West Cook Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller 56 Proviso Dr, Berkeley 218,749 $6,, $27 Edsal Manufacturing John Hancock Life Insurance Company Martens St, Franklin Park 33,65 $8, $24 Provision Equity LLC Martens Street, LLC Significant West Cook Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type 56 Proviso Dr, Berkeley 74, Diversified Entities New lease 1131 Irving Park Rd, Franklin Park 44,783 Integrated Air New lease United Pky, Schiller Park 2, GoPicnic New lease 57 Proviso Dr, Melrose Park 1,8 Merx Global Sublease Entries highlighted in red denote NAI Hiffman transactions 59

60 p Chicago # INDUSTRIAL BUILDINGS 2,7 MARKET SIZE (SF) 213,16,64 TOTAL VACANCY 17,297,295 SF (8.11%) DIRECT VACANCY 16,748,65 SF (7.86%) SUBLEASE VACANCY 548,69 SF (.26%) AVAILABLE SPACE 22,118,783 SF (1.38%) 4Q13 NET ABSORPTION (SF) 597,845 TOTAL 213 NET ABSORPTION (SF) 85,513 UNDER CONSTRUCTION (SF) 35, 4Q13 NEW SUPPLY (SF) gton hts Grove lage Dale mhurst 88 Mt. Prospect Burr Ridge Ohare Int'l Airport 2 Des Plaines 2 Franklin Park Melrose Park La Grange Morton Grove Niles Oak Park Cicero Palos Heights 55 5 Skokie 29 2 Alsip 41 Chicago North Bedford Park Bridgeview 9 64 Chicago Midway Airport Evanston 57 Blue Island 41 Chicago South Vacancy Rate 8.11% Net Absorption 597,845 SF Asking Rents 8 Mokena Tinley Park 57 Chi South Holland 8 Hammond Gary/Ch Chicago proper is by far the largest submarket in terms of total square feet and number of buildings. While the industrial base is geographically diverse, much of the modern development in recent years has taken place in neighborhoods close to downtown, such as Pilsen/Bronzeville (Near South), Kinzie Corridor/Avondale (Near North), and Back of the Yards/Crawford (Near Southwest). There are several planned industrial developments in these neighborhoods; the industrial projects compete with residential and retail more than in any other submarket. In addition, the West Loop/Fulton Market District has seen a lot of interest lately especially for redevelopment projects. This competition translates into higher land values, which ultimately causes the rental rates and sales prices to be higher. Companies that place a premium on proximity to end-users will gladly pay these higher real estate expenses. There are still many industrial companies that operate in less-functional buildings, but make the trade-off for a readily available labor pool. Since 1987, the City of Chicago has seen a slowing of the erosion of its industrial base, through the creation Vacancy Absorption of Planned Manufacturing Districts 2 MM 11% 1 MM 1% 9% -1 MM 8% -2 MM 7% (PMDs). These PMDs make it nearly impossible to change the zoning, which has kept the underlying cost of industrial land low; however some fi rms have recently challenged these PMDs, and if successful, could alter Chicago s industrial landscape. -3 MM % Vacancy Rate (%) Net Absorption (SF) 6 NAI Hiffman An impressive 597,845 SF of vacant space was absorbed during the fourth quarter, as vacancy dropped to 8.11%

61 Year in Review The vacancy rate in the Chicago submarkets decreased throughout 213, dropping 69 basis points over the course of the year to 8.11%, the lowest rate seen since 29. Net absorption totaled an impressive 597,845 SF for the fourth quarter, as several user sales and new leases combined to push demand positive, bringing the total for the year to 85,513 SF of vacant space absorbed. Construction Deliveries 2,, 1,5, Chicago 1,, The only ongoing industrial construction project in Chicago is a 35, SF building addition for New World Van Lines at N Rogers Ave. A build-to-suit manufacturing facility 5, for soap producer Method was announced during the fourth quarter. The 15, SF building will be developed at the former Ryerson steel mill site near the 111th St exit off I- on the city's far south side, and is expected to begin construction this spring. Blocks of Available Space DP Fox Ventures LLC, a diversifi ed management company, purchased a three-building portfolio totaling 21, SF at , 2475, and N Elston Ave for $16.5 million. Pallet rental service PECO Pallett, Inc completed the largest new lease of the quarter, leasing 69,12 SF within the 259,68 SF building located at E 97th Pl. 2,-49,999 5,-99,999 1,-199,999 2, Looking Forward The industrial areas of Chicago tend to attract owners and tenants who need to locate in the city for a specifi c reason. Demand continues to increase for functional, modern assets in the city. Venture One is redeveloping the 312,154 SF they recently purchased at 281 S Western Ave to split the building and create exterior docks. These types of projects will likely become more commonplace in order to address this demand. Largest Blocks of Available Space Building Address City Block Size (SF) 4 W Diversey Ave Chicago 1,331, 26 W 35th St Chicago 647,8 311 S Kedzie Ave Chicago 51, W Roosevelt Rd Chicago 358, S Ashland Ave Chicago 347,46 Significant Chicago Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller , 2475, & N Elston Ave (3 bldgs) 21, $16,5, $79 DP Fox Ventures LLC Stewart & David Reich 1 W Pershing Rd 14, $4,9, $47 Vienna Beef Ltd The Inifinity Group 4258 N Knox Ave 5, $1,469,82 $29 Robert Hoffmann RE LLC Advance Presort Service, Inc 255 N California Ave 43,1 $1,262, $29 Anchor Mechanical, Inc Aldridge Electric, Inc 151 N Kingsbury St 33,5 $4,2,* $125* Improv Olympic Hillco Distributing Company, Inc 1215 W Fulton St 33, Undisclosed Undisclosed Drapac Investments LLC Fulton-Racine LLC 14 W Carroll Ave 22,937 Undisclosed Undisclosed Drapac Investments LLC Hilco Real Estate Significant Chicago Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type 65 N Sacramento Blvd 143, Goose Island/Anheuser Busch New lease E 97th Pl 69,12 PECO Pallet, Inc New lease E 97th Pl 51,72 Noble Americas Lease renewal 274 W 79th St 48,44 HD International New lease *Redevelopment sale to be developed into new Improv Olympic Chicago comedy theater Entries highlighted in red denote NAI Hiffman transactions 61

