mb real estate's 2013 1st quarter chicago market overview submarket snapshots

SECTION #

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FIRST QUARTER 2013 | CHICAGO MARKET OVERVIEW 1

CENTRAL BUSINESS DISTRICT

2013 CHICAGOSUBMARKET SNAPSHOTS

F I R S TQ U A R T E R

2013

CHICAGOSUBMARKET SNAPSHOTS

MARKET OVERVIEW

FIRST QUARTER

2013

The Chicago Market Overview is published quarterly by MB Real Estate.

To obtain additional copies or for further information, please contact:

SCOTT MASONResearch Coordinator

181 West Madison Street, Suite 4700

Chicago, Illinois 60602

(312) 726-1700

w w w . m b r e s . c o m

TABLE OF CONTENTS

SECTION TWO

SUBURBAN CHICAGO

SUBURBAN SUBMARKET SNAPSHOTS

08 Suburban Map 09 East-West 10 North11 Northwest12 O’Hare

SECTION THREE

ABOUT MB REAL ESTATE

13 Company Overview

SECTION ONE

CHICAGO CENTRAL BUSINESS DISTRICT

CBD SUBMARKET SNAPSHOTS

01 Central Business District Map 02 Central Loop03 East Loop04 North Michigan Avenue05 River North06 South Loop07 West Loop

CENTRAL BUSINESS DISTRICT MAP

FIRST QUARTER 2013 | CHICAGO SUBMARKET SNAPSHOTS 1

CENTRAL BUSINESS DISTRICTSUPPLY

1

CENTRAL BUSINESS DISTRICTSUBM

ARKET SNAPSHOTS

1

One of the strongest performing submarkets in 2012, the Central Loop saw direct vacancy increase in Class A, B and C buildings for the first time in two years, causing overall direct vacancy to increase 60 basis points to 13.8 percent. In its worst quarter since the recession, the Central Loop was one of two submarkets to experience net negative absorption, erasing the net occupancy gain from the previous quarter.

The Central Loop saw sublease vacancy increase as well, up 50,000 square feet to 957,000 square feet. Much of this can be attributed to the law firm Winston & Strawn, which is now marketing a 75,000 square foot block at 35 West Wacker. With the second highest percentage of sublease vacancy in the CBD at 2.6 percent, the Central Loop continues to struggle with large blocks of sublease space, including United Airlines 130,000 square foot block at 77 West Wacker.

In a quarter that saw few new lease transactions over 20,000 square feet, Responsys signed a new lease for 24,000 square feet at 111 West Jackson. The marketing software company will relocate from 225 West Washington in April.

Two buildings traded in the first quarter: Harbor Group International sold 111 West Washington to the Shidler Group for $94.6 million and the Canadian Imperial Bank of Commerce sold 123 West Madison to Cagan Management Group for approximately $4.9 million. Tishman Speyer brought 161 North Clark to the market after Grant Thornton signed a 137,000 square foot lease at the end of 2012. Chicago Public Schools is marketing 125 South Clark for sale but is also entertaining leasing its unused space and remaining in the building.

The Central Loop’s boundaries are the Chicago River (North), Wells Street (West), State Street (East), and Van Buren Street (South).

CENTRAL LOOPAvailability increases after a strong 2012



ARKET SNAPSHOTS

LARGEST BLOCKS OF DIRECT AVAILABILITYBuilding Address Size (sf) Building Class

222 N LaSalle St * 199,132 B

10 S Dearborn St * 139,165 A

1 N Dearborn St 97,261 B

120 S LaSalle St * 94,995 B

200 N LaSalle St 94,875 B

175 W Jackson Blvd 68,539 B

175 W Jackson Blvd * 67,794 B

175 W Jackson Blvd 67,725 B

77 W Wacker Dr 67,342 A

175 W Jackson Blvd * 65,930 B

CENTRAL LOOP SUMMARY A B C Total

Inventory (square feet) 13,575,094 14,263,388 8,627,220 36,465,702

Year to Date Absorption (square feet) (32,312) (29,491) (116,136) (177,939)