62 I-88 Corridor # INDUSTRIAL BUILDINGS 773 MARKET SIZE (SF) 62,92,314 TOTAL VACANCY 4,471,175 SF (7.2%) DIRECT VACANCY 4,161,777 SF (6.7%) SUBLEASE VACANCY 39,398 SF (.5%) AVAILABLE SPACE 4,7,731 SF (7.97%) 4Q13 NET ABSORPTION (SF) -24,757 TOTAL 213 NET ABSORPTION (SF) 418,724 UNDER CONSTRUCTION (SF) 954,565 4Q13 NEW SUPPLY (SF) 9 Hampshire Sugar Grove 3 Chicago Palatine Executiv Airpo East Dundee Arlington 9 Heights Hoffman Mt. Pro Elgin Estates Schaumburg Des Pl 29 Streamwood Elk Grove South ElginBartlett Village Ohar Int'l Air Dupage Airport St Charles Geneva Batavia North Aurora Aurora Montgomery West Chicago Plainfield 88 Naperville Barrington Bloomingdale Wood Dale Romeoville 355 Bolingbrook Downers Grove Lemont 355 Elmhurst Burr Ridge 2Fr L Vacancy Rate Net Absorption Asking Rents Shorewood Joliet 8 Mo 7.2% -24,757 SF 8 Minooka Elwood The I-88 Corridor industrial submarket saw increased tenant and speculative developer demand due to the lack of available land in neighboring submarkets such as Central DuPage. Developers were drawn to the number of larger sized land sites for multi-building developments and easy access to major expressways that the I-88 submarket has to offer. With limited options for in fi ll development opportunities in Central DuPage and I-55 submarkets the I-88 submarket has become an area of demand for the last twelve months. Vacancy Absorption Inventory by City 1,, 6, 15% 13% Oswego, Lisle, North Aurora, Westmont, etc. (18%) 3, 11% Downers Grove (6%) Aurora (43%) -3, 9% -6, 7% Montgomery (14%) -1,, % Vacancy Rate (%) Net Absorption (SF) Naperville (19%) 62 NAI Hiffman Vacancy held between 7% and 8% during the course of 213, rates lower than what the area witnessed prior to the recession

63 Year in Review Absorption turned slightly negative during the fourth quarter, as new vacancies offset the effect of continued leasing and sales activity. The largest new vacancy involved Accel Color moving out of 8, SF at 72 Frontenac Rd in Naperville. Absorption was positive for 213, however, totaling 418,724 SF, bringing the tally since the submarket turned around in 21 to more than 4.7 million SF of vacant space removed from the market. The vacancy rate ended the year at 7.2%, 3 basis points below the rate recorded a year ago. Construction Deliveries 2.5 MM 2 MM 1.5 MM 1 MM I-88 Corridor Construction started on a 64,565 SF speculative facility during.5 MM the fourth quarter in North Aurora's I-88 Gateway Logistics Center, to be completed by the end of 214. Construction continues on the 35, SF build-to-suit facility for Ozark Automotive Distributors, Inc at 543 Frontenac Ct in Naperville. Blocks of Available Space TA Associates Realty added to its portfolio of industrial buildings in December, acquiring the 252,6 SF building located at 277 Eola Rd in Aurora. The largest new lease signed during the fourth quarter involved RFID-tagged plastic pallet manufacturer igps leasing 83,782 SF at 14 Ambassador Dr in Naperville. Looking Forward The I-88 Corridor vacancy rate remained steady between 7% and 8% over the course of 213, a rate lower than what the submarket experienced in 26 and 27, prior to the downturn. Only six options for tenants looking for contiguous blocks of space 1, SF or larger in size are currently available, suggesting signifi cant adjustments to the vacancy rate are unlikely over the coming quarters. 2,-49,999 5,-99,999 1,-199,999 2, Largest Blocks of Available Space Building Address City Block Size (SF) 2413 Prospect Dr Aurora 32, Baseline Rd Montgomery 295, Bilter Rd Aurora 295, 258 Prospect Ct Aurora 24, 82 Frontenac Rd Naperville 152,859 Significant I-88 Corridor Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller 277 Eola Rd, Aurora 252,6 Undisclosed Undisclosed TA Associates Realty CalSTRS 5S22-5S35 Frontenac Rd, Naperville 2, $8,5, $43 Exeter Property Group RREEF America REIT II Corp 265 & 264 White Oak Cir, Aurora (2 bldgs) 18,852 $5,85, $54 KTR Capital Partners LP REM Builders Inc 355 Thayer Ct, Aurora 64,22 $3,, $47 Jaken Co, Inc First Industrial Realty Trust, Inc Significant I-88 Corridor Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type 12 N Overland Dr, North Aurora 187,2 Lanter Lease renewal 14 Ambassador Dr, Naperville 83,782 igps New lease 51 Airport Rd, North Aurora 65,625 One Source Industries, LLC Lease renewal 219 Corporate Ln, Naperville 32,322 Konematic Inc New lease 1938 University Ln, Lisle 21,462 Communications & Power Industries LLC New lease 5 Industrial Dr, Naperville 11,63 Lacrosse Training New lease Entries highlighted in red denote NAI Hiffman transactions 63