Direct Vacancy Rate 9.2% 16.1% 17.1% 13.8%

Total Vacancy Rate (Direct + Sublease) 13.2% 18.8% 17.4% 16.4%

14.7

%

15.2

%

17.5

%

15.2

%

11.8

%

11.4

%

12.7

%

13.6

%

13.8

%

13.2

%

13.8

%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 2013

CENTRAL LOOP SUBMARKET HISTORICAL DIRECT VACANCY

* Indicates future available space

Numbers in parentheses are negative

2

The East Loop saw 177,000 square feet of net positive absorption, which is more than it experienced in all of 2012. This led direct vacancy to fall 70 basis points to 19.0 percent, which is the largest decrease of the CBD’s submarkets. Class A buildings made up more than half of the net positive absorption with Class B buildings posting positive absorption for the first time in over a year, though almost a quarter of its inventory remains vacant.

The construction firm Clayco expanded by 30,000 square feet at 35 East Wacker for a total of 70,000 square feet. The Unite Here Union relocated over 22,000 square feet from 55 West Van Buren to 218 South Wabash. The labor union will consolidate its union and labor management trust fund into two floors. Despite some large tenant activity there are still seven contiguous blocks of at least 100,000 square feet in the East Loop, the second highest concentration of blocks of this size in the CBD.

One building was put up for sale in the first quarter. Joseph Chetrit is attempting to sell the 260,000 square foot Class C building at 360 North Michigan. The building is currently 7.0 percent leased as it is being emptied to convert to an alternative use. Michael Silberberg and Mark Karasick are still under contract to invest $100 million into the two-building Prudential Plaza (130 East Randolph and 180 North Stetson) in exchange for a controlling interest in the property. The asset has contributed to the submarket’s high vacancy in recent quarters due to its lack of capital and subsequent inability to attract new tenants.

The East Loop is bordered by the Chicago River (North), State Street (West), Lake Shore Drive (East), and Van Buren Street (South). It is inhabited mostly by advertising, media firms and corporate tenants.

EAST LOOPClass A buildings lead sharp decline in direct vacancy



ARKET SNAPSHOTS


200 E Randolph St 306,163 A

130 E Randolph St * 256,720 B

303 E Wacker Dr 174,125 B

130 E Randolph St * 155,829 B

130 E Randolph St 128,948 B

333 S Wabash Ave * 112,000 B

401 S State St 110,898 C

33 S State St 70,107 C

111 E Wacker Dr 67,216 B

233 N Michigan Ave 67,028 B

EAST LOOP SUMMARY A B C Total


Year to Date Absorption (square feet) 93,566 76,447 6,996 177,009



17.2

%

18.4

%

22.4

%

19.1

%

14.2

%

12.1

%

16.3

%

20.2

%

19.3

%

19.7

%

19.0

%

0%

5%

10%

15%

20%

25%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 2013

EAST LOOP SUBMARKET HISTORICAL DIRECT VACANCY


3

After experiencing two consecutive quarters of positive absorption for the first time since 2008, the North Michigan Avenue submarket saw direct vacancy increase once again, up 30 basis points to 20.8 percent. Class A buildings were the only segment to experience a decline in direct vacancy after posting 31,000 square feet of positive absorption. Total sublease vacancy continued to increase as well, adding over 70,000 square feet to a sublease market that already constitutes over 2.0 percent of total inventory.

Large deals remained scarce with no new lease transactions over 20,000 square feet signed in the first quarter. Despite having six contiguous blocks of at least 100,000 square feet, constituting over 10.0 percent of its inventory, the submarket has lagged other submarkets in attracting new, large tenants.

The North Michigan Avenue submarket has an abundance of large availabilties, the two largest being the 351,000 square foot block at 515 North State and the 316,000 square feet at Tribune Tower (435-445 North Michigan). Because of this, it has struggled to bring down its direct vacancy, the second highest in the CBD, and compete with the overall market in general.

The North Michigan Avenue submarket is home to retailers, hotels, restaurants, entertainment venues, advertising and marketing agencies, and the large Northwestern Memorial Hospital campus. Its borders include Division Street (North), State Street (West), Lake Michigan (East), and the Chicago River (South).