64 les Dupage Airport F I-55 Corridor a West Chicago 355 Elmhurst 88 2 # INDUSTRIAL BUILDINGS 662 MARKET SIZE (SF) 82,119,658 ra 88 Naperville Downers Grove L TOTAL VACANCY 5,523,971 SF (6.73%) DIRECT VACANCY 4,936,297 SF (6.1%) SUBLEASE VACANCY 587,674 SF (.72%) 53 Woodridge Burr Ridge AVAILABLE SPACE 1,42,167 SF (12.23%) 4Q13 NET ABSORPTION (SF) 41,77 59 Bolingbrook TOTAL 213 NET ABSORPTION (SF) 1,488,276 Lemont UNDER CONSTRUCTION (SF) 2,52,86 4Q13 NEW SUPPLY (SF) 41,928 3 Plainfield 55 Romeoville Vacancy Rate Net Absorption Asking Rents 6.73% 41,77 SF Shorewood Joliet 8 Mok The I-55 Corridor is one of the most desirable regional distribution submarkets due to its location close to cross-country interstates I-55 and I-8, its proximity to Chicago s consumers and labor market and its newer, modern warehouse buildings. As a result, the I-55 Corridor has seen the highest level of development, leasing and sales activity over the past several years and has been the focus of many institutional buyers. Given the desirability of this submarket, most of the larger sites have been developed and there are limited sites available for development. Vacancy Absorption 1.8 MM 1.2 MM.6 MM 15% 12% 9% Inventory by City Forest View, Burr Ridge, Willowbrook, Darien (9%) Lemont (4%) Plainfield (4%) Romeoville (36%) Woodridge (12%) 6% -.6 MM % Vacancy Rate (%) Net Absorption (SF) Bolingbrook (35%) 64 NAI Hiffman Nearly 1.5 million SF of vacant space was absorbed in 213, pushing the I-55 Corridor vacancy rate down to 6.73%

65 Year in Review The I-55 Corridor vacancy rate increased by 42 basis points during the fi nal quarter of 213 to 6.73%, despite positive net absorption totaling 41,77 SF. Behind the increase were three new vacant speculative facilities that were completed during the quarter totaling 41,928 SF. This rate is still 27 basis points below the vacancy rate recorded a year ago. Over the course of 213, nearly 1.5 million SF of vacant space was absorbed. Construction Deliveries 1 MM 8 MM 6 MM I-55 Corridor Three buildings broke ground during the fourth quarter, including 4 MM a 672,8 SF speculative facility being developed by Pizzuti Co in Romeoville's Pinnacle Business Center, a 898,56 SF build- 2 MM to-suit facility also being built by Pizzuti Co in the same park for Pactiv Corp, and a 347,4 SF build-to-suit facility for Orbus Exhibit and Display Group underway in Woodridge's Union Pointe Business Park. Construction continues on IDI's 62,82 SF speculative project at 7 S Weber Rd in Bolingbrook. Blocks of Available Space 2,-49,999 Two Bolingbrook buildings totaling 769,428 SF were acquired in October as part of the 177-property national portfolio purchased by Liberty Property Trust for $1.475 billion. The largest lease signed during the fourth quarter was the build-to-suit lease signed by plastic, paper, and aluminum food packaging producer Pactiv Corp in Romeoville. Looking Forward The I-55 Corridor has been among the most active submarkets in the entire market over the past three-and-half-years. However, more than 12% of the space in the submarket and 28 options for 1, SF or larger are currently available, suggesting that signifi cant adjustments to the vacancy rate remain a possibility. 5,-99,999 1,-199,999 2, Largest Blocks of Available Space Building Address City Block Size (SF) 91 Carlow Dr Bolingbrook 747, Windham Pky Romeoville 723, Remington Blvd Bolingbrook 65,4 815 Bluff Rd Romeoville 49, Theodore Ct Romeoville 421,361 Significant I-55 Corridor Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller 553 S Joliet Rd, Bolingbrook 417,9 Undisclosed* Undisclosed* Liberty Property Trust Cabot Properties, Inc 15 E Crossroads Pky, Bolingbrook 352,338 Undisclosed* Undisclosed* Liberty Property Trust Cabot Properties, Inc 144 Sherman Rd, Romeoville 3,48 $1,32, $43 Kole Construction Company New Supplies Company, Inc Significant I-55 Corridor Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type Pinnacle Business Center, Romeoville 898,56 Pactiv Corp Build-to-suit lease 23 Internationale Pky, Woodridge 148,416 Prodigy Mailing Services New lease Schmidt Rd, Romeoville 124,8 Hub One Logistics, Ltd Lease expansion/renewal 47 Crossroads Pky, Bolingbrook 67,5 Chilled Solutions New lease 151 Remington Blvd, Bolingbrook 52,48 FleetPride Lease expansion 1453 S Gougar Rd, Lockport 52,5 PressSense New lease 144 Tower Dr, Burr Ridge 39, Worldpac New lease 175 E Crossroads Pky, Bolingbrook 27,538 Midwest Laser New lease 618 Anderson Dr, Romeoville 18,67 Phillip Metals, Inc New lease *Part of a 177-property national portfolio sold for $1.475 billion, or about $64 PSF Entries highlighted in red denote NAI Hiffman transactions 65

66 South Cook # INDUSTRIAL BUILDINGS 1,125 MARKET SIZE (SF) 85,311,64 TOTAL VACANCY 7,27,125 SF (8.52%) DIRECT VACANCY 7,113,69 SF (8.34%) SUBLEASE VACANCY 156,516 SF (.18%) AVAILABLE SPACE 9,716,33 SF (11.39%) 4Q13 NET ABSORPTION (SF) 214,663 TOTAL 213 NET ABSORPTION (SF) 777,824 UNDER CONSTRUCTION (SF) 36, 4Q13 NEW SUPPLY (SF) ok 355 Downers Grove Lemont 355 Elmhurst 88 Burr Ridge 2 Franklin Park 8 83 Mokena Melrose Park La Grange Oak Park Cicero 43 Tinley Park 55 Bedford Park Palos Heights Bridgeview Alsip Chicago Midway Airport Matteson 57 Blue Island 1 3 South Holland Chicago Heights Chicago Ham Park Forest Vacancy Rate 8.52% Net Absorption 214,663 SF Asking Rents Monee Illinois Indiana South Cook is the third largest submarket in Chicago by both square feet and number of buildings. The prominence of this submarket hasn t translated into heavy transaction velocity, however, as high-growth distribution fi rms have tended to focus their expansion in the collar counties (with their lower property tax rates) to the south and west. A signifi cant portion of South Cook s industrial base is manufacturing-oriented, so the buildings tend to be older and designed for production, not distribution. Many of the communities are considered in-fi ll, meaning vacant land sites are rare, with buildings needing to be torn down to accommodate new development. Ownership is mixed, including institutional, owner/user and both national and local private owners. The bright spots for the submarket remain the proximity to skilled labor, and the access to a multitude of expressways, rail lines, and public transportation. Vacancy Absorption Inventory by City 2 MM 15% 1 MM 13% All Other South Cook Communities (35%) Bedford Park (26%) 11% 9% -1 MM -2 MM % 5% Vacancy Rate (%) Net Absorption (SF) Harvey (5%) Bridgeview (8%) Alsip (15%) Chicago Heights (11%) 66 NAI Hiffman The South Cook vacancy rate dropped by 1.5% during 213 due to the absorption of 777,824 SF of vacant space