NORTH MICHIGAN AVENUEWoes return for CBD’s second smallest submarket



ARKET SNAPSHOTS


515 N State St * 350,906 A

435-445 N Michigan Ave * 316,190 C

101 E Erie St * 217,569 A

410 N Michigan Ave * 214,849 B

401-465 E Illinois St 210,000 C


455 N Cityfront Plaza Dr 89,854 A

360 N Michigan Ave 76,855 C


980 N Michigan Ave 62,384 A

NORTH MICHIGAN AVENUE SUMMARY A B C Total


Year to Date Absorption (square feet) 31,239 (53,942) (34,652) (57,356)



10.8

%

12.7

%

14.0

%

14.0

%

11.8

%

11.4

%

16.7

%

18.2

%

19.5

%

20.5

%

20.8

%

0%

5%

10%

15%

20%

25%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 2013

NORTH MICHIGAN AVENUE SUBMARKET HISTORICAL DIRECT VACANCY


4


Class A and B buildings continue to drive declines in direct vacancy in the River North Submarket. Dropping another 30 basis points to 8.8 percent, direct vacancy in the River North Submarket is now over 6.0 percent below the overall market. In addition, River North saw its sublease vacancy drop almost 100,000 square feet decreasing total vacancy 110 basis points to 13.2 percent, which is lower than the direct vacancy rate seen in all other submarkets.

Even so, large sublease availabilities exist. AT&T, Level 3 Communications and Career Education Corporation are all marketing their respective spaces of 50,000 square feet or greater of sublease space at 350 West Mart, 600 West Chicago and 222 Merchandise Mart.

Due to the lack of available blocks of direct space greater than 20,000 square feet, the River North Submarket experienced no large lease transactions, and much of the absorption came from small requirements.

There were no sales in the first quarter, but two properties remain on the market. KBS REIT 2 is selling up to a 49 percent stake in the trophy tower at 300 North LaSalle, which could fetch upwards of $600 per square foot. Joseph Lagoa is asking $8.5 million for a loft building at 540 North LaSalle that is completely vacant.

The borders of the River North submarket are defined as Division Street (North), Racine Avenue (West), State Street (East), Fulton Street, and the Chicago River (South). It has historically been home to small, older buildings catering to art galleries, furniture studios, and small businesses, but has recently seen an influx of technology, law, trading, and financial firms.

RIVER NORTHDirect Vacancy continues to decrease in CBD’s most in demand submarket



ARKET SNAPSHOTS


350 W Mart Ctr * 87,404 B

350 W Mart Ctr 87,393 B

222 Merchandise Mart Plz 68,829 B

350 W Mart Ctr 64,661 B

321 N Clark St 61,431 A

RIVER NORTH SUMMARY A B C Total


Year to Date Absorption (square feet) 53,842 13,412 (18,335) 48,919



11.9

%

19.3

%

14.5

%

12.6

%

10.6

%

9.2%

15.8

%

13.6

%

11.7

%

9.1%

8.8%

0%

5%

10%

15%

20%

25%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 2013

RIVER NORTH SUBMARKET HISTORICAL DIRECT VACANCY


5


With less total inventory than other submarkets, the South Loop is subject to large swings in vacancy rates. As such, direct vacancy fell 150 basis points down to 25.8 percent after increasing 100 basis points in the previous quarter.

Leasing at the South Loop’s only Class A Building, 440 South LaSalle (One Financial Place), comprised the majority of the submarket’s positive absorption. However the building is still struggling with the loss of former tenant MF Global in the second quarter of 2012, and vacancy remains elevated at 27.9 percent. The resulting three blocks of available space ranging from 53,000 to 163,000 square feet constitute well over half of the building’s remaining vacancy.

Despite its direct access to CTA trains and the LaSalle Street Metra Station, the South Loop in general has struggled to attract tenants looking for top-quality space. This is due in large part to the fact that Class C buildings make up over half of its inventory, with the remaining 1,000,000 square feet coming from 440 South LaSalle. The South Loop submarket will continue to trail the recovery as tenants leave its Class C buildings in an effort to upgrade their office space to take advantage of attractive rents.