67 Year in Review The South Cook submarket has now witnessed net positive absorption for the past ten consecutive quarters as 214,663 SF of vacant space was absorbed during the fourth quarter, bringing the absorption tally for 213 to 777,824 SF. The vacancy rate continued to decline through the fourth quarter, dropping 25 basis points to 8.52%, nearly 5% below its 29 peak and 1.5% below the rate recorded a year ago. Construction Deliveries 2.5 MM 2. MM 1.5 MM South Cook The only ongoing development project is a 36, SF build-tosuit facility for Intermodal Maintenance Group that broke ground at W 73rd St in Bedford Park last quarter, and is expected to be completed this spring. IndCor Properties purchased the 776,515 SF building at 217 Mark Collins Dr and the 258,95 SF building at 2171 Mark Collins Dr, both in Sauk Village in December as part of a 28-property portfolio that involved industrial buildings in Nevada, California, and Illinois. The portfolio sold for $32 million, or about $46 PSF. Plastic recycling, manufacturing, compounding, and distribution company Resource Plastics signed the largest new lease of the fourth quarter, taking 17,563 SF of the 35,7 SF building located at 5623 W 115th St in Alsip. Looking Forward The improvement witnessed in the South Cook submarket over the past several years has taken place among the submarket's more modern and desirable business parks. Much of the product in the South Cook submarket is older and not as functional as the high-ceiling, precast product seen in more modern submarkets. Demand is expected to gradually return to these buildings as more desirable space is leased. 1. MM.5 MM 2 21 Blocks of Available Space 2,-49,999 5,-99,999 1,-199,999 2, Largest Blocks of Available Space Building Address City Block Size (SF) 217 Mark Collins Dr Sauk Village 5, W 65th St Bedford Park 462, S Pulaski Rd Alsip 37, W 73rd St Bedford Park 27, S Cicero Ave Matteson 25, S Homan Ave Blue Island 181, Significant South Cook Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller 217 Mark Collins Dr, Sauk Village 776,515 Undisclosed* Undisclosed* IndCor Properties Pacific Life Insurance Company 2171 Mark Collins Dr, Sauk Village 258,95 Undisclosed* Undisclosed* IndCor Properties Pacific Life Insurance Company 6969 W 73rd St, Bedford Park 99,2 Undisclosed & Undisclosed # Venture One Real Estate LLC C-III Asset Management W 159th St, Markham 91,52 $1,625, $18 Kelly Pipe Co, LLC Markham Property Management Inc Significant South Cook Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type 5623 W 115th St, Alsip 17,563 Resource Plastics New lease 48 E Lincoln Hwy, Chicago Heights 81, Comprehensive Logistics Company Inc New lease 636 W 73rd St, Bedford Park 33,15 Advanced Grinding Services Inc New lease S Latrobe Ave, Alsip 12,16 Schillinger Distribution New lease 7661 S 78th Ave, Bridgeview 1, Olympia Food Industries Lease renewal *Part of a national 28-property portfolio sold for a published price of $32 million & REO sale Entries highlighted in red denote NAI Hiffman transactions 67

68 I-8/Joliet Corridor # INDUSTRIAL BUILDINGS 622 MARKET SIZE (SF) 67,66,437 TOTAL VACANCY 7,8,492 SF (11.53%) DIRECT VACANCY 7,8,492 SF (11.53%) SUBLEASE VACANCY SF (.%) AVAILABLE SPACE 8,88,199 SF (13.2%) 4Q13 NET ABSORPTION (SF) 32,516 TOTAL 213 NET ABSORPTION (SF) 3,181,131 UNDER CONSTRUCTION (SF) 57, 4Q13 NEW SUPPLY (SF) 1,18,911 Cherry Valley 34 Ottawa 9 DeKalb 6 71 Seneca Hampshire West Chicago Batavia 88 Aurora 126 Lake Zurich Palatine Chicago Executive Airport Arlington 2 9 Heights E Elgin Schaumburg Niles South Elgin Elk Grove Ohare Int'l Airport Village Dupage Airport St Charles Naperville 55 Bolingbrook Lemont Romeoville Shorewood Joliet Minooka Channahon Elwood Mokena New Lenox 45 Forest Highland Park ElmhurstMelrose 355 Park 29 Downers Grove Buffalo Grove 57 Cicero Bedford Park 2 Tinley Park Chica Airpo Mon 55 Vacancy Rate Net Absorption Asking Rents Kankakee 11.53% 32,516 SF The I-8/Joliet Corridor submarket has historically catered to multi-state big box distribution. Its access to I-8, I-55 and I-355 position the corridor well for distribution operations. In addition, the nation s largest inland port is located in Joliet and Elwood. This intermodal development, also known as CenterPoint Intermodal Center, has remained a bright spot not only in the corridor, but for the entire Chicago market. CenterPoint Intermodal Center now offers intermodal service, direct rail service, barge service as well as unit train service from multiple rail providers. Vacancy Absorption 2. MM 1.5 MM 25% 21% Inventory by City Ottawa, New Lenox, Mokena, Frankfort, etc (26%) 1. MM 17% Joliet (45%).5 MM 13% 9% Tinley Park (6%) -.5 MM % Minooka (9%) Vacancy Rate (%) Net Absorption (SF) Elwood (14%) 68 NAI Hiffman The I-8/Joliet Corridor absorbed nearly 3.2 million SF of vacant space in 213, more than any other submarket