The boundaries of the South Loop include Van Buren Street (North), I-90/I-94 (West), Lakeshore Drive (East), and 16th Street (South). The South Loop is populated primarily with education, small businesses, and converted residential properties.

SOUTH LOOPLimited options hamper recovery in the CBD’s smallest submarket



ARKET SNAPSHOTS

LARGEST BLOCK OF DIRECT AVAILABILITYBuilding Address Size (sf) Building Class

440 S LaSalle St * 162,517 A

619 S LaSalle St 89,000 C

440 S LaSalle St * 55,475 A

440 S LaSalle St * 53,143 A

SOUTH LOOP SUMMARY A C Total

Inventory (square feet) 1,019,325 1,155,967 2,175,292

Year to Date Absorption (square feet) 18,513 6,044 24,557

Direct Vacancy Rate 27.9% 24.0% 25.8%

Total Vacancy Rate (Direct + Sublease) 29.0% 24.0% 26.3%

20.5

%

19.1

%

16.3

%

12.3

%

14.5

%

14.5

%

12.9

%

18.6

%

23.0

%

27.3

%

25.8

%

0%

5%

10%

15%

20%

25%

30%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 2013

SOUTH LOOP SUBMARKET HISTORICAL DIRECT VACANCY


6

With positive absorption of 159,000 square feet, West Loop Class A buildings continue to lead the recovery in the submarket and the CBD in general, experiencing the largest decline in vacancy across all submarkets. Class B and C buildings erased most of this positive absorption, posting net negative absorption of 153,000 square feet. This disparity between Class A buildings and the rest of the submarket caused overall direct vacancy to remain virtually unchanged at 13.9 percent.

The two largest new lease transactions include Guggenheim signing a 76,000 square foot lease at 227 West Monroe and Associated Bank signing a 35,000 square foot lease at 525 West Monroe. Plante Moran consolidated multiple offices into 85,000 square feet at 10 South Riverside, where it has the ability to expand into additional space. W.W. Grainger signed a lease expansion at 500 West Madison, increasing its square footage from 15,000 square feet to 36,000 square feet. SNR Denton is in advanced negotiations to lease 125,000 square feet at 233 South Wacker (Willis Tower).

With its proximity to major transportation, relatively low vacancy, and developable parcels, the West Loop submarket has become the focus of new development speculation. 444 West Lake is the only development to have broken ground, and has received a signed letter of intent from McDermott Will & Emery to occupy 225,000 square feet. But there are nine other West Loop sites with varying proposed building sizes that have been courting potential anchor tenants.

Investment activity showed no signs of slowing in the first quarter with Beacon Capital Partners selling 550 West Washington to Metlife for $111 million or $298 per square foot. Additionally, in what would be the largest transaction of the quarter, Mirae Asset Global Investments recently agreed to purchase 225 West Wacker for $218 million or $335 per square foot from J.P. Morgan Chase & Co.

The West Loop’s borders are defined as the Chicago River (North), I-94/I-90 (West), Wells Street (East), and Van Buren Street (South).


500 W Monroe St 338,131 A

233 S Wacker Dr * 285,994 A

540 W Madison St * 250,553 A

311 W Monroe St * 214,490 C

300 S Riverside Plz * 198,302 B

111 N Canal St 176,520 C

111 N Canal St 131,250 C

233 S Wacker Dr * 125,553 A

222 S Riverside Plz * 103,128 B

227 W Monroe St * 103,122 A

WEST LOOPConstruction speculation heats up as Class A market tightens



ARKET SNAPSHOTS

WEST LOOP SUMMARY A B C Total


Year to Date Absorption (square feet) 158,864 (46,916) (106,593) 5,354



14.6

%

14.4

%

17.3

%

11.5

%

10.2

%

11.8

%

16.6

%

15.8

%

14.2

%

13.9

%

13.9

%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 2013

WEST LOOP SUBMARKET HISTORICAL DIRECT VACANCYNumbers in parentheses are negative

7

* Indicates future available space Italicized addresses indicate new blocks this quarter

SUBURBAN MAP


SUBURBAN CHICAGOSUBM

ARKET SNAPSHOTS

8

After seeing occupancy decrease three of the last four quarters, the East-West submarket started 2013 strong with 170,000 square feet of positive absorption. Its Class A buildings saw positive absorption that was greater than the net absorption of any other submarket. Yet Class B buildings offset part of these gains as the only class in the submarket to see occupancy levels decrease. Despite this the East-West submarket saw direct vacancy decrease 40 basis points to 22.0 percent.

The East-West submarket experienced strong demand from the healthcare industry with four such companies signing large lease transactions in the first quarter. Advocate Health Care relocated 140,000 square feet from Oak Brook to 3075 Highland Parkway in Downers Grove and Patterson Medical relocated 53,000 square feet from Bolingbrook to 28100 Torch Parkway in Warrenville. These relocations were within the East-West submarket and highlight the “musical chairs” issue facing the Suburban market. The 37,000 square foot new requirement signed by Molina Healthcare at 1520 Kensington Road in Oak Brook and the expansion to 46,000 square feet, more than doubling its requirement, by Loyola University Medical Center at 1-5 Westbrook Corporate Center, Westchester brought true positive absorption for the submarket.

With 30 large blocks greater than 50,000 square feet of direct vacant space and another seven of sublease availability, landlords continue to lower asking rental rates, down another 2.8 percent on a year-over-year basis. Class A buildings feature 20 of the 30 such blocks in the East-West submarket.

Investment activity continued at a moderate pace in the first quarter. The largest being Adventus Realty Trust purchasing the four property Oak Brook Office Center (2707-2809 Butterfield Road) from Inland Group for $106 per square foot.

The East-West submarket encompasses Cook, DuPage, Kane, Kendall, and Will Counties, with major cities including Downers Grove, Lisle, Naperville, and Oak Brook.

EAST-WESTClass A buildings see occupancy increase once again



ARKET SNAPSHOTS

EAST-WEST SUMMARY A B C Total


Year to Date Absorption (square feet) 239,844 (99,158) 29,585 170,271



22.6

%

20.1

%

19.3

%

17.1

%

17.2

%

18.9

%

21.5

%

22.1

%

21.6

%

22.4

%

22.0

%

0%

5%

10%

15%

20%

25%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 2013

EAST-WEST SUBMARKET HISTORICAL DIRECT VACANCY

LARGEST BLOCKS OF DIRECT AVAILABILITYBuilding Address City Size (sf) Building Class

700 Oakmont Ln Westmont 256,767 A

2400 Cabot Dr Lisle 217,718 A

3075 Highland Pky * Downers Grove 88,576 A

535 E Diehl Rd Naperville 83,792 A

500 Joliet Rd Willowbrook 78,400 B

2000 S Finley Rd Lombard 78,300 B

2655 Warrenville Rd Downers Grove 76,691 A

2245 Sequoia Dr * Aurora 76,126 A

4343 Commerce Ct * Lisle 74,855 A

3050 Highland Pky * Downers Grove 74,319 A



9

After a strong performance in the fourth quarter of 2012, the North submarket experienced negative net absorption of 62,000 square feet, the only submarket to experience negative absorption in the Suburban market. While Class B and C buildings experienced net positive absorption of 94,000 square feet, Class A buildings continue to be one of the worst performing segments of any submarket. Overall direct vacancy in the North submarket increased 20 basis points to 20.9 percent because of its Class A buildings, which have posted positive quarterly absorption only three times since the beginning of 2008.

Despite owning the lowest direct vacancy rate, the North direct market has struggled in recent quarters due to high sublease availability of 4.8 percent, the highest in the Suburban market. Class A buildings have especially struggled with sublease vacancies, its 1.1 million square feet or 7 percent of Class A inventory is the highest in the Suburban market.

Large lease activity was muted in the first quarter. Pet Factory and The Alternative Source Medical will relocate within the North submarket into 30,000 square feet each at 1700 South Butterfield Road in Mundelein. They are coming from 845 East High Street, Mundelein and 1566 Barclay Boulevard, Buffalo Grove respectively. Blue Chip Marketing expanded its space by 43 percent to 30,000 square feet at 650 Dundee Road, Northbrook.