69 Year in Review The I-8/Joliet Corridor vacancy rate increased by more than a full percentage point to 11.53% during the fourth quarter, despite positive net absorption totaling 32,516 SF for the three month period. This vacancy increase was due in part to the completion of a vacant 485,5 SF speculative facility in Joliet's CenterPoint Intermodal Center. Net absorption was pushed positive for the quarter by the completion of the 695,911 SF build-to-suit facility for Trader Joe's in Minooka. However, the current vacancy rate is still more than 9% below the peak reached in early 29, and the I-8/Joliet submarket absorbed more vacant space than any other industrial submarket in 213, totaling nearly 3.2 million SF. Construction Deliveries 8 MM 7 MM 6 MM 5 MM 4 MM 3 MM 2 MM 1 MM I-8/Joliet Corridor Construction is now underway on a 29, SF build-to-suit facility for Falken Tire in Joliet's Rock Run Business Park of which they will be leasing 214,6 SF, and a 217, SF buildto-suit project for Supreme Lobster/Joliet Cold Storage near the intersection of New Lenox Rd and Cherry Hill Rd, across the street from Joliet's Cherry Hill Business Park. Blocks of Available Space 2,-49,999 5,-99,999 Retail and private label manufacturer and distributor Garcoa Laboratories purchased the 157,95 SF industrial manufacturing building located at 999 W McKinley Rd in Ottawa. The largest lease signed during the fourth quarter was the 45,6 SF build-to-suit lease signed by an undisclosed 3PL provider at the CenterPoint Intermodal Center. Looking Forward The I-8/Joliet Corridor submarket has recorded several periods of signifi cant absorption over the past several years, including 213. Although the vacancy rate is still above 1%, there is potential for additional improvement in 214 and beyond, as 21 options for 1, SF or larger of contiguous space are available and new construction continues to increase. 1,-199,999 2, Largest Blocks of Available Space Building Address City Block Size (SF) 2175 W Mississippi St Elwood 1,22, Youngs Rd Joliet 1,1, International Pky Minooka 849, S Chicago St Joliet 575,24 41 Rock Creek Blvd Joliet 59, CenterPoint Way Joliet 485,5 41 E Laraway Rd Joliet 475,14 Significant I-8/Joliet Corridor Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller 999 W McKinley Rd, Ottawa 157,95 Undisclosed Undisclosed Garcoa Laboratories Insite Real Estate Significant I-8/Joliet Corridor Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type CenterPoint Intermodal Center 45,6 Undisclosed 3PL provider Build-to-suit lease Rock Run Business Park, Joliet 214,6 Falken Tire Build-to-suit lease 8451 W 183rd Pl, Tinley Park 56,735 Undisclosed New lease Oakleaf Ct, Joliet 1, Hands of Hope New lease Entries highlighted in red denote NAI Hiffman transactions 69

70 Northwest Indiana Chicago # INDUSTRIAL BUILDINGS 434 MARKET SIZE (SF) 35,957,57 TOTAL VACANCY 2,437,151 SF (6.78%) DIRECT VACANCY 2,412,151 SF (6.71%) SUBLEASE VACANCY 25, SF (.7%) AVAILABLE SPACE 3,57,47 SF (9.93%) 4Q13 NET ABSORPTION (SF) 347,776 outh lland o ts Gary/Chicago Airport Gary 12 2 Hammond Portage 6 65 Porter 9 2 Michiga TOTAL 213 NET ABSORPTION (SF) 62,288 Merrillville 3 51 Valparaiso UNDER CONSTRUCTION (SF) 548,228 4Q13 NEW SUPPLY (SF) 25, Illinois Indiana 53 Crown Point Vacancy Rate Net Absorption Asking Rents Lowell 6.78% 347,776 SF The Northwest Indiana submarket is a bifurcated market, with areas north of I-8 including the towns of Hammond, East Chicago, and Gary containing some of the heaviest manufacturing facilities in the world, home to companies like BP Amoco, US Steel, and Arcelor Mittal. There are many functionally obsolete crane & manufacturing buildings housing fi rms in this area that service the steel and chemical industries. South of I-8, towns such as Munster, Hobart, Merrillville and Portage cater to more modern business parks. Indiana has historically held signifi cant economic advantages over Illinois, such as lower property taxes, utility costs, labor rates, and soft costs (workman s compensation and unemployment insurance). Most companies new to Northwest Indiana migrate from South Cook and Will Counties, but existing Northwest Indiana fi rms rarely move across the state line to Illinois. Vacancy Absorption Inventory by City 9, 6, 15% 13% Hobart, Whiting, Schererville, etc. (21%) Hammond (24%) 3, 11% Merriville (4%) 9% -3, 7% Portage (11%) -6, % East Chicago (22%) Vacancy Rate (%) Net Absorption (SF) Gary (18%) 7 NAI Hiffman Tec Air, Inc is moving their headquarters operations and up to 258 jobs to Munster, Indiana from Illinois

71 Year in Review Following a period of minimal change in vacancy during the middle of the year, the Northwest Indiana vacancy rate decreased by 44 basis points to 6.78% during the fourth quarter, as 347,776 SF of vacant space was absorbed, in part due to the delivery of a 115, SF build-to-suit facility for Dawn Foods. Net absorption for 213 totaled 62,288 SF, the highest annual tally since 21. A year ago, the area's vacancy rate was nearly a full percentage point higher. Two build-to-suit construction projects broke ground during the fourth quarter, including a 123, SF facility for Munster Steel in Hammond's West Point Industrial Park and a 25, SF facility for Aunt Millie's Bakeries in Merrillville. Construction continues on a 5,228 SF speculative building in Portage's Ameriplex at the Port business park and a 35, SF build-tosuit facility for precision food cutting equipment manufacturer Urschel Laboratories Inc in Chesterton's Coffee Creek Center. Two projects were completed this quarter, including a 9, SF building expansion to Hanson Logistics' building at 221 Northwind Pky in Hobart and a 115, SF build-to-suit facility for Dawn Foods in Merrillville's Ameriplex at the Crossroads park. The largest lease signed during the fourth quarter involved manufacturing company Tec Air, Inc relocating their Willow Springs, Illinois headquarters to Munster, Indiana, leasing 127,6 SF in the Lake Business Center at 92 Calumet Ave. Looking Forward The Tec Air, Inc move from Illinois to Indiana is another example of a company moving operations and in the case of Tec Air, hundreds of jobs, to Northwest Indiana. Companies will continue to be attracted to the area's economic advantages over Illinois. Construction Deliveries 1,5, 1,2, 9, 6, 3, 2 Blocks of Available Space 2,-49,999 5,-99,999 1,-199,999 2,+ 21 Northwest Indiana Largest Blocks of Available Space Building Address City Block Size (SF) 6515 Ameriplex Dr Portage 574,249 7 Chase St Gary 2, 1575 Louis Sullivan Dr Portage 2, 4 7th Ave Gary 196, 32 Sheffield Ave Hammond 14, 447 Railroad Ave East Chicago 118,457 1 N Bridge St Gary 11, Significant Northwest Indiana Sale Transactions 4th Quarter 213 Building Address Size (SF) Sale Price Price PSF Buyer Seller 6 US Highway 2, Michigan City 24,527 $52, $21. Richards Building Supply Co P-Americas LLC Significant Northwest Indiana Lease Transactions 4th Quarter 213 Property Address Leased (SF) Tenant Lease Type 92 Calumet Ave, Munster 127,6 Tec Air, Inc New lease th Ave, Munster 65, Carl Buddig & Co New lease W 151st St, East Chicago 28,44 Next Generation New lease 1451 Texas St, Gary 8, Stericycle Inc New lease Entries highlighted in red denote NAI Hiffman transactions 71

72 Logistics Review Year-End 213 Guaranteed Changes in the Logistics Industry and Why it s Important to Real Estate Transportation continues to play a vital role in the transformation of commercial real estate; it has signifi cantly changed the traditional real estate business into one that is focused on supply chain. In order to maintain or increase profi t margins amidst rising costs, corporations are focusing on their supply chains holistically as opposed to separate, individual issues. Gone are the days of pure price buyers. The real estate industry often focuses on a price-per-pound competitive set approach, while the truth is that rental rate is only a small, necessary percentage of a fi rm s supply chain initiative. The more one understands the supply chain challenges that a corporation faces, the less important the real estate rental rate becomes. Analyzing the transportation sector over the past 1 years, the real estate sector typically lags behind the supply chain industry by about 24 months. In order to shorten that lag and maintain a competitive advantage over the next 24 months, it is imperative to be aware of the following changes that are on the horizon: Transportation spend currently averages 1 times more than the cost of rent. With pressure on trucking, new regulations, and capacity constraints, transportation will become approximately 15 times the cost of rent, further reducing the focus on rental rate versus the total supply chain benefi t of a location. How effectively a site s transportation advantages can be quantifi ed will dictate the profi tability and lease-ability of an asset. Real Estate Rent vs. Transportation Costs Rent Spend 1x Transportation Spend 15x 3x 6x 9x 12x 15x Corporations are becoming more sophisticated and will eventually measure their profi tability by SKU level. Rental rates will be a very small factor when compared to access to a specifi c supplier and customer base. Incentives can move the needle for a site selection decision, however, an ongoing transportation advantage can erase the needle altogether. Consistent annual reductions from transportation costs will outweigh most incentives. Nearshoring is here, and Mexico is particularly positioned well. Various transportation providers in the Chicagoland region are promoting their connectivity to Mexico and some assets in Chicago are better positioned to capitalize on this. There will be two to three unit trains of food products servicing the Chicagoland and Midwest Region over the next 24 months. This will lead to an increasing need for modern temperature-controlled space, in particular space that has the capacity for unit train business. 72 NAI Hiffman

73 Logistics Review It has been said that the Panama Canal expansion will be a game changer for real estate, but this simply is not true. As corporations increase their all-water distance as much as possible, the east coast will see an incremental increase in their market share, but the majority of this growth will be via the Suez Canal. Air freight will decline with the exception of deferred air. Whenever possible, freight will migrate to intermodal as it is much more cost effective and has increased in reliability. Largest Ports by Container Traffic (TEUs) While e-commerce has emerged as a new market for industrial real estate, it s important to point out that in the second quarter of 213, e-commerce represented 5.8% of total retail sales. In other words, $1 billion versus $64 million. It s often only referred to in growth percentage and simply put, it has more room to grow. Interestingly, the battle ground for e-commerce is no longer product, it s transportation. The importance of intermodal distance is declining, but critical mass is still key; the historical rule had been any freight going over 1, miles would go via rail, then it became 75 miles, and today it is closer to 5 miles. At a conference in 213, The Norfolk Southern announced that they have critical mass on a 22-mile stretch for a tenant and it is a great success. The migration to rail is absolute and railroads have been preparing for this shift. Rail is the only viable alternative to trucking with capacity and consistent distribution. Trucking companies are now one of the biggest allies to railroads. Moving forward, it s critical to know the proximity of an asset to a rail hub and what specifi c functions that rail operation can provide. In the past, whoever had access to capacity won. In the next 24 months, whoever has access to capacity survives. Transportation will continue to drive industrial real estate. Understanding the challenges the logistics industry is trying to overcome will create real estate opportunities. More specifi cally, being able to positively impact a corporation s transportation spend will result in higher rents while reducing a company s total landed cost. 73