Kraft completed a sale-leaseback of its 679,000 square foot headquarters at 3 Lakes Drive in Northfield to W.P. Carey & Co. for $106 per square foot, allowing them to reinvest in their business and employees. Google has put Motorola Mobility’s 1.1 million square foot corporate campus at 600 North U.S. 45 in Libertyville on the market. This space also constitutes the largest block of direct contiguous space available for lease in the suburbs.

The North submarket is located within portions of Cook and Lake Counties, with major cities including Bannockburn, Deerfield, Evanston, Glenview, Highland Park, Lake Forest, Northbrook, and Vernon Hills.

NORTHClass A buildings continue to lag



ARKET SNAPSHOTS

NORTH SUMMARY A B C Total


Year to Date Absorption (square feet) (156,305) 96,264 (2,219) (62,259)



17.5

%

17.6

%

16.5

%

16.1

%

12.5

%

14.5

%

17.5

%

19.6

%

20.6

%

20.7

%

20.9

%

0%

5%

10%

15%

20%

25%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 2013

NORTH SUBMARKET HISTORICAL DIRECT VACANCY


600 N US Highway 45 * Libertyville 1,121,186 A

300 Tower Pky * Lincolnshire 175,545 A

1000 Milwaukee Ave Glenview 114,144 A

1 Overlook Pt Lincolnshire 111,327 A

3 Parkway Blvd N Deerfield 107,625 A

2355 Waukegan Rd Bannockburn 106,495 A

25 Tri State International * Lincolnshire 95,771 A

75 Tri State International * Lincolnshire 86,036 A

544 Lakeview Pky Vernon Hills 84,237 B

2-4-6 Genesee St Waukegan 75,996 C



10

The Northwest submarket, the most distressed in the Suburban market, saw its direct vacancy rate decrease 80 basis points to 25.0 percent, the largest drop of any submarket. Class B buildings rebounded with their strongest quarter since 2007, posting 133,000 square feet of net positive absorption.

Lease transactions above 20,000 square feet were nonexistent in the Northwest submarket. With 28 direct contiguous blocks of at least 50,000 square feet available for lease, 15 of which are greater than 100,000 square feet, finding large tenants to fill space has proven troublesome. Landlords have decreased rents due to this large glut of space, down 4.3 percent on a year-over-year basis.

The Multi-Employer Property Trust sold the almost entirely unoccupied three property Greenspoint Office Park in Hoffman Estates (2800 West Higgins Road, 2800-2820 Greenspoint Parkway) to the Lincoln Property Company for $47 per square foot. CWCapital Asset Management put the 911,000 square foot Continental Towers Complex in Rolling Meadows (1701 Golf Road) on the market, the complex is less than 60.0% occupied.

The Northwest submarket is located within the portions of Cook, Kane, Lake, and McHenry Counties, with major cities including Arlington Heights, Itasca, Rolling Meadows, and Schaumburg.

NORTHWESTSmall lease transactions lead rebound in most distressed submarket



ARKET SNAPSHOTS

NORTHWEST SUMMARY A B C Total


Year to Date Absorption (square feet) 54,107 133,249 32,169 219,525



18.8

%

15.2

%

16.5

%

18.1

%

18.8

%

21.3

%

22.7

%

24.4

%

27.7

%

25.8

%

25.0

%

0%

5%

10%

15%

20%

25%

30%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 2013

NORTHWEST SUBMARKET HISTORICAL DIRECT VACANCY


21440 Lake Cook Rd Deer Park 351,425 A

1299 Algonquin Rd Schaumburg 195,393 C

5550 Prairie Stone Pky Hoffman Estates 193,601 A

1701 Golf Rd Rolling Meadows 183,506 A

3501 Algonquin Rd Rolling Meadows 156,140 C

3890 Salem Lake Dr Long Grove 150,000 B

3333 Beverly Rd Hoffman Estates 129,000 A

2895 Greenspoint Pky Hoffman Estates 127,941 A

700 N Wood Dale Rd Wood Dale 125,328 B

200 N Martingale Rd Schaumburg 109,716 A

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After a strong fourth quarter in which Suburban Chicago’s smallest submarket outperformed the overall market, O’Hare saw decreased activity and net positive absorption of only 2,000 square feet. Class A and B buildings made up for slow quarters in C buildings, offsetting their negative absorption with 13,000 square feet of net positive absorption. Albeit slight, this marks the first time since before the recession that the O’Hare submarket experienced four straight quarters of net positive absorption.