74 Industrial Investment Market Year-End 213 Investment Market Trends Pictured above: 251 N Barrington Rd in Hoffman Estates, purchased by Broadstone Net Lease for $36.3 million in October In 213, industrial investment sales activity around Chicago demonstrated modest improvement over 212 annual metrics, in multiple regards. An estimated 22.1 million SF of industrial space was transacted on an investment sale basis in 213, up from an estimated 18.9 million SF in total industrial buildings were sold in investment sale transactions in 213, an increase from 86 total buildings that were sold in 212. Additionally, total industrial investment sales volume for 213 was an estimated $1.1 billion, a marginal increase over the estimated 212 annual total of $1.2 billion. The minor increase in total sales volume, despite more substantial increases in number of buildings sold and total SF sold, is indicative of the slight decrease in average price achieved PSF of industrial product sold in 213. In 212, the average price PSF sold was approximately $54.7, whereas in 213 the average price PSF sold was approximately $ Industrial investment sale activity followed a usual trend in 213 with the largest number of transactions ac occurring in the second and fourth quarters. Tracking all industrial sales over $5 million, there were a total of 42 investment sale transactions, accounting for $1.1 billion in sales. Property sales from investors to owner-occupiers accounted for the second largest dollar volume, with a total of 15 transactions accounting for an estimated $146.5 million. Sales motivated by redevelopment opportunities accounted for the next largest amount, with 12 transactions accounting for $129.9 million in total sales volume, followed by sales between users with 6 transactions accounting for $48.6 million. Despite recognizing a reasonable amount of investment sale activity in 213, a constant trend throughout the year was the inability of sellers to reallocate capital to alternative quality investments, persuading them to refrain from selling unless confronted with a unique opportunity to maximize value. These dynamics resulted in a constrained supply of desirable product on the market, which, coupled with a fairly high level of demand, led us into a period of unsurpassed capitalization rate compression as sub-6% cap rates were achievable for well-located ed core assets that came to the market for sale. Class "B" space did not experience the same level of demand and capitalization rate compression as investors, advisors, and REIT s remained fi xed on core product and, for the most part, proved unwilling to translate their more aggressive underwriting to class "B" assets. A few large portfolios of class "B" industrial product came to market in 213 but received less than optimal interest, falling short of seller expectations. Despite e this, going into 214 investors and developers remain optimistic regarding class "B" pricing given the extremely limited number of core opportunities and increasing competition and pressure to place capital. Provided rent growth is recognized in the market, further cap rate compression in class "B" space remains reasonable to expect, if not foreseeable, barring some other signifi cant shift in market dynamics. a 213 Quarter-by-Quarter Sales Comparison 25 $6 Sales Volume vs. Construction Deliveries $4 Billion 24 Million 2 15 $5 $4 $3 Billion 18 Million 1 $3 $2 Billion 12 Million 5 Q1 213 Q2 213 Q3 213 Q4 213 # Investment sales # User to user sales # Distressed sales # Investment to user sales # Redevelopment plays Sales volume ($ millions) $2 $1 Source: HFF $1 Billion $ 6 Million Sales Volume ($) Construction Deliveries (SF) Source: HFF/NAI Hiffman 74 NAI Hiffman

75 Industrial Investment 213 presented new challenges relating to uncertainty in the fi nancial markets. Interest rates fl uctuated throughout the year with signifi cant changes in the second and third quarters, though they failed to have a signifi cant impact on the Chicago industrial investment sale market. The aforementioned market conditions of constrained supply and heightened demand offset the negative impact of slightly higher interest rates, particularly for core assets and strong credit tenant situations. Class "B" space felt the most pressure from increasing interest rates, as the majority of interest in this product is from high-leverage buyers. As for property values, the historically large variance between the average industrial cap rate and the 1-year treasury yield provided a fair amount of insulation from the risk of rising cap rates, and is even considered by some as an argument for further cap rate compression in 214. Significant Investment Activity The largest single industrial investment sale transaction of the year involved Liberty Property Trust acquiring Cabot Industrial Value Fund III for approximately $1.5 billion. Included in the 177-property transaction were 25 assets located in Chicago, totaling approximately 3.2 million SF with a total allocated sales volume estimated at $186 million. The second largest transaction of the year involved IndCor Properties purchasing a 15-building, 2.2 million SF industrial portfolio from Ares Commercial Real Estate Corp for $11.5 million. With 13 properties located in the Chicago suburbs and the remaining two properties in Wisconsin, the transaction represented one of the earliest and most substantial investments in class "B" properties witnessed during this recovery period. Another signifi cant national portfolio sale, which had a large composition of Chicago assets, is IndCor Properties acquisition of the Pacifi c Life Industrial Portfolio, a 7 million SF portfolio purchased for $32 million. Three Chicago assets totaling approximately 1.6 million SF were included in the transaction, with an estimated allocated sales volume of $73.2 million. Significant Industrial Investment Sales 213 Size (SF) Sale Price Price PSF # Bldgs Buyer Seller 3,238, $186,6,147 $ Liberty Property Trust Cabot Properties 2,156,492 $11,5, $ IndCor Properties Ares Commercial Real Estate 1,6, $73,168, $ IndCor Properties Pacific Life 931,55 $51,, $ STAG Capital The Landmark Group Companies 965,183 $43,433,5 $45. 1 Duke Realty The Opus Group 1,1, $43,165, $ DCT Industrial Trust Hamilton Partners Buyer Type by Sales Volume Institutional/Advisor $57.9 million Developer $79.8 million Private REIT $45.4 million Fund $396.4 million The Industrial Investment Market Review data has been provided by HFF, L.P. HFF (Holliday Fenoglio Fowler, L.P.) and HFFS (HFF Securities L.P.) are owned by HFF, Inc (NYSE: HF). HFF operates out of 21 offi ces nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affi liate HFFS offer clients a fully integrated national capital markets platform including debt placement, investment sales, equity placement, advisory services, loan sales and commercial loan servicing. p.com. Private Investor $19.8 million Public REIT $325.5 million Source: HFF 75

76 Retail Review Year-End 213 The Chicagoland metropolitan retail marketplace began to stabilize in 213. Chicago and the suburban retail trade areas experienced a decrease in shopping center vacancy as well as stabilization of quoted asking base rents. Safeway s decision in the 4th quarter of 213 to cease retail operations of the entire Dominick s grocery store chain within the Chicagoland region was unexpected and halted the momentum of recovery. Safeway s decision and announcement to close its 72-store Dominick s portfolio by the end of 213 immediately added 2.8 million SF of available big box to an already saturated vacant big box environment. Prior to this news, Walmart and Lowe s had a combined 9, SF of vacancy spread among seven freestanding stores ranging between 115, to 135, SF. Additionally, Sears Holdings made the decision in the 3rd quarter of 213 to close specifi c underperforming retail locations within the Chicagoland area, adding another 1.5 million SF of vacancy. With the combination of existing big box vacancy and Dominick s closing, Chicago s metropolitan retail market is faced with a signifi cant excess of big box vacancy in 214 of over 5.2 million SF. The new expansion of grocery stores was active in 213 and will continue to be robust in 214. Mariano s announced it will occupy 11 vacant Dominick s locations, Jewel-Osco committed to 4, while Caputo s Fresh Markets, Tony s Finer Food, Pete s Fresh Market, and Whole Foods are collectively pursuing approximately 7 of the locations. The 22 former Dominick s locations totaling 88, SF are spoken for, thereby reducing the 5.2 million SF of vacancy to approximately 4.3 million lio SF. The 4.3 million SF of vacancy will have a signifi ficant impact on new shopping center construction in 214, as there are no multi-tenant shopping centers between 8, SF to 15, SF planned for 214. For example, Mariano s could absorb 11 new store opportunities po without the burden of new construction, thus saving valuable time and money. However, the expansion of freestanding 76 NAI Hiffman

77 Retail Review building tenants such as CVS, Walgreens, fastfood drive-throughs, sit-down restaurants, and automotive retail locations will continue in 214, which will aid the retail construction recovery. Safeway s announcement will severely affect other aspects of the retail market as the small shop retail category and retail investment marketplace recover in 214. The majority of Dominick s store locations were positioned within shopping centers of approximately 85, SF to 15, SF in total size. The size of the Dominick s footprint within those centers occupied approximately 35% to 5% of the gross leasable area of the center. Subsequently, a shopping center anchored by Dominick s that was not absorbed within the fi rst wave of buyers will suffer hardships in reference to customer traffi c fl ow, hampering 214 gross retail sales. The commercial retail investment business in the Chicagoland market will face diffi cult decisions with regard to its recovery and activity in 214. The time necessary for logical and appropriate absorption of the 4.3 million SF of vacancy will be lengthy, and it will have an impact on investment sales business in 214. Ownership entities with big box vacancy must be willing to absorb deep discounts with regard to future base rent levels, especially if additional changes of taxes, insurance, and CAM fees continue to rise to dangerous levels. Although Chicago and the suburban trade area somewhat stabilized with lower vacancy rates and a slight increase in base rent levels in 213, the 214 commercial retail environment could decrease the commercial retail gains obtained in

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79 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. Definitions The NAI Hiffman Market Reviews track several measures of market conditions. This information is collected for individual properties then consolidated, organized and analyzed for submarket and market totals. These terms, used throughout the reports, are defined below according to NAIOP Terms & Definitions. 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 abandoned or discontinued) but for which a certificate of occupancy has not yet been issued; or b) properties undergoing conversion to office from another use or c) properties undergoing a major renovation where 75 percent or more of the building is not available for lease and building generally requires a certificate of occupancy to be made available for lease. Total Inventory (Market Size) The total square footage of gross rentable area in a specific market. It includes the gross rentable area in buildings that have received a certificate of occupancy. Total inventory increases when a new building is delivered and decreases when an existing building is destroyed, demolished or its use changes. Available Space The total amount of space that is currently being marketed as available for lease in a given time period. It includes space that is available, regardless of whether the space is vacant, occupied, available for sublease, or available at a future date. Available space excludes shadow space. Vacancy Rate A measurement expressed as a percentage of the total amount of vacant space divided by the total amount of inventory. Vacant space is inventory that is not currently occupied. Shadow Space That portion of leased space which is vacant but not available space. Shadow space is difficult to measure. (Synonym: phantom space) 79

80 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] Jud Henry Senior Associate [email protected] Matt Novak Associate [email protected] Aubrey Van Reken Vice President [email protected] James Adler Executive Vice President [email protected] Adam Johnson Vice President [email protected] Daniel O Neill Executive Vice President [email protected] Michael Van Zandt Executive Vice President [email protected] Brian Edgerton Vice President [email protected] Patrick Kiefer Executive Vice President [email protected] Jack Reardon Senior Vice President [email protected] Jason Wurtz Vice President [email protected] Linda Garske Senior Vice President [email protected] Kyle Kreminski Associate [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. 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] Jennifer Hopkins Senior Retail Associate [email protected] 8

81 NAI Hiffman Industrial Services John Cash, SIOR Executive Vice President Steve Connolly, SIOR Executive Vice President David Haigh Vice President Adam Roth, CCIM, SIOR Executive Vice President Casey Baird Associate Benjamin Cremer Senior Vice President Daniel Leahy, SIOR Executive Vice President Stephen Sullivan Vice President Kyle Barrett Associate Kelly Disser Vice President Adam Marshall, CCIM Vice President Brett Tomfohrde Associate Howard Bergdoll Associate Eric Fischer Vice President Mark Moran Executive Vice President Eric Tresslar Executive Vice President Duke Botthof Executive Vice President Jeff Fischer Executive Vice President Lawrence Much, SIOR Executive Vice President John Whitehead Vice President Joe Bronson, SIOR Vice President Chris Gary Vice President [email protected] Adam Naparsteck 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 Specialist [email protected] Catherine DeBoer Elsa Gaztambide Karen Kirian Melody Lawrence Cindy Nickell Alison O Connell Denise Racana Tammi Sowinski Erin Thill Lynn Zbierski Research For further information regarding the content of this market review, or for specialty reports, please contact your local broker or: Craig Hurvitz Director of Research [email protected] Brian Chandler Research Associate [email protected] 81

82 Notes 82 NAI Hiffman

83 Notes 83

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