Landlords decreased rents a 6.0 percent on a year-over-year basis, the largest decrease in the Suburban market. Rental rates in Class A and B buildings saw the largest decreases of any segment in the market, down 7.4 and 7.9 percent, respectively. Interestingly, Class C buildings increased 5.1 percent, the only segment of the Suburban market where gross asking rents increased which was also accompanied by a slight increase in occupancy.

The largest lease transaction of the quarter involved the relocation of Association Management Center from the North submarket to 8735 West Higgins Road, Chicago where they expanded from 12,000 square feet to 47,000 square feet.

There was one notable sale in the O’Hare submarket during the first quarter. Robert Kozonis sold a 240,000 square foot building at 2300 East Devon Avenue, Des Plaines to the Saban Capital Group for $163 per square foot.

The O’Hare submarket is located in northwestern Cook County surrounding O’Hare International Airport, with major cities including northwestern Chicago, Elk Grove Village, and Rosemont.

O’HARELittle activity in smallest submarket



ARKET SNAPSHOTS

O'HARE SUMMARY A B C Total


Year to Date Absorption (square feet) 9,719 3,880 (11,686) 1,913



20.0

%

19.4

%

20.8

%

18.2

%

19.0

%

21.4

%

27.3

%

26.1

%

26.0

%

24.9

%

25.0

%

0%

5%

10%

15%

20%

25%

30%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 2013

O’HARE SUBMARKET HISTORICAL DIRECT VACANCY


2350-2360 E Devon Ave Des Plaines 142,596 B

5450 N Cumberland Ave Chicago 134,525 B

8420 W Bryn Mawr Ave * Chicago 104,164 A

8750 W Bryn Mawr Ave * Chicago 102,498 A

4242 N Harlem Ave Norridge 93,155 B

5100 River Rd * Schiller Park 74,988 A

1350 E Touhy Ave Des Plaines 71,367 B

9500 W Bryn Mawr Ave Rosemont 69,701 A

10255 W Higgins Rd Rosemont 69,695 A

8550 W Bryn Mawr Ave * Chicago 66,895 B



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FIRST QUARTER 2013 | CHICAGO MARKET OVERVIEW

MB REAL ESTATE

ABOUT MB REAL ESTATE Our mission is to provide clients and investors with extraordinary real estate value and unlimited support

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PETER E. RICKERChairman & CEO

JOHN T. MURPHYPresident

At MB Real Estate, our corporate mission is to maximize the value of our clients’ real estate by creating timely and innovative solutions that meet their unique needs and objectives.

We offer the highest level of real estate support with our team of committed, results-driven experts in asset and facilities management, leasing, tenant representation, development, project management, and investment services.

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DEPARTMENT LEADERSHIP

PATRICIA ALUISI Executive Vice President & Chief Administrative Officer/General Counsel

MARK A. BUTH Executive Vice President & Managing Director of Leasing Services

ANDREW J. DAVIDSON Executive Vice President & Managing Director of Corporate Services & Tenant Advisory

GARY A. DENENBERG Executive Vice President & Managing Director of Leasing Services

DAVID R. GRAFF Senior Vice President of Project Services

MAUREEN G. GROVE Vice President & Managing Director of Accounting Services

DANIEL J. NIKITAS Executive Vice President of Corporate Services & Tenant Advisory Services

KEV IN M. PURCELL Executive Vice President & Chief Operating Officer

PETER J. WESTMEYER Senior Vice President & Managing Director of Investment Services

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mb real estate's 2013 1st quarter chicago market overview submarket snapshots

